Managing for Performance
How to Get the Best Out of Yourself and Your Team
by Alasdair White
First published in 1995
as a hardback and in 1996 as a paperback by
Judy Piatkus
(Publishers) Ltd of
5 Windmill Street, London W1P 1HF
United
Kingdom
ISBN 0-7499-1446-7 (hardback)
ISBN 0-7499-1576-5 (paperback)
Copyright 1995 and 2011 by Alasdair White
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Acknowledgments
It is normal for authors to thank all those who have contributed in anyway to the writing of the book – amongst the many others who have helped and to whom I am indebted, I would like to give special thanks to Philippe Paillart, Tom Evans, Jean-François Hautemulle, Karl Sergeant, and Bryn Thomas all of whom provided me with opportunities to develop, refine and test the ideas and skills presented in this book. Finally, my thanks go to Gill Cormode and her team at Piatkus Books without whom this book would never have seen the light of day.
Alasdair White
Belgium, 1995 and
2011
A new introduction by the author, November 2011
Part I: What are we trying to achieve, and how will we achieve it?
1. Management and Performance Management
Part II: Who is going to achieve the objective?
4. Management style - the key to success
6. Team development – coaching and training
Part III: Achieving the objective
8. Office environment - physical and psychological
9. Cause, commitment and goals
10. Feedback – Seeing how we are doing
11. Where do you go from here?
A new introduction by the author, November 2011
This book had its origins in the late 1980s when neoliberalism and the economic beliefs of Milton Friedman held sway, when Reaganomics and Thatcherism ruled the Anglo-Saxon world and the communist blocs were crumbling. It was a time when Friedman, the 1976 Nobel Laureate for Economics, and his fellow economists of the ‘Chicago School’ had successfully proselytised the world into believing that free markets, the minimal intervention of governments, and the pursuit of personal good (for which one can read ‘wealth’) was a desirable objective in all circumstances.
It was the time when Gordon Gekko (played by Michael Douglas) in the 1987 film Wall Street famously declared: “Greed, for the lack of a better word, is good. Greed is right. Greed works.” And he was believed, admired, and emulated by thousands of bankers, traders, and entrepreneurs across the world. By the early 1990s, when I came to write Managing for Performance, neoliberalism had become the dominant economic paradigm of the world – from the Anglo-American heartlands of capitalism to the former communist bloc and all the way to the developing states.
Today, of course, neoliberalism has been discredited because the global economy, built on its principles, has been shaken to its core by the worst financial crisis in a hundred years – a crisis that has been blamed not only on the asset bubbles that were created, not only on the greed, materialism and the obsessive credit-driven consumerism, but also on the culture created by ‘Gekko-ism’ gone mad.
In many ways, Managing for Performance was an attempt to bring a more collective and collaborative approach to the management of people at a time when individualism ruled and it was passionately believed that money motivated everyone. The 2007 financial collapse, the analysis of the toxic cultures of the big banks (such as Lehman Brothers – the bank that started the domino collapse of the world’s banking system), and the continuing legacy of a theory that was pushed beyond a state of viability is still too close, and many companies and their managers are still in the thrall of the ‘Gekko-ism’, the individualism, the profit-driven management styles and the toxic cultures of the last twenty years.
When I was approached with the idea of re-issuing Managing for Performance, the initial discussions focused on updating the book for the 21st century. I soon realised that it would be far easier to write a completely new book on the subject but, upon reflection, I also realised that the ideas and techniques that had made Managing for Performance an international bestseller fifteen years ago were still absolutely valid today – only the context has changed.
The corporate and organisational cultures in which we work are now much better understood thanks to the work of people like Hofstede, Tromenaars, Deal and Kennedy, Bartlett et al, Schneider and Barsoux and many other researchers, who have dissected, analysed, synthesised, and generally exposed national and transnational organisations to examination, and have offered theories and guidance as to how to manage within them. One thing is now very clear to all managers: organisations reflect their national culture as modified by the culture of the people who work there. This means they have to select and apply those management techniques that work best with the people they are managing.
But isn’t that exactly what all managers have to do at all times and in all circumstances? Of course it is, and that is why the performance management techniques in Managing for Performance are as applicable today as they were when the book was written.
