"Sales are down from last year."
"The whole industry is down."
"It's tough right now."
"We're just trying to minimize our losses."
In both good times and in bad, you've probably heard these comments if you haven't said them yourself. But there are always companies that are making their goals and many that are even exceeding them. So how is it possible for some companies to prosper while so many others are struggling to keep their doors open?
The difference lies in upper management's style: reactive or proactive. In a reactive organization, reactive managers do just what the word implies; they react to the situation around them. You'll hear them using the sentences in the first paragraph as excuses. They react to the fact that there are fewer customers and that the ones they have spend less money.
Proactive managers, on the other hand, are innovating. Knowing that tomorrow may not bring any more potential customers than today, they search for new ways to get more. (One way to get more customers is to steal them from your competition.)
And if proactive managers still anticipate selling less, they look closer at what they could do with their products and margins to increase the bottom line. They strengthen their advertising, they tighten general operating expenses. Overall, they change the way they do business. They make it better.
When it comes to tightening expenses, there is a major mistake that reactive managers often make. Certainly a good tightening of the belt is in order periodically. But in most cases, when cuts are called for, they usually start with personnel.
This makes sense if you have unproductive employees. What doesn't make sense, however, is how reactive managers make those cuts. All too often they are made based on seniority rather than performance.
What a reactive organization ends up doing is keeping Mary, whose performance for the last five years has been average at best, while Susan, who consistently meets and exceeds her goals, has to leave because she's only been there for one year. There's something seriously wrong with this picture.
If layoffs are called for, they should be based on performance. Proactive managers have systems in place to hold employees accountable. They know who is producing and who isn't. So if they are forced to cut back, they know exactly where to start.
To illustrate how it works, let's say a company has a goal of $10,000 to meet for the week. There are four salespeople who all work an equal number of hours. It only makes sense that if two people work the same amount of hours they should be expected to sell at least the same minimum dollar volume.
Now, what tends to happen when analyzing the weekly results brings us to yet another difference between reactive and proactive managers.
We'll continue to use our example of four salespeople all working the same amount of hours. Suppose one person sells $4,000, one sells $2,500, another sells $1,500 and the last one sells $2,000. The company ends up reaching the goal of $10,000. The reactive manager is happy; the store has made its goal so he has nothing to worry about.
As a result, the two salespeople who did not contribute their fair share continue to exist for months or even years without ever being noticed, helped, replaced or anything. Life goes on without anyone ever realizing the impact (or lack thereof) that these two people are making on the bottom line.
The proactive manager recognizes the impact that these two people are making by falling short of their minimum. Certainly they see that the company achieved its goal, but only because one individual picked up the slack for two others. In a proactive organization, these two salespeople would not be around for months or years unless they were able to improve their statistics.
I'm not suggesting that you terminate all your salespeople who fall short of their minimums. You should first train them to make certain they are capable of reaching those minimums. Then, after sufficient training, there must be a process by which substandard performers are identified and replaced.
Take a look at the management style in your organization. Has everyone been so busy reacting to the current situation that sales may be suffering? Start taking proactive measures today. The impact it will make on the bottom line may surprise you.
