August, 2011

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Article Index

Sales Forecasting vs. Poker
Article by: Carl Moe

The forecasting process that many sales managers first learned was the “divide by 2 then multiply by something less than 1 and call it done" model.  They knew that sales rep forecast data was more emotional than it was objective, but getting to the real number was more like pulling teeth than managing.   However, over time, the typical characteristics of a flawed forecast process do become clear.


Lean Leader of the Month
Article by: Mike Shumaker

Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services. Founded in 1865, our privately held company employs 131,000 people in 66 countries. We help customers succeed through collaboration and innovation, and are committed to sharing our global knowledge and experience to help meet economic, environmental and social challenges.


Have you developed your ”Roadmap To Excellence”?
Article by: Don Hoffert

In previous articles, we covered characteristics for achieving and sustaining organizational excellence to drive performance in organizations. We know that high performing, world class organizations plan for the future and measure performance.


Employees Can Be Terminated for “Mere Gripes” on Social Networking Websites
Article by: Gregory Peters

Employees no longer have carte blanche protection under the National Labor Relations Act (“NLRA”) to complain about their employers on Facebook without fear of disciplinary action or termination.  In July, 2011, the National Labor Relations Board (“NLRB”) released a trio of advice memoranda that delineate when the NLRA protects employees who use social media websites (i.e., Facebook, MySpace, Twitter, Linkedin, etc.) to comment or criticize employers.  Departing from most decisions made by the current NLRB, these determinations appear to be relatively favorable to employers.


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Sales Forecasting vs. Poker

The forecasting process that many sales managers first learned was the “divide by 2 then multiply by something less than 1 and call it done" model.  They knew that sales rep forecast data was more emotional than it was objective, but getting to the real number was more like pulling teeth than managing.   However, over time, the typical characteristics of a flawed forecast process do become clear.

  • High probability prospects never close.
    • Instead, projected close dates just keep drifting.
  • End of the quarter bulges.
    • Does order production come by way of cave-in pricing to meet quarterly budget goals?
  • Reps are asking for discounts late in the sales cycle.
    • This usually happens because the salesperson skipped a step or two in the sales process, or the prospect wasn’t fully qualified.
  • No sales forecast definitions.
    • You asked your salesperson how s/he arrived at a ninety percent close forecast on a particular prospect, and the response was: They are asking a lot of questions, so they must be really interested!
  • Too many high-percentage deals in the forecast.
    • Sales may be listing hopeful prospects as “real deals” for their “keep my job” forecast.
  • No forecast audit possible
    • Each salesperson is allowed to create and use his/her own forecast system.

Building a Bankable Forecast starts with defining what can be put on the forecast.  This means management must define the qualifying process, starting with the Differentiating Value (what separates you from the competition and makes you worth more).  Step 2 is to set the bar for what has to be discussed (the critical qualifying questions or CQQ’s that are typically referred to as the 4 M’s ) regarding prospect motivation for your product or service, money (do they have enough funding and can they spend it), decision methodology (how and where is your Differentiating Value positioned in the prospect’s decision process) and market options (eliminating the world of competitive alternatives).  This approach solves two forecasting challenges:

  1. You don’t have sales reps operating with their own unique qualifying system that no one understands….including the rep.

  2. The forecast process now has a structured audit trail.

Now, sales reps are responsible for qualifying each of the 4 M’s (motivation, money, methodology, market) with every prospect opportunity.  Based on acceptable prospect responses, the rep can claim 25% probability for each qualified M.  This means that the forecast data is now “digital” with 0, 25, 50, 75 or 100 as possible forecast percentages.

Forecasting vs. Poker


Most Chief Revenue Officers (CRO’s) refer to these 4 cornerstone qualifying elements (motivation, money, methodology, market) as the Four ♣ Aces of forecasting for one obvious business reason.  They don’t want to keep investing (gambling) more time and money on sales campaigns where they have zero Aces (meaning minimal or no alignment) with what a prospect wants, needs, or can afford.  As such, there are at least three similarities between poker and selling that are easily recognized.

The three similarities are:

  1. There are no guaranteed outcomes—everything invested is at risk.

  2. There is only one winner.

  3. When you draw a bad hand in poker, the wise decision is to minimize your loss and fold. The same applies in sales, but if your sales reps don’t know the reality of your position in the deal (as in how to qualify), they will always push to keep you in the game by saying “I don’t know what our chances are for getting this business but I know what they are if we pull out.”  