Would I change anything if I were to update the book? Well, yes – I would want to expand some sections (such as motivation) to reflect the latest research in the field and I would want to include sections on collaborative working, virtual teams (and virtual organisations) and managing in a networked world as they all place new emphasis on developing new performance management skills. I would also want to explore the current obsession with the idea that performance management is a technology-based activity (it isn’t, of course, it is about managing people: technology-based performance management applications are for monitoring purposes only).
Managing for Performance presents a number of timeless management skills that have proven to drive performance in organisational environments as diverse as US banking, Japanese engineering, African mining, volunteer charities, Middle Eastern oil production, healthcare, and European luxury goods. Used wisely and with a strong focus on managing people, these techniques will ensure that performance will follow no matter where you work or in which sector.
Alasdair White
Belgium 2011
Introduction
I have always found managing people a fascinating, frustrating, exhilarating, and extremely satisfying experience. The purpose of this book is to provide you with a range of techniques and ideas to make your management experience more rewarding, to help you achieve your objectives, and to help you manage for performance.
I was persuaded to write this book by the many managers who have come on my Performance Management Workshop seminar over the last three years. At the beginning of the week there was often a healthy degree of scepticism about the ideas presented – ‘after all, wasn’t this just another managing people type seminar’ – but by the end there was commitment.
This commitment was carried out into the workplace with outstanding results. One business actually achieved a 50% growth in profits following the implementation of all the concepts outlined and they clearly believed that the workshop’s training and ideas were what made it happen. Similar results have been achieved elsewhere – but I would like to make a very important point: the techniques and skills outlined in this book are only that – techniques and skills; it requires YOU to put them into practice and to make them work. Putting them into practice takes time and commitment and you must not expect an instant improvement in performance from your team – give it time and keep going, even when the going is hard.
Each chapter follows the same basic, easy-to-understand, structure – first there is a discussion of the theory and techniques involved, then we look at how to apply them and finally there is a brief bullet-point summary of the basic points.
Part I: What are we trying to achieve, and how will we achieve it?
1 Management and Performance Management
What is a manager? ● what is ‘Performance Management? ● what makes people ‘tick’? – the theory of motivation ● different management styles for different people ● office environment – a help or a hindrance?
What is a manager?
What is a manager? There are, of course, hundreds of answers to that question. My starting point is to define a manager as someone who manages a process and leads a team of people. If you have anybody reporting directly, or indirectly, to you then you are a manager and your main responsibility is to manage their activities and lead them towards delivering a superior performance. And to do this you need to use a range of people-management techniques – you need to be a leader.
But what is a leader? I do not see the role of a leader as being different from that of a manager – it is part of the same thing – and I generally use the two words interchangeably. However, if you visit any large bookshop and look at the titles on the shelves in the business section, you will find that many books, perhaps hundreds, have been written on the subject of leadership – what makes a good leader, and what are the qualities of a leader. Unfortunately for the general reader, much of the analysis has been undertaken by, and many of the books written by, academics, who mystify rather than demystify the subject. Almost all of the material suggests that leaders are born, not made, and that you cannot learn to be a leader.
This is not true.
Professor John Adair, when studying leadership, concluded that the most practical way to examine leadership was to observe what a leader does. Whilst acknowledging that leadership qualities and the situation in which the leader works undoubtedly play a part, Adair believes these aspects do not go far enough in determining success, and it is the actions that leaders need to take that are the most important. He narrowed these down into three critical areas:
achieving the task
building the team
developing the individual.
Adair concludes that it is the balance between these three areas that determines the success of the leader, and that if they are out of balance for any length of time there are likely to be adverse consequences.
I believe we can use the Adair model to look at the role of the manager – especially since the modern manager needs to be a leader. I think it is reasonably clear to most of us that the prospects for the old-style manager who was nothing but a glorified supervisor are strictly limited – much more is expected of today’s manager as companies de-layer, restructure, and re-engineer to allow them to succeed in the 1990s. The manager of today has to be a leader.
There are three clear areas of responsibility that all managers have to accept:
the responsibility for determining how the objective of his team will be achieved
the responsibility for ensuring the team members are selected, developed, trained, and carry out their responsibilities to a pre-determined standard that will allow them to achieve their objective, and
the responsibility for the motivation, performance, and personal development of the individual team members so that the objective is achieved.
The first area of responsibility is one of planning (‘achieving the task’), the second is one of team building and training (‘building the team’), and the third is one of performance management (‘developing the individual’). Unfortunately, most managers fail to plan – instead, they fight fires – they accept the team they are given and do little to develop it, and they have little understanding of performance management. The result is that they fail to achieve their objectives and generally blame ‘the bosses’ for unrealistic goals. In many companies this sort of management behaviour goes unchallenged due to a corporate culture that only pays lip service to accountability and extracts no retribution for failure.
