Two Steps Forward, One Step Back

I worked with a client recently who had taken extraordinary steps to bring about change in their culture and ethos. So far, so good, right? One quarter later, they reversed everything. Why? And what happened there? The company had a growth target that they wanted to maintain, and to that point, they had slowed. If you wish to apply this to personal growth, it’s an easy match. Consider: We wanted to get into shape, so we established goals, began working gradually toward them, and at one point, decided we were dissatisfied with our rate of progress. So we took truly drastic measures, evaluated, and adjusted after a time.

Publicly traded companies have to show measurable progress or they get into trouble fast. So the popular idea was to do anything they had not tried so far. In truth, this is not necessarily a bad approach, though I recommend some research first. If you wanted to get into better shape and realized you hadn’t tried a high-sugar diet yet, that would qualify using that logic. However, it’s probable that it won’t help you reach the goal, something you’d most likely discover if you studied the current science in fitness. So trying anything different merely because it is different is not good enough. A fact that this company learned the hard way.

They took a creative, innovative culture and imposed a paramilitary psychology to its functions. Most people did not handle it well, and it backfired. There is an old truism that people are only motivated by the carrot or the stick–and sometimes a combination of the two. I’ve seen how particular job roles fall into specific points on that carrot-stick continuum. For example, salespeople, the truly excellent ones, seem oblivious to the stick. The carrot drives everything for the great ones. It is all about the commissions, the incentives, what they have to gain by doing their jobs well that excites them. Talk to them about consequences and you will lose the great ones. They don’t care, and know your speech isn’t about them.

Previously, using their sales team as an example, the incentives and high commissions were an effective carrot to entice the sales team to act. My observation included that there was more than sufficient focused activity to support this. In digging through their internal processes, I concluded that there were a number of intervening variables unnoticed to that point. For one, getting technical answers to customers’ pre-buying decisions was a convoluted, error-prone process. Even the most diligent salespeople could lose customer momentum as they struggled to answer reasonable questions. The organization has a back-office process that is easily described as amorphous, meaning there was no hard-and-fast set of answers to which a salesperson could turn.

The answer, as mentioned above, was to impose a bigger stick. New management was inserted over sales teams to impose a more menacing and fierce threat of consequences should the salesperson fail.

Since excellent salespeople tend to be oblivious to any such “stick”, they kept doing what they did…until their own driver, the carrot, was removed. The company, in an effort to control costs, reduced commissions, froze incentives, and in effect, also reduced the carrot. Now the excellent salespeople paid attention. And made plans to leave.

The company did not originally factor in which sales staff would leave, only expected attrition. They figured that this reduction in headcount would solve their problem. They initially viewed the high commissions as part of making the sale, itself. So in reducing commissions, they reasoned that their cost-per-sale would be reduced. Problem? They made fewer sales, so they saw no improvement. Why fewer sales? The excellent salespeople left for competitors, taking their customer relationships with them. The company now had a two-fold problem: a much less skilled sales staff and fewer established customer relationships. They predictably went into a tailspin.

We get what we reinforce. Remember that statement. If we reinforce and reward an excellent employee the way he or she defines “reward”, we will attract and keep excellent employees. Do this on a mass scale and we have a mass of excellent people.

Of course, there are other variables to consider, and I’ll explore those in other articles. But for this company, coming back from the brink meant attracting great talent, developing it, and keeping it. As well as learning which combination of “carrot and stick” work best with that employee. That enabled the company to reinforce the desired behaviors effectively and keep high performers performing at a high level.

Planned attrition is a bad idea where the workforce is skilled or specialized. You will keep the “bottom of the barrel” onboard as the top-level talent moves on, possibly to a competitor.

It’s also worth remembering that a radical shift in culture or company philosophy will need to cascade down to all employees or it will fail. If the change is something the high performers have requested, then it very well may be a great way to keep that talent onboard. However, if it feels like a step backward for those people, they may very well begin reevaluating the work relationship.