Like in poker, #3 is the only one you can manage – the first two are simply rules of the game.  That is why defining Critical Qualifying Questions (CQQ’s) are so important.  CQQ’s are not only the basis of our Bankable Forecast process, they are also the roadmap for achieving shorter sales cycles.  Today’s economy demands we know as soon as possible when an ‘opportunity’ is not really an opportunity for the business.  Any sales rep can stay in a deal to the dead end – the CQQ based forecast process is specifically designed to eliminate that behavior and the related costs.  

The Forecast Audit Trail

The reality of getting to Four ♣ Aces with an opportunity usually requires multiple prospect events, depending on your sales cycle. During the Critical Qualifying Questions process, each Ace added to the forecast has an audit trail back to the prospect discussion (who, when, etc.) and the answers given.  When sales management meets with a salesperson to review their forecast, two drill-down questions need to be asked for each piece of business listed:

  1. Explain how you confirmed the Aces claimed on the forecast. This becomes an audit review of the Critical Qualifying Question events for each Ace claimed.

  2. What is your plan and schedule to qualify the remaining Aces with each prospect? Let the sales rep explain how and when s/he will either move the prospect up or out based on the Critical Qualifying Question events the sales rep needs to complete.

Summary

Forecast accuracy is the accountability objective built into the Bankable Forecast Process. Using drill-down questions to audit the Aces claimed and to review the rep’s plans for addressing the remaining Aces, provides the Chief Revenue Officer with both an objective, prospect-based forecast process and a quality assessment of the rep’s competence. The bottom line is the Chief Revenue Officer either gets a good forecast number or the rep gets a do-over assignment.  Either way, forecast data only improves.

Carl is Founder of the Chief Revenue Officer (CRO) RoundTable and the author of Chief Revenue Officer/B2B Success Model. He can be contacted at 952-232-6720 or cmoe@CRORoundTable.com

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Lean Leader of the Month

Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services. Founded in 1865, our privately held company employs 131,000 people in 66 countries. We help customers succeed through collaboration and innovation, and are committed to sharing our global knowledge and experience to help meet economic, environmental and social challenges.

 

How and when did you get introduced to lean and what fuels the passion?

That’s an interesting question.  I’m not sure that you can be a strong advocate for Lean by being introduced to it;  my position is that you need to have a hands-on experience with Lean, whether working on the line or leading a business.  After that experience, you get it!  Almost 15 years ago, I was working on what I would refer to as traditional process improvement projects and earning my MBA.  One of those efforts was (gasp!) an ERP program.  As we got closer to implementation, our operations stakeholders informed us quite clearly that our designs were not hitting the mark.  They wanted pull systems, and we had no idea what those were.  Upon partnering with these strong lean practitioners, we learned about foundational lean concepts and where they wanted their operation to move towards.  With all of the complexity of our ERP systems, what our operational partners wanted was, ironically, something that was more simple in design AND more value-add.  That was a watershed moment for me.  My Lean mentors are people many of you know through Manufacturers Alliance.

 

What are you current Lean oriented activities?

I primarily work in 3 spaces at Cargill:

  • Transferring CI (Lean/Six Sigma) capabilities to Cargill business units and functions to aggressively expand CI bandwidth/capacity at Cargill.
  • Identifying and facilitating strategic kaizens in selected business units and functions (drive value realization).
  • Facilitate a Community of Practice across Cargill where we share CI best practices, lessons learned, and success stories.  This connectivity and collaboration is very important at Cargill, given its size and complexity.  We are truly a learning organization.

 

What were the lessons learned from leading or training your team on a Lean project?

  • Ensure that clear roles and responsibilities are identified and committed to.  We leverage the RASCI chart at Cargill to accomplish this.
  • Understand that while you may have been a strong individual contributor in the past, that you now need to work through people, which is a leadership role. 
  • Back to a prior response, hands on learning is imperative with Lean.  Some of the concepts are counter-intuitive, which drives the need for some programming that can only be done by doing.
  • You need to develop different approaches or strategies to manage different levels of stakeholder support. 
  • Lean is not a business strategy;  Lean will help accelerate/advance business strategy.  This might be a controversial statement!
  • Kaizen is scalable;  Kaizen can be leveraged to eliminate waste at the cell or work center level all the way to being a catalyst for strategic alignment at a high level.

 

What are the next steps in your Lean journey at Cargill?