To be effective managers we have to ensure that we are effective in each of the three main areas, to understand that they are interdependent, and to keep them in balance. The key is the ability to manage people: the skills involved in getting them to deliver their best performance are ones which we can all develop. It is a matter of learning to use a range of techniques in an appropriate manner: techniques we can all learn, which are not difficult to apply, and which are based on common sense and an understanding of why people do things.
What is ‘Performance Management’?
Performance Management is applying these techniques to get the best possible performance from you and your team in any given circumstance, so that you can achieve your goals and objectives. This is a very sweeping statement so let me explain.
Let me start by defining ‘performance’. The Oxford English Dictionary defines ‘performance’ as ‘the process or manner of performing’ or ‘to accomplish or to execute’. Therefore, the best performance is ‘the best process of accomplishing’ whatever it is you want to accomplish – be it reaching a sales goal, making a profit, getting more out of your life, winning a medal, becoming a concert pianist or anything else you care to mention.
Secondly, the OED defines ‘to manage’ as ‘to have under effective control’ with ‘management’ being the ‘process of managing’.
Given these definitions, it is clear that ‘Performance Management’ is the effective control of the best process of accomplishing whatever has to be accomplished.
A great deal has already been written about almost all aspects of management and many influential thinkers have turned the whole subject into a ‘science’, with rules, processes, theories, and all the paraphernalia that entails. We have scientific management, situational management, behavioural management, and many more schools of thought, all of which have valid contributions to make to understanding the role of the manager within organisations, but fail to address themselves to the enhancement of the performance of the individuals who make up that organisation and on whom its success depends.
In Performance Management we are not concerned with the systems and processes that are involved in our work, nor are we deeply concerned with scientific management theories – although a little background is called for to explain why the techniques work. What we are concerned with is the management of people and how you can obtain a better performance from yourself and your team. To be an effective Performance Manager you have to manage your own performance effectively if you are to manage the performance of others.
How do you do this? The starting point must be to know what you and your team have to achieve and by when – this establishes the goal. The next step is to develop an overall plan outlining how you are going to achieve your goal. This plan will then define what resources you are going to need – especially the human resources.
You must then acquire those resources, select and recruit the necessary people, develop and train them, and then manage their performance. And don’t forget, you are one of your resources and you will need to look at your management styles, your skills, your strengths and weaknesses, as well as those of your people. In the following chapters, we will be looking at these issues in depth and I will be offering help and guidance on how to do find the necessary people and how to develop them, and yourself, so as to achieve your objectives.
Beyond this, there are three main requirements for the successful management of people:
to understand what makes a person ‘tick’ – why they work and for what reason: their motivation for doing things,
to understand the need for different management styles in different circumstances, and
to understand the impact of the environment on the ability of a person to deliver an optimum performance.
Let’s take a brief look at the background to each of these.
What makes people ‘tick’? The theory of motivation
Back in the early 1960s, thinkers in the USA were attempting to develop a theory of ‘why people do things’ – a grand theory of life, so to speak. The result was encapsulated as: ‘people only do something if they obtain a psychological or material benefit from doing it’.
In other words, people act only for selfish reasons. This is hard to fault – the main argument against it being that people sometimes act for altruistic reasons, to which the theory’s supporters answer: apparently altruistic actions supply a psychological and emotional ‘gain’ or benefit to the person taking the actions.
Motivation has an unhealthy stablemate: manipulation. Motivation can be defined as ‘getting someone to do what they want’, whereas manipulation is ‘getting people to do what we want’. Clearly, if people do things only to obtain a benefit for themselves then they will certainly be motivated to do what they want – equally, it is sometimes hard to see how doing what we want them to do will provide them with a benefit.
So, the first key to successful motivation is to get your people to really want what they want – because in seeking to achieve what they want, they will deliver an optimum performance. The more they desire to do what they want, the greater their performance. The management skill is to succeed in persuading your people to want what you want because in this way your objectives and those of your team become the same and they will be motivated to achieve – this process is centred around goals and goal-setting. In terms of corporate management, your objectives, as a manager, should be those of the organisation itself.
