Jocko Willink : Extreme Ownership - Sales Compensation/Planning
I’ve recently read Jocko Willink’s book Extreme Ownership which covers a bunch of great topics for business leaders. The authors pull lessons from their experience with the navy seals and examples from consulting. There was one section that I thought was really applicable in regard to sales planning. This section was titled “Belief” (Chapter 3). I have included an excerpt below from this section of the book and my key takeaways.
Here are some of my key takeaways that should always be applied with any type of planning/change management:
Explaining the “why” first in a clear and concise manner so all levels can understand the item that is trying to be solved. This needs to be explained at all levels and significant support, data and documentation should always be provided to help ensure all mediums are covered. I
Buy-In : For any type of change or momentum shift you need to have buy-in and support from all levels. Take the time to gather feedback and take in different perspectives of stakeholders to ensure when you go to roll out this change that everyone is on board and will support the effort.
Be ready to show a path to success for the team impacted by this change and support their managers so they can show them this path to success as well. As an employee, change can be difficult to understand when you are absorbing this information at first. A clear message on the keys to success will help mitigate any confusion.
My final thought is that with all great plans there needs to be even better communication of the plan for any team to actually execute. If you take the time and effort to complete these points noted above then the specific points of your communication will be easy to cover as you’ve done the work already.
Best of luck!
Excerpt - Extreme Ownership : How U.S. Navy Seal Lead and Win - Chapter 3:
“This new compensation plan is terrible,” said one of the midlevel managers. “It will drive our best salespeople away.” The rest of the class agreed. Toward the end of a short leadership-development program for the company’s midlevel managers, my discussions with the class had revealed a major issue that created stress and fragmentation among the ranks of the company. Corporate leadership had recently announced a new compensation structure for their sales force. The new plan substantially reduced compensation, especially for low-producing salespeople. “What’s the issue?” I asked the group. “It’s hard enough to keep salespeople here; this doesn’t help!” one manager responded. “They don’t get how hard it is in this market,” said another, referring to corporate senior leadership. “This new compensation plan will push people to our competitors.” “Some of my folks have already heard rumors about it; they don’t like it at all. And I can’t convince them otherwise. I don’t believe in it myself!” another responded. I asked them all a simple question: “Why?” “Why what?” one of the managers responded. “Why is your leadership making this change?” I asked. “Hell if I know!” one manager stated emphatically, which brought laughs from the group. I smiled and nodded. Then I asked again: “OK, but why do you think they are implementing this plan? Do you think they want to push your best salespeople out the door? Do they want those salespeople to go to your competitors? Do you think they actually want the company to lose money and fail?” The room was quiet. The managers—most of whom respected their bosses and maintained good relationships with the company’s corporate leadership—knew their leaders were smart, experienced, and committed to the success of the company. The problem was that no one could understand why this new plan had been implemented. “Has anyone asked?” I questioned them. The room fell silent. Finally the class clown blurted out, “I’m not asking. I like my job!” Laughter erupted from the room. I smiled and let them settle down. “Understandable,” I replied. “So the CEO, is she unreasonable? Would she actually fire someone for asking the question?” The group of managers mumbled, “No.” “What is it then?” I asked. Finally, one of the more senior managers spoke up with a serious answer: “I’d feel pretty stupid asking. Our CEO is smart and has a lot of experience. She gets this business.” “OK,” I shot back. “So you’re all just scared to look stupid?” Heads nodded in a universal yes. I nodded as well, now more fully understanding the issue. No one wants to look stupid, especially in front of the boss. “Let me ask you this,” I continued. “When you can’t explain the reason behind this new compensation plan to your sales force, how does that make you look?” “Stupid and scared,” the class clown responded. “Exactly!” I shot back, in jest. But I knew a simple, easy way to solve the problem had been uncovered. That afternoon I swung by the CEO’s office. She was meeting with the company’s president of sales. “How is the workshop going?” the CEO inquired. “It’s going pretty well,” I said. “You have a solid crew of managers.” “Absolutely. They are a great group,” replied the CEO. “How is your relationship with them?” I asked. “Oh, I think it is very strong with most of them. Some of the newer ones I don’t know all that well yet, but as a whole, I have a good relationship with our managers,” the CEO answered. “Do they ever confront you on anything or ask questions?” I asked. The CEO thought for a few seconds. “Not really,” she acknowledged. “I think they get the business, and I think they know what we are trying to do. So there really isn’t much that they would need to confront me on. I’ve been in this game a long time. I wouldn’t be here today if I didn’t know what I was doing. They know that and I think they respect that. Experience counts for a lot in this business. But I think if they had an issue, they would certainly bring it up to me.” A common misperception among military leaders or corporate senior executives, this was an example of a boss who didn’t fully comprehend the weight of her position. In her mind, she was fairly laid back, open to questions, comments, and suggestions from people. She talked about maintaining an “open-door policy.” But in the minds of her sales managers, she was still The Boss: experienced, smart, and most important, powerful. That position demanded a high level of reverence—so high, in fact, that for an employee to question her ideas seemed disrespectful. None of them were comfortable questioning her, even though none of the midlevel managers actually worried about losing their jobs because they asked a question. But they were certainly worried about looking bad in front of The Boss. “I’m not sure they are as comfortable confronting you or opening up to you as you think,” I stated bluntly. “Really?” The CEO asked with a slightly puzzled face. “Let me give you an example that came up today,” I replied. “The new sales compensation plan.” “What about it? Don’t they like it?” the CEO asked with surprise. “It’s not that they don’t like it,” I answered. “I don’t think they get it.” “Don’t get it? The plan isn’t really that complex. In fact, it is simple,” said the CEO, preparing to give me the quick explanation. “It’s not that they don’t get what the plan is,” I said. “You’re right: it is simple. It reduces overall compensation for sales staff, especially for the low producers.” “Exactly. What’s the issue with that?” the CEO said. She was right. Even I, without experience in this particular field, had no trouble understanding the basic concept of the new compensation plan. “The issue is not that they don’t understand the plan, but that they don’t understand why the plan is being implemented. They don’t believe in it. They think this plan will drive away good