Some time ago I had a conversation with one of my daughters. She was deeply concerned—and not a little irritated--about management decision-making at her Quiz Questions.jpgwork place. She has a master’s degree, and works in the education field, but the principle that arose in our discussion applies in all industries, every type of organization, and across the full gamut of management.

 

Here is the scenario

 

The executive—in this case, my daughter’s boss—told her that she was going to make a management decision based on a process or metric—or to be more specific to the academic environment, a rubric (i.e., a process for scoring what might otherwise be a subjective decision).

 

However, after further discussions, my daughter discovered that whatever “process” or “rubric” was to be applied wad purely and evidently subjective to her boss alone. That is to say, what was set forth to reduce an otherwise purely subject and intuitive decision to a “process” – a “rubric” – was merely a pretense. Any decisions being made remained purely subjective and were not correlated to a “process,” at all.

 

Now, let me be clear: I am a free-market guy. I believe that business owners and their executives should be able to hire, fire and make other managerial decisions at will. I am fully committed to the fact that they may do as they please as long as their actions do not include coercion or deceit.

 

In this scenario, it is not the executives’ decision with which I take issue – which is why the decision itself will not be discussed here. What I wish to discuss is how many times executives and managers are themselves deceived as to the presence of a real “business process” by which they manage.

 

In my experience, if I spent time thinking about it, I’m certain that I could come up with a fairly large number of examples. However, to be brief, let me just toss out just a couple.

 

    1. First, I can think of numerous discussions I have had with executives over the years regarding so-called “sales management.” I say, “So-called,” because I have been presented with one of two variations on the same theme in this regard too many times.

      The first instance is where the owner of a small-to-mid-sized business (SMB) was the company’s first salesperson. This is quite natural, as the enterprise was likely an outgrowth of some entrepreneurial venture undertaken by the owner, and he or she still remains as the firm’s sales manager. Over the years, he or she has created a sales team of hand-selected folks, and the executive is convinced that each of these salespeople is unique and each requires special handling – a sort of prima donna approach.

      In the second scenario, the owner or chief executive is not in charge of the sales team. Instead, the firm has hired an experienced “sales manager” based on this person’s employment history and relative success in producing sales at some other firm in the same or a similar industry. This person has, then, hand-selected a team of salespeople. I find the sales manager often doting over his sales staff, making certain that each is uniquely satisfied with their particular arrangements for work and pay. This is a variation on the same prima donna theme, but with a layer of middle management.

      In both of these cases, however, the general attitude of the top management at the firm is that, while they may give lip-service to something they call their “sales process,” when one digs deeper, it becomes abundantly clear that the “sales department” is really surrounded by mystique. Each hand-picked salesperson has his or her own mystical mojo that is performed in a somewhat ritual-like fashion. This mojo, when properly carried out and when not too much interfered with by management and administration, produces a stream of sales to support the rest of the company.

      In these situations, the rest of the company’s executives and managers are under the implicit understanding that “I must not mess with the salespersons’ mystical mojo or things will go badly for the whole company.” Frequently, even top executives fear treading too much on the mojo, let there be bad repercussions.

    2. The second matter that comes to mind is “sales commissions.” On numerous occasions I have asked executives, “How do you calculate and pay commissions?”

      To this simple question, I am not infrequently given a simple answer: I have heard something along the lines of, “We pay commissions based on gross margins.”

      Simple enough, don’t you think?

      Well that is, until you begin to dig deep into the details. Then you starts hearing things like this: “Well, yes, we do pay commissions based on gross margins. But, if our buyers get a special deal on a purchase, we pay commissions on the ‘regular’ gross margins, not the actual gross margins of the sale of those special purchases.” Or, “Yes, we do pay commissions based on gross margins but, because the contract we signed with salesperson X is different from the deal we reached with salesperson Y and Z, the way we calculate ‘gross margins’ is different for each salespersons.”

 

 

Now I know you are probably asking, “What is the similarity is between your daughter’s situation and the two examples you have just provided to us?”