The second key to success is to maintain the motivation of your people – this is rather more difficult to achieve and is the area in which most managers fail. They believe that once they have motivated their people that is all there is to it – but they are wrong: once motivation is established it never lasts and has to be constantly re-established – a process which is based on performance monitoring and feedback.
Chapter 7 covers the subject of motivation – what it is, and what it is not – and will try to establish some simple rules.
Different management styles for different people
Steve Jones was a manager who took pride in being a ‘straight-talking’ man and he had led his sales team in the successful development of new markets and the launch of new products. The job had required a forceful, hands-on approach to getting things done and his team appreciated Steve’s straight-talking leadership – they knew where they stood and knew they could rely on him to help them achieve their goals. Steve was a successful Performance Manager.
After his department had done all that was asked of them, and more, Steve was asked to become a main Board director, in charge of sales and marketing and with a brief to ‘drive the sales up’. However, within months he was faced with hostility from his fellow directors, a deteriorating performance amongst the sales team, and demoralisation in the marketing department. After a year, the sales performance was no better and the Board was considering calling for his resignation.
Fortunately, the Chairman saw what the problem was and intervened.
He took Steve aside and together they analysed the situation. It soon became clear that the main issue was Steve’s style of management – his straight talking was perceived as aggressive and abrasive by his fellow directors; his forceful, hands-on approach was perceived as interference by the creative team in the marketing department; and the sales team now saw him as trying to rule by diktat. All in all, Steve’s earlier successful management style was no longer appropriate in his new role and he had failed to change his approach.
What the Chairman knew, and Steve had found out, is that different people and different circumstances require different management styles – what is a successful style in one circumstance is inappropriate in another.
In Chapter 3 we look at how you yourself can develop as a manager, while Chapter 4 examines the whole subject of management style in greater detail.
Office environment – a help or a hindrance?
We all know that being in a cold office can stop us working at our best – and, equally, an office that is too hot has the same effect. Similarly, the amount of light available, the availability of proper equipment, and the quality of the air all have an impact on our performance.
Our non-work work environment can also has a major impact – the cleanliness of the toilets, the availability of refreshments, and the colour scheme are just three areas of environmental impact. In fact, it is the quality of these things that tell a visitor more about the company than all the literature available. Consider for a moment: you walk into a top restaurant and you know the bill is going to be high, but you are looking forward to the meal; you decide to visit the toilet before the meal and find it is less than clean – how does your perception of the restaurant change? If you are anything like most people, you will feel a lot less happy about the food, the service, and the bill – you may even choose to leave the restaurant.
Many people unconsciously form opinions about the management of a company based on environmental things – and this is often expressed as, ‘If they don’t care about the conditions in which we have to work, how can they really care about us?’ If your people believe you do not care about them then you have little chance of them delivering a good performance.
Environmental issues go beyond the physical conditions in which we have to work: the attitude of the team members to each other, the ‘political’ environment within the company, and the ‘market’ environment in which we work also affect our ability to deliver an optimum performance. These subjects are important and we will see how improved communication can overcome some of the downside.
Summary points
As the manager, you must take responsibility for planning how the team objectives are to be achieved, for building the team, and for developing and motivating the individual members.
The key to leadership is managing people so they deliver their best performance in any given circumstance.
Performance Management is the application of the management techniques necessary to achieve superior performance.
To obtain a top performance from your people you must understand what makes them ‘tick’ – what motivates them.
People are motivated by what they want to achieve: as their manager, you have to make what they want and what you want as close as possible.
Motivation, once established, never lasts – you must continually reinforce the motivation of your team by monitoring and feedback.
You have to understand that different people and different situations require different management styles – you must use the most appropriate management style.
You must take into account the environment in which you operate – your people (and you) are affected by your environment which can help or hinder performance.
2 Objectives and planning
Define the objectives ● define the resources and constraints ● capacity planning – the vital exercise ● a Sales Capacity Planning Exercise ● what happens when goals and performance are incompatible? ● plan your work ● the Action Plan ● work your plan
In most corporations, sometime in the third quarter, a meeting takes place to decide on the goals and objectives for the following year. This meeting, generally called the annual budget meeting, attempts to define what the business has to achieve to meet the requirements of the Five-Year Plan or whatever measure of success the company uses. Normally, only senior management are involved and the meeting focuses on reviewing the current performance against plan, forecasting the likely outcome of the year’s activities, and – based on this – what could reasonably be achieved the following year in terms of turnover, revenue, and profits. The leading figure in many of these meetings is the finance director – he is the one with all the numbers, he generally controls the forecasting, and he is the one who will have produced the report from which everyone will work.
