SalesForceXP: January/February 2009 Coverstory: The Perfect Storm

COVERSTORY

SalesForceXP January/February 2009 Cover The Perfect Storm

by Paul Nolan

Sales leadership in a recession isn't about battening down the hatches and waiting it out

When a panel of economists known as the National Bureau of Economic Research declared in December that the U.S. economy has been in a recession for a full year, you could almost hear the collective groan of "Where have you been?" from those who have been on the frontlines of retail and business-to-business commerce.

Whether you call it an economic crisis, a downturn, a credit crunch, or any of the other "hard times" terms the media has used interchangeably since before last summer, sales managers across a wide swath of business-to-business industries agree on one thing: It's been a pain in the ass to sell stuff lately.

Executive coaches and business consultants are quick to point out that one side effect of having a healthy U.S. economy for the bulk of the last two decades is a dearth of managers with experience leading sales teams through deep, drawn-out recessions. But don't panic, says leadership consultant John Baldoni (www.johnbaldoni.com). "In all honesty, it's not that much different than leading in good times except there is more urgency to it."

The current recession, like downturns that have come before it, has brought widespread job cuts and project delays. But smart management in difficult times isn't about hunkering down and playing it safe. When you come out the other side of this recession - and there is another side - you want to have the right people in place, and you want them to have been laying the groundwork for a rebound for the past year or more.

The consultants we spoke with agree that leadership skills emerge far more often during difficult times than they do during good ones. As Stanford economist Paul Romer is noted for stating, "A crisis is a terrible thing to waste."

What Constitutes Winning?

An excellent starting point for managing a sales team in this economy is to recalibrate what constitutes success. In his book, Lead By Example: 50 Ways Great Leaders Inspire Results (AMACOM, 2008), Baldoni lists 15 things managers need to know to lead through tough times. One is to create a culture of success, which may sound like an impossible mission to beaten-down sales managers, but Baldoni feels otherwise.

"It all depends upon how you measure a win," he says. "While it might be exceeding a sales goal in a growth economy, it could be holding on to a client now. Or maybe it's doing something from the customer service side that adds value for a customer."

Creating a winning culture allows people to feel confident.

Choose your spots to make bold moves and let your whole team in on the strategy, says author and Harvard Business Review blogger Tamara Erickson. She equates management during a recession to coaching football and facing a fourth down and two:

"Most of the time, the smart move is to punt. But once in awhile, it makes sense to take the risk." (See sidebar below.)

Erickson says one mistake managers frequently make during troubled times is to demand greater control - whether consciously or unconsciously - and trust their teams less.

"Faced with a crisis, executives often shout 'Give me the ball!' What leaders frequently forget in the heat of crisis is that the wisdom of crowds applies within their own companies. Instead of hogging the ball during a downturn, they ought to tap the ideas and the energy of the entire organization," she says.

Invest in Success

It's counterintuitive, but slow economies can be an ideal time for managers to invest both time and money in their sales team. "How often do we hear managers say they don't have enough time to spend with their people?" says Baldoni. "They should use the time that comes with a slower economy to develop their skills."

For example, in response to the economic downturn of 2000-2002, Alliance Business Academy in Bangalore, India started conducting annual team-building exercises at a top Indian software company. Working with two of the company's 200 teams a year, ABA focused the training on endeavors such as completing joint tasks, clarifying group values, and improving team processes. Since the program started, trained teams have been 50 percent more productive, on average, than untrained teams, according to aggregated measures of quality, time, and cost. The company put five teams through the program in 2008. ABA has replicated the results at a major aerospace company and a large European engineering conglomerate.

"Such professional development pays off most with employees whose team skills are poor but whose impressive individual performance precludes letting them go," explains B V Krishnamurthy, director and executive vice president of ABA.

In a white paper entitled "Strategies for Hard Times," the sales trainers at Huthwaite (www.huthwaite.com) state, "the worst consequence of the drive for increased activity is that managers try to become super sellers and spend their time trying to close business rather than developing and coaching their sales teams. But the sales managers who are able to keep their numbers up during a recession are the ones who invest effort in coaching their people."

An extended period of falling sales volume causes many managers to become desperate for business and give most of their attention to those accounts that are nearest to closing. Managers concentrate on calls that are late in the selling cycle instead of those on the other end of the pipeline, yet the early calls of the selling cycle offer the greatest potential for minimizing the effect of the recession. With any pipeline, what you get out at the end ultimately depends upon what you put in at the start.

Every recession has produced winners and losers. Hunkering down and playing it "safe" has spelled the end for many companies. The leader with a long-term outlook invests in his sales force in bad times as well as good. While other companies are cutting back, the long-term leader finds opportunities to gain competitive advantages, whether it's through hiring, training, adopting new marketing strategies or introducing new products or services.