Three things:

  • Moving beyond the “honeymoon” period to commitment/advocacy.
  • Ensuring that we are demonstrating a clear line of sight to value realization.  This will help us to successfully move beyond the honeymoon!
  • Instilling Lean/CI concepts into our Cargill Leadership curriculum, to enable a better understanding of the concepts that will help foster improved leadership advocacy.

 

Last question - How would you describe peer-to-peer education & training to your colleague?

“I do, we do, you do.”

 

Mike Shumaker is a Lean Leader for Cargill in Minnetonka MN. Mike may be reached at mike_shumaker@cargill.com

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Have you developed your ”Roadmap To Excellence”?

In previous articles, we covered characteristics for achieving and sustaining organizational excellence to drive performance in organizations. We know that high performing, world class organizations plan for the future and measure performance.

This article will cover two more characteristics: organizational focus on the processes and the workforce.

Why is focus on processes critical?  Processes are the way in which organizations design and deliver products that meet customer needs.  Well-designed processes promote efficiency, high productivity, and consistent outcomes; poorly designed (or executed processes) promote inefficiency, waste, and errors. Consider these pain points:

  • The cost of poor quality is estimated to be as high as 20% of sales (in terms of repair, rework, scrap, write-offs, warranty claims) for any type of organization – businesses, healthcare, schools, nonprofits.  For a $500 million organization, roughly $100 million might be waste. This is just an average, some organizations are worse.  (Quality Digest)

  • Deming estimated that about 94% of organizational issues (errors, waste, breakdowns) belong to the system (processes) 

A few best practices in process management are below:

  • Design work systems that relate to and capitalize on your core competencies.  “Work systems” refers to how work gets accomplished (through workforce, suppliers/partners, contractors, collaborators to produce and deliver products and services).  Good companies will systematically determine what to outsource to external resources and what to retain internally based on core competency, intellectual property, efficiency and cost, or other factors.

  • Measure, manage, and improve work processes to achieve better performance, reduce variability, and stay current with business needs and direction.  You may choose techniques like Plan-Do-Study-Act (PDSA) or tools such as ISO, Lean, or Six Sigma and use the DMAIC process (Define, Measure, Analyze, Improve and Control) for stage gate improvement, embedding the right “tools” at the right time for the right job.  Optimally, pick a process-tool(s), train your people on it, create an environment that supports using it (including rewards), and stick with it.

  • Employ problem solving tools throughout the organization so that people can quickly diagnose and address process failures.  The Seven Quality Tools and the A3 method are good places to start.  These methods should be embedded in whatever improvement method you choose.

Core process definition will support  process mapping, measuring and improving, and serve as a basis for employee engagement to achieve organizational objectives.

Why is focus on the workforce critical?  Engaged employees are assets; disengaged employees are liabilities. Research shows that companies with engaged employees have 19% higher operating income, 17% higher operating margin, and 28% higher earnings per share. (Towers Perrin). Likewise, over the last 10 years, Fortune’s “Best Companies to Work For” (perhaps a proxy for engagement) average annual stock return was 18% versus 12% for the S&P 500 – that’s 50% better than the market.  (Fortune)

There is a link between engaged employees and organizational results. Consider these pain points: many US workers are not happy:

  • 45% of US workers are currently satisfied with their jobs. Only 51% find their jobs interesting, 43% feel secure in their jobs, and 51% are satisfied with their boss.  The result: between 50-70% of US workers are considering seeking a new job.  (Conference Board)

  • Only 17% of US workers are highly engaged.  (Towers Perrin)

 

Here are some best practices for workforce focus:

 

  • Systematically assess workforce capability (your ability to accomplish work through the knowledge, skills, abilities, and competencies of your people) and capacity (your ability to ensure sufficient staffing levels to accomplish work processes and meet customer needs).

  • Recruit, hire, place, and retain workers that represent the diverse ideas, cultures, and thinking of the community and that represent – and are consistent with – your organization’s values and culture.

  • Ensure, measure, and improve workforce health, safety, and security.

  • Support employees with appropriate policies, services, and benefits, tailored to the needs of different workforce groups.

  • Identify factors that affect workforce engagement, and measure levels of engagement across different employee groups.  There are many tools for this (Gallup Q-12, Hewitt, Passionwerx, others).

  • Manage career progression and succession planning throughout the organization.

  • Reward and recognize employees through a performance management system that supports customer focus and the achievement of organizational action plans and goals.