If senior management has a good understanding of the business and the market in which it operates, the numbers in the finance director’s report should be reasonably accurate, allowing the management team to discuss the strategic objectives. Such a discussion will focus on ‘what we want to achieve’, what markets the business is to operate in, and what products or services have to be provided to deliver the levels of profits desired. A good strategic discussion should result in a good strategic plan – one that can be broken down into its component parts and handed over to more junior managers to be turned into tactical action plans.
Unfortunately, in a number companies, the annual budget meeting turns into a turf war with each of the principal managers defending the performance of their department and focusing on tactical issues of ‘how are we going to achieve the number’ rather than a strategic discussion about ‘what we want to achieve’. The goals that come out of such a meeting are then handed down and unquestioningly accepted by managers all down the line until they reach the level of the manager who actually has to deliver the performance. At this point the goals are likely to be greeted with disbelief, derision, and frustration – but they are just numbers and there is little point in trying to appeal. In a huge number of cases, the result is that the goals are not met, the objectives are not achieved, and no one has to take the blame – the manager collects his annual increase, his staff continue as normal, and a generally low level of motivation pervades the organisation. The attitude in the minds of the managers is: ‘If goals don’t have to be achieved, then why try to achieve them?’
So who is to blame for this sorry situation? Senior management for not being strategically orientated? Middle managers for not questioning the goals? Or the manager who accepts the goal with little hope of achieving it?
Initially, the blame rests with senior management. Most people feel more comfortable with the detail of their job (the tactics) than they do with the wider picture and, despite having reached the highest levels in a business, senior managers are still prone to this – even though they know that their job is to accept the challenge of being strategic. The situation is not helped by the fact that middle and junior managers caught in this position either accept the goals they are given, even if they are unachievable, or ‘sandbag’ their goals to protect themselves – in other words, if they are asked for their input to the planning process they will forecast a performance that is easy to achieve so that there is little risk of failure.
In corporations which suffer from this type of management, and there are many, there is plenty of evidence to suggest that head offices just hand out goals based on purely mathematical projections – last year’s numbers plus 10% plus a further 10% because the shareholders need better returns – and there is minimal upward input from the front line. This stems from the fact that senior management is not focused on the strategic objectives, middle management is focused on protecting their jobs, and junior management see little hope in changing anything. Unfortunately, in today’s environment, this approach is likely to result in the corporation going out of business – and if that happens, all managers will have to accept the blame.
Now, I suspect that there is a very good chance that you may actually work for a corporation which has this problem. So what can you do the break the vicious circle?
The answer is to do what you would have done if you had worked for a company with senior managers who think strategically – you must take the responsibility for determining how the objective of your team will be achieved. You must state clearly what can be achieved with your current resources, you should support this with a realistic plan, and then deliver what you say you will deliver. If you do this often enough you will eventually find that head office ask for your input on what is realistic and the objectives handed down will become achievable. The vicious circle will be broken and the company will move forward.
So how do you do this?
The answer is to plan carefully and then work your plan. However, a word of warning is necessary. Many managers make the mistake of embarking on this process having already accepted the targets – this is a major error and will trap them into the Catch-22 situation I have just described. It is vital that you define your objectives, resources, and constraints before accepting the goals, especially if you are in a junior position in which you have little control over the resources available to you.
Step 1: Define the objectives
In most organisations the targets for the year tend to come down the line as a series of numbers that affect both sides of the equation – there are targets on the income/revenue side and there are targets on the expenses side. The first step is to sort out what the numbers mean to you and your team – to define the size and shape of the overall objective you have to achieve.
The actual size and shape of the objective depends on where it is viewed from and it is important to understand that different levels of management have different views of what has to be achieved. The Board of Directors may see the objective as the value of the company’s shares and the dividend they will pay, while senior management may see it as a profit figure. The production manager is likely to see the cost of the product as his objective, while the sales manager will see the total sales revenue as the key target. The assembly line manager may see the total number of units assembled as his goal, while the quality manager may see the decline in the number of errors as his prime concern. All of these are correct and if everyone meets their targets then the company will meet its objectives.
