It’s The Employee’s Fault!
We’re at that point in the year when if you haven’t already developed your strategy for 2023, at the very least you are reviewing the results for the past year.
When the results are poorer than hoped, the direction of blame usually points in a predictable direction: at the employees.
The reasoning makes sense. Poor sales mean an under-performing sales team. Trickling lead flow is marketing’s fault. And low profit falls at the feet of the finance team who okayed the pricing model.
Performance may indeed be the source of poor results. But it could be something.
Cause or Correlation
It’s a reasoning issue –and one that scientists grapple with explicitly. Causality versus correlation. In organizations, we rarely try to tease apart co-occurring phenomena to determine the true cause of our problems. A well-designed strategy hypothesizes cause and effect relationships. If it’s done right, then the metrics measure those variables independently.
But those metrics usually only reveal strategic flaws. You can’t measure everything. And so, when results are poor, we look to what seems like the most proximate cause –and the one we have the greatest immediate power to change. People.
For any poor results, behavior by some employee preceded it. It’s natural to assume they are linked. The employee, team or manager did (or didn’t) do X, and therefore, the result is bad.
But not so fast. It’s also possible that the behavior was irrelevant to the result, or that something altered the employee or team’s behavior.
Start with understanding both the problem and all the inputs into the outcome. Those inputs include people and their behavior. But they also include structure, product, incentives, systems and more.
It’s useful to interrogate the particular result and its characteristics. Is a poor sales number ubiquitous across customer types and use cases? Is customer churn in all use cases or in only one? What is the source of the disappointing profitability? Did something change?
When doctors diagnose a disease they often consider multiple diseases. That’s called a “differential” diagnosis as it considers two or more different explanations. Diagnosis can go wrong.
The goal is to find a diagnosis that explains all of the germane symptoms. But what if all of the symptoms are not symptoms? For example, the patient may complain of a headache, muscle pain and a rash. But the rash may be unrelated to the other symptoms and due to new detergent.
Or, what if a symptom goes unnoticed or is disguised? Lyme Disease is frequently undiagnosed because the symptoms vary, blood tests aren’t always sensitive enough to and the most well-known symptom — a “bullseye” rash — isn’t found in 25% of cases or can be camouflaged on a location like the scalp. If either of those happen —no rash or a negative blood test—then the remaining symptoms can lead to inaccurate diagnoses like arthritis, malaria, or flu.
Unless someone does a scrupulous history that reveals a tic bite opportunity or finds the missing rash, Lyme Disease falls out of consideration.
But a truly creative diagnostician may see the very existence of too little information as a signal that data (symptoms) are missing.
Looking outside of known symptoms to infer missing data is not a medical skill, it is a critical thinking step. So, we’re back to the subject of reasoning. According to many medical researchers, “most [medical] errors are mistakes in thinking”.
The same kind of diagnostic process applies in organizations. The symptoms are business results: sales, customer churn, low profit and unmet targets. To correct those results, it isn’t enough to point to an obvious solution like employee performance—no matter how intuitive it may seem.
There may be additional symptoms that aren’t as apparent.
Consider this case: One of my start-up clients is a business-to-business SaaS platform. They have two different types of sales. The first type are usually their big ones—solutions that they customize to large enterprise customers. Closing those deals is a long sales cycle that the sales team manages from the beginning through onboarding.
Those are prestige sales, and eventually will be lucrative. But initially, they often just break even because of the work it takes to customize the solution.
Their other type of sale is an off-the-shelf, self-serve sale. Those can be either enterprise or small businesses. They don’t need any customizing and can simply sign up for a 30-day trial and use the service. The sales team isn’t involved until later in the free trial.
These self-serve sales, while smaller, are meant to provide the recurring monthly revenue. They were designed to be the flywheel that drove progress. The company’s investors believe in the self-serve model and see that as its primary engine of growth.
In the last annual review almost 85% of the revenue came from big enterprise sales.
Simultaneously, the self-serve sales were poor. They were weak early in the year but that was before any investment in marketing and lead flow. But lead flow was now good and there had been lots of 30-day trial enrollments for the previous 8 months.
At this point, self-serve registrations should have been almost 40% of revenue.
Bring me the Sales Team’s Head on a Pick!
The first thing the CEO did, before we even chatted, was to voice his concern to the VP of sales. Why weren’t they closing these smaller deals? The leads were there.