 

“Believing” you are managing is not the same as managing in reality

 

The similarity is this:

 

In each case the executive in charge called their decision-making a “process” (or, in the academic world, a “rubric”), and I think, truly believed that they were managing “a process” (e.g., “the sales process”). However, close inspection reveals that each decision was being made on a case-by-case basis, without reliance upon a process or rubric, at all.

 

Note that my objection is not to the case-by-case decision-making – although I offer that this is likely not a sound approach to managing a growing SMB. Rather, my objection is to the managers’ beliefs that they are actually managing to a “process” or by “a process.”

 

Simply put: If there is no process, it – whatever “it” is – cannot be managed.

 

The key point here is to separate purely subjective, case-by-case decision-making from the act of “management.”

 

Management implies the existence of “a process,” – that is, an understood cause-and-effect relationship in a sequence of dependent events leading to a predetermined goal. There are three critical elements to this definition of “management” and “a process”:

 

  1. The “process” must have a goal or outcome. If there is no goal or outcome that can be stated in advance, then there is no point in attempting to “manage” it, for to manage it would be to somehow affect the outcome of the process (e.g., improvement). If the goal or outcome of the process is not understood or has not been articulated, then there is little need for the act of “management.”
  2. The “process” must include more than one step or event, and the steps or events must be related by their sequential dependence. One cannot manage, for example, “the big bang.”

  3. The “manager,” in order to manage effectively must understand both the goal of the process and the process itself.

 

In the case of much so-called “sales management” that I have observed, one could not readily determine—at times—whether the goal of management was to maximize enterprise throughput or minimize disturbances to each salesperson’s mystical mojo.

 

The point is, if one salesperson’s mystical mojo works by wining-and-dining customer executives, and another salesperson’s mystical mojo encompasses playing a lot of golf with executives and purchasing agents at customer firms, and a third salesperson achieves some measure of success by yet a third means, then there is no process and no truly effective “sales management” can be taking place. It becomes impossible to say that the firm can replicate its success—or, even, extend our success—by leveraging “a process” that has proven itself to be effective.

 

Whenever an executive must deal with sales operations as mystical mojo that is carried out in some seemingly inexplicable way by certain persons who were hired because they have a demonstrated facility for working this “mojo,” then that executive cannot be said to be “managing” the “sales process.” He or she may be managing many things related to sales, like the expenses related to sales, the number of salespeople, the sales territory assignments, and more. But he or she cannot be managing “the sales process” any more than he or she would be said to be managing a group of witch doctors in the work they do.

 

Let me go further to say, that even though the executive may have a “prescribed sales process” that includes a number of “steps,” even if those “steps” are somehow encoded in some CRM (customer relationships management) or other software application; and even if the salespeople are required to “check-off” against these prescribed “steps”; if such “steps” are subject to frequent manipulation by the salespeople or sales managers or if a near-constant series of concessions are being made to the demands of salespeople or sales managers in accommodation to their claims of “mojo,” (or something equally nebulous) then no real “sales process” exists in such an organization.

 

Also, if management is repeatedly finding itself caving-in to what amounts to little more than “threats” that “bad things will happen” if the salespeople’s and sales managers’ demands are not met in one way or another, then I would suggest that no “sales process” exists.

 

What difference does it make?

 

Now, I hear you asking: “What difference does it make if we have a “sales process” as long as we are making sales and surviving?”

 

To that question, too, there is a simple answer:

 

As an executive, if you do not have a real and manageable “sales process,” then you are at the mercy of the economic winds and the fickleness of fate. In the absence of a manageable process, you cannot know what actions will lead to improvement. Despite your title as “executive,” your only recourse is to try this or try that, simply because you have no fundamental understanding of the actual cause-and-effect relationships that lead to more sales or better sales.

 

By the way, this same principle applies to every aspect of management—supply chain, manufacturing, inventory, and more.

 

Is that really how you want to run what is arguably the leading edge of your business enterprise?

 

What do you think? We would like to hear the good, the bad or the ugly of your experiences with management of processes across your organization. Leave your comments here.

 

Follow us on Twitter: @RKLeSolutions and @RDCushing
LIKE us on Facebook: RKL eSolutions and GeeWhiz2ROI