It is vital, therefore, to clarify the task involved – exactly what are the key components that make up the objective for your team: is it a growth in revenue, an increase in sales, a decrease in expenses, or a combination of all of these? To do this you must understand the numbers that affect you – and disregard the rest. This may seem a little radical but there is little point in worrying about the share price if your primary objective is producing a given number of error-free widgets in a year.
Defining the objective for your team is your responsibility, although you would be wise to seek the assistance of your immediate superior and, possibly, your senior team members. But I suggest you do not involve too many people at this stage as incomplete information reaching junior members of the team is likely to confuse and may have a demoralising effect. After all, your responsibility is to offer leadership to your people and consensus decision-making at this stage is an abdication of that responsibility.
Once the key components have been defined and you have a very clear picture of your objective, you should obtain as much information about it as possible. This will certainly include an upward discussion with your manager to ensure that you share a common understanding of what you have to achieve. In this way you can avoid many future problems and your manager will be in a position to assist you since he will know exactly what you are trying to do. Of course, it is possible that your manager does not share your opinion or cannot accept the objective that you have defined. In this case you and he must enter into a discussion to determine his parameters and constraints and to ensure that you have a clear understanding of his objectives, and how yours fit with them. My experience has been that senior managers, as much as their junior colleagues, have seldom really focused on their objectives in terms of the component parts and my discussion with them has centred on identifying exactly what my team and I have to achieve as part of my manager’s objectives. This usually results in a common understanding from which realistic goals can be developed.
At this stage, you should have a very clear view of what has to be done, but before involving your team you need to identify your resources and understand the constraints you face. This process will tell you if the objectives are realistic and achievable for your team as it is now or whether you will need to obtain additional resources or carry out other activities to deliver the necessary level of performance.
Step 2: Define the resources and constraints
Your resources include you, your team, your budget, the time available to achieve the objective, the skills available amongst the team, marketing and other support actions being planned, your access to the market, technological support, the human resources support, and so on. This list is not exclusive and your individual situation will determine what resources you should consider – for example, if you are the manager of a production department your raw materials fall into this category, whereas if you manage a delivery section the number of vehicles will also constitute a resource.
The constraints you face often fall into the same categories and are generally the points of weakness in your resources. Your job at this stage is to identify actual and potential constraints and to determine their impact on your ability to achieve the objective. Beyond the obvious constraints of the budget and its impact on staff levels, training, marketing and so on, you should focus on the constraints of time and capacity (see below). These are frequently interdependent, especially in such areas as sales, production, and technology.
Capacity planning – the vital exercise
Capacity planning, especially if you are a manager in a sales or production environment, is possibly your singularly most important activity if you are to achieve your goals. But in undertaking this exercise, you are not trying to ‘prove’ the goal can or cannot be achieved – you are determining what performance can be expected given your current resources. The starting point for capacity planning is not the goals, but your people and the job they are currently doing. You need to fully understand where you are now before you can plan on going somewhere else.
This exercise is often ignored by managers – especially those who like to complain about their goals – and I can remember one group for whom the process was a turning point in their conversion to performance management. I was running a Performance Management workshop with a group of experienced front-line managers and we were talking about goals. Their general view was that senior management knew nothing about the realities of the business in the front line and the goals were pretty unachievable. On the other hand, I had previously had their senior management team on a similar seminar and knew that their approach to goals was very realistic indeed.
As we worked through the capacity planning exercise the change in attitudes was almost tangible – the group provided all the figures and the result was they realised that not only were the goals achievable but there was also spare capacity which, with the proper management approach, would produce a performance well above expectations. Almost exactly a year later, I ran a follow-up seminar at which the managers reported that they had not only hit their targets (some for the first time) but had delivered 50% more than the goals which they had previously criticised as unrealistic. They identified the capacity exercise as the key to their success.
So, let us examine a typical capacity planning exercise using an office-based sales and service operation – for example, a bank, a mail-order business, a company selling advertising space (newspaper or magazine advertising sales departments). In the following example the customer visits the salespeople at their place of business (i.e. a bank), but the same process can be used for a sales force who go out to clients (but remember to add in travelling time) and those who sell over the telephone. I have also used it, with modifications, in all sorts of areas of business – in planning the capacity of a production department in a factory, in checking the staffing requirements of a policy-processing section in an insurance company, and planning the staffing levels necessary to complete an audit on time.
A Sales Capacity Planning Exercise
Answer the following questions, based on your own organisation’s practices.