The VP then began scrutinizing her team. She looked in the CRM and found very few of those in upcoming appointments. Was her team just ignoring those deals? Were their lower commissions disincentivizing follow-up?
To her credit, before she wandered down the warpath we had a conversation and tried to find the root cause. Certainly, the incentive structure was one possibility. So was laziness. Another was that something had gone wrong in the process.
It turned out that, like the bullseye rash hidden under a head of hair, there were more symptoms. But they weren’t in plain sight.
Looking for the Bullseye Rash
The self-serve process had three steps:
Step 1: New prospects sign up for a free 30-day trial. They create an account and provide some banking and corporate information.
Step 2: They use the platform for a few weeks and discover its awesomeness.
Step 3: After 2 weeks, the sales rep contacts the client and walks them through the contract and final sale.
It seemed obvious that the problem was in the follow-up. Customers were signing up with no problem. There was only one missing link.Sales reps weren’t completing the sales.
But something didn’t sit right with the sales leader. She knew her team and that they were conscientious. The idea that they were simply avoiding these leads left her incredulous. To gather more information, the sales leader decided to have a fact-finding chat with her team.
Sales Tell Their Side
The sales team reported that they couldn’t connect with the trial customers. They called, wrote, texted, and sent calendar invites. They never heard back.
Much of that was in the CRM notes. But in the CRM reports, all that was reflected was the number of appointments set per hundred trial registrants and the rest of the closing information. If no appointment ever got booked, the reports didn’t show the activity of trying to book them. The only way to find that information was manually.
Back to the trial customers. It was confusing. These prospects had gone to the effort setting up their accounts—even providing banking and business credentials. Why weren’t any of them buying?
From Warm to Frigid
We surveyed those lost customers. There were a lot of them, so although only a small percentage responded, we could glean what we needed.
While the platform was easy to sign up for, it wasn’t easy to use without training. High-ticket enterprise customers got onboarded by an account manager—had access to that account manager for ongoing support.
Trial customers didn’t have account managers. The process was meant to be non-threatening. The upshot was that customer signed up for the trial, tried to use the platform, and instead of discovering its awesomeness, got frustrated. They never came back and never used their trial. Plus, they were angry about the time they had wasted.
They went from being warm leads to cold.
Whose Fault was It?
The sales team wasn’t at fault. The problem was structural. And it could be fixed—even before working on improving the user experience (UX) which would take time.
The company immediately improved onboarding. They added videos, instructions, chat bots, email and by-appointment tech support.
3 months later they were closing upwards of 35% of trial customers. They expect that number to rise as they improve the UX.
It would have been easy and typical to berate the sales team and insist they try harder. Even if the reps protested and reported the issue, if the leader had mentally decided they were at fault she might not have heard them.
The Systemic Reality
When business results are sub-par, it is unlikely that one employee or team is at fault. Usually something more fundamental at play. Something strategic or structural.
That isn’t to say that performance is never weak and that can’t cause bad outcomes. That would be ridiculous. But often, even poor performance has a deeper explanation.
A former client of mine had a similar problem. They were missing their revenue targets and the CEO was certain that the problem was the sales team. It was –sort of. They struggled with the value proposition, were weak at follow-up and didn’t generate any leads themselves.
But an interview with the CRO and his team explained a lot. The CEO had changed the target market and use case 4 times in 2 years. Reps had to reorient themselves each time. Not only could they not adapt and master the changes –but they expected it would change again at any moment. They were out of their depth. So yes, the sales team was failing. But what sales team wouldn’t in that situation?
Even if an employee is underperforming, it’s worth asking why. Are they lazy, stupid, or incompetent? Or is it something else? These prompts can help.
- The Problem? Get a full picture of the problem and its inputs. Assess the inputs in case one of them reveals the problem is upstream of the employee.
- Confusion? Although a new process or operation may have been rolled out, do the relevant employees understand it? Confusion can thwart results.
- Counter–Factual: Assume that it isn’t a performance problem. If that were true, what information would you need to find the real cause? That will lead you to the hidden symptoms.
- Ask the Employees: While they may just be incompetent, they also may be able to shed light on something deeper. Knowing that customers hate the product or think it’s overpriced or that they constantly need tech support is valuable information. It may explain the problem.
Of course, it may also reveal that the employee is lazy or failing to think critically and solve a problem for himself.