Friday, October 12, 2012

Planning Part III: Employee Enhancement

Employee Enhancement

Everybody says, “Our employees are our biggest asset.” But in the world of distribution the truth is our employees really are our biggest investment.  According to the Profit Analysis Reports generated by distributor associations, payroll cost represents somewhere between 60 and 65 percent of our total spending. 

We’re not just “whistling Dixie” when we make the claim, it’s totally true.  But sadly, very few distributors create a real plan for maintaining or improving this investment.  If we were talking buildings instead of people, rust, decay and rundown would be the descriptors in play.  Most of us hire top talent, and then we rely on our hires to keep up with changing times.  Computer skills, inventory management techniques, and sales process are left pretty much to the individual.  What’s worse; along the way, only a few of us take the time to assist the employee in their development via a formal review.

According to new research presented in The Challenger Sale, the performance gap between average and top performer has grown from 30 percent to over 400 percent.  So, moving our customer facing employees along in their development is not a good investment, it’s a great use of our funds.  My observations point that similar differentials exist in other areas of our businesses.

Let’s think about how we should go about creating an annual employee enhancement plan.

Understand Employee Strengths and Weaknesses

Planning season is a good time to analyze (and spell out) the strengths and weaknesses of your employees.  With just a little bit of thought, one can develop a list which outlines the specific areas where employees are struggling as well as areas where employees excel.  Ask yourself the following questions:

·         Is there anyone who is in the wrong position based on their strengths and weaknesses?

·         Are there any common weaknesses shared by multiple people in the organization?

·         Does everyone have the tools required to handle their job properly?

·         Are there people who employees turn to for guidance in specific areas?

·         Is there anyone who has little hope of improving their performance in the next year?

Rank your People

During times of economic stress (read that Recession), it may become important to scale back on your head count.  The very thought of this topic makes most of us uncomfortable, but we must spend some time thinking about the possibility.  Some employees are indispensable to the business; others are less valuable.  It’s important to rank employees based not only on their performance but also on their value to your business.  Understanding who falls into which group is important today and critical is we hit a rocky economy.

Your plan for the coming year should include setting performance improvement plans for the bottom tier employees.  Ask yourself; how long can we afford to hold onto an employee who does not create value for our organization?  Set a time line for improvement.  Without a time line, tough decisions can be postponed indefinitely.   We’ll operate under the assumption that nobody is inherently evil.  By keeping them around for the long haul in spite of performance issues, we diminish our financial success and endanger the attitudes of our best employees via frustration created by working with underperforming coworkers. 

 Establish a Training Plan

So many distributors occasionally set up a couple of hours of “one-size-fits-all” training and believe they have covered their bases.  While there may be some topics which impact such a broad spectrum of their people that companywide training is justified, generally it’s not that way.  The best training is individual and specific; matched according to the strengths and weaknesses of the person involved.

And we’re not talking about spending thousands of dollars for outside trainers.  Often, one or two folks in every organization have strengths which overlap other employee’s weaknesses.  Internally driven training works, however most distributors fail to invest the time to do it right. 

Your plan should include: topics for training, who will conduct the training, the goal of the training and a defined time frame.  And, none of this is difficult if you do the planning first.

Set Standards for Supply Partner Product Meetings

A few years ago we did a survey of distributors in the Electrical world on training.  The results were eye-opening.  The survey indicated that less than 50% of the product training sessions conducted by their supply partners met the mark.  One distributor even commented, “We feel obligated to hold these sessions but when you calculate the cost of taking our people off the road for one day a month, they are a complete waste of money.”

It appears as though these folks put very little thought into what goes into a successful training session.  Instead, they take center stage armed with a factory provided PowerPoint detailing product minutia of questionable importance.  Important points, like competitive positioning, target customers, selling points and applications are either ignored or come as an afterthought.

 Understanding new products is important.  But selling new products is our stock and trade.  We suggest you create a set of standards which outline (in detail) what you expect from a supplier training session and incorporate this into Supply Partner planning sessions.

A few parting thoughts

Here are a few other topics that must be included into your Employee Enhancement Plan:

·         Establish a time for annual reviews – these are best when not tied to raises.

·         Set improvement deadlines for employees who struggle.

·         Front line managers are a key to growing your people – push this information down to everyone who leads a department or group in your company.

·         Set a time for a ‘360’ review for yourself.  We all have room for improvement; don’t leave “you” out of the equation.

Distributor Planning Made Easy.  Check out our Distributors Annual Planning Workbook:



1 comment:

DanOB said...

Frank, this whole series is exceptional. We will be using it as the basis of a management discussion going forward. Nice work!