1. How long does the salesperson spend with a client, on average?
2. How long does a salesperson need to prepare for and record the result of a sales interview?
3. How long does a salesperson spend on service phone calls, on average?
4. How much time does the salesperson spend on administrative and service activity?
5. How long does the salesperson spend on non-business related issues, on average – i.e. coffee, toilet, gossip, etc.?
6. How long does the salesperson spend on manager-imposed tasks – such as meetings, reports, and training?
7. Based on a six-hour selling day plus two hours of administration time and taking into account non-business and manager-imposed time, how many sales interviews can a salesman do in a day?
8. How many PROSPECTS must a salesperson interview to obtain one new relationship? (This is the closing ratio on new accounts.)
9. How many existing CLIENTS must a salesperson interview to sell one additional product to an existing client? (Closing ratio on cross-sell.)
10. Based on the closing ratios and the number of sales interviews possible per day, what is the Minimum Performance Standard (MPS) in terms of number of sales per salesperson?
11. Does the MPS for sales exceed the goals per salesperson (if so there is spare capacity) or does it fall short of the goals (in which case there is a capacity issue)?
12. Based on the closing ratios and the MPS, are there enough prospects available to the branch?
13. Based on the closing ratios and MPS, are there enough existing clients who are real prospects for cross-sell activity?
14. Are there real capacity issues or are they organisational and/or prioritisation issues?
15. What other resources are needed to address capacity and/or marketing issues (prospects, etc.)?
When doing this exercise you must be careful to consider only what your people are currently doing – at this stage you must avoid thinking about what they should be doing; that comes later. In most teams there are people doing different jobs – for example, in a sales team there may be a number of salespeople plus an administrator, a secretary, and a process clerk – and you will need to carry out the capacity planning exercise for each person. This is also true if you have team members doing the same job but at different levels – for example, two salespeople, one of whom has been doing the job for five years and the other for five months.
This analysis reveals just how much time your people are spending acquiring business, doing administration, fulfilling activities to do with management, and doing nothing in terms of making money for the company. In the case of the senior line managers mentioned above, we found that administration and activities to do with management such as writing reports and attending meetings was using up around 60% of the team’s time – by cutting this to 20% we freed up the team and they could now spend around 70% of their time on acquiring business – twice as much time as before. The analysis can also open up a whole range of issues that can sidetrack you – for example, you could be tempted to start examining better ways of administering the business, of reducing non-productive time, or of handling clients, all of which are valid areas for you to examine when you have the time and after your team are well on their way to their goals.
At this point you need to consider only what you are doing now and whether this will allow you to reach your goals. If the answer is ‘Yes, we can achieve our team goals doing what we are doing now,’ then you can move on to the allocation of resources and start the process of achieving the objectives. Once this has begun and has picked up momentum, then, and only then, can you shift your focus onto all the areas that may result in your team achieving more. Remember, your prime responsibility is to achieve the team goals, not to reorganise the way the company does business.
On the other hand, if the answer is ‘no, we can not achieve our team goals based on what we are doing now,’ then we have a different situation to face.
What happens when goals and performance are incompatible?
To many mangers this is an all-too-familiar situation, but instead of hitting out with statements condemning the goals as unrealistic, or demanding more resources, you should consider carefully:
what can be done to improve performance without additional resources (e.g. training, coaching, reassigning staff)
the impact on performance that readily available, additional resources would have (e.g. additional computers, more telephone lines, better lighting, a new photocopier)
whether alternative tactics, but the same performance, would enable the team to reach its goal (e.g. re-routing paperwork, cutting out unnecessary processes, telephone selling instead of direct marketing).
Having considered these points, you are then in a position to recalculate your ability to achieve the objective. However, if, having factored in all these possibilities, you are still unable to reach your goal, you at least know why and are in a position to define what can be delivered. At this point you should involve your senior manager again as he may well know of other resources that could be made available or of alternative approaches to achieving the objective. If there are none, then your manager is fully aware of what you and your team can achieve and can start the process of redistributing the goals or adjusting them downwards. (Remember, your manager has to go through a similar process so that he can achieve his goals.)
Now, and only now, can you accept the goals for you and your team. You know what can be done and you are in a position to do it. Now you can move on to planning how you will achieve the objective.
Step 3: Plan your work
A leader plans his work and then works his plan – as a performance-orientated manager you must do the same. Now that you have defined the objectives, determined whether they are achievable, and know what resources are available, you can start preparing your Action Plan which will outline in detail how the team is going to achieve the objective.