 

Engaged employees lead to engaged customers; engaged employees also promote innovation and alignment to core business processes and their improvement.

In summary, We have six actions in order to achieve and sustain performance excellence:

  1. You need to focus on customers – to listen and anticipate their needs, to build relationships and engage customers so that they are committed to your organization, are loyal, and are willing to advocate for and recommend your organization to others.

  2. You need to have effective leadership that sets vision; aligns, guides, and manages the organization; focuses on workforce, customers, and partners; communicates effectively; and ensures accountability, transparency, ethical behavior, and support of key communities.

  3. You need to set and deploy strategy – to set a course for the future, a grand vision for the organization.

  4. You need to measure performance, both at the day-to-day operating level as well as the strategic level – ensuring that facts (rather than intuition) become the basis for organizational decision making and improvement.

  5. You need to focus on your processes so that you can optimize your resources and deliver products, services, and programs that satisfy customer needs and create value for the enterprise.

You need to engage your workforce so that they are satisfied, capable, and fully motivated to reach high performance, serve customers, and achieve organization objectives.

Don Hoffert is president of Roadmap To Excellence LLC., a management consulting firm specializing in performance excellence "roadmap development and execution" systems. He is a certified Baldrige Examiner, a Program Management Professional, and a Lean Six Sigma Black Belt. (excerpts from MN Council for Quality and MG Browns book "Get It, Set IT, Move It, Prove It"). Don may be contacted at www.roadmaptoexcellence.com. Ph. 612 298 7858

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Employees Can Be Terminated for “Mere Gripes” on Social Networking Websites

Employees no longer have carte blanche protection under the National Labor Relations Act (“NLRA”) to complain about their employers on Facebook without fear of disciplinary action or termination.  In July, 2011, the National Labor Relations Board (“NLRB”) released a trio of advice memoranda that delineate when the NLRA protects employees who use social media websites (i.e., Facebook, MySpace, Twitter, Linkedin, etc.) to comment or criticize employers.  Departing from most decisions made by the current NLRB, these determinations appear to be relatively favorable to employers.

Over the past year, the NLRB filed numerous complaints against employers who disciplined employees for posting negative comments about the employer on social media websites.   However, the NLRB provided little guidance regarding the parameters of the protections allotted to these social media communications. 

In its recent memoranda, the NLRB defined boundaries for the protection it intends to extend to employees’ social media postings.  The memoranda outlined when social media communications constitute protectable “concerted activity” versus general complaints not entitled to protection under the NLRA.  In the three cases, the NLRB found that none of the employees had engaged in protectable concerted activity.  In a memorandum involving JT’s Porch Saloon & Eatery, Ltd., the employee exchanged Facebook posts with a non-employee, in which stated he, “hadn’t had a raise in five years,” “was doing waitresses’ work without tips,” the customers were “rednecks,” and he hoped the customers “choked on glass.”  In a case involving Martin House, the employee communicated via Facebook with non-employees about the mental state of Martin House’s residents.  In a third case involving Walmart, the employee posted “Wuck Falmart,” called his supervisor a derogatory name, and stated that Walmart engaged in false advertising.  Here, a number of co-employees posted innocuous response statements, such as “hang in there.”  In each of these cases, the NLRB found that no “protected concerted activities” occurred.  Instead, it found each individual had used Facebook to engage in unprotected, “mere griping.” 

Importantly, these advice memoranda provide an initial glimpse into the parameters of the protection the NLRB intends to provide to social media communications.  The NLRB will likely support charges where the employee relied on social media as a forum to: (1) act with or by the authority of other employees; (2) initiate, induce or prepare for concerted group action; or, (3) bring group complaints to management’s attention.  Conversely, where an employee uses social media to comment or complain on behalf of himself or herself, this will not constitute concerted action.  To determine whether concerted activity exists, the NLRB intends to examine co-workers’ responses (if any) to the social media posts and the history of complaints made to management on the same topic.

Since this area of the law is still relatively non-traversed, employers should use caution when disciplining employees for comments left on social media websites.  Employers should have a social networking policy in place.  Employers who face a difficult or questionable disciplinary or termination decision should consult their legal counsel.

Gregory L. Peters, is an attorney with Seaton, Peters & Revnew, P.A. whose practice is limited to representing employers in labor and employment matters. Mr. Peters has worked with companies in all areas of employment counseling, employment litigation, labor arbitration, union organizing and labor negotiations. Mr. Peters can be reached at (952) 921-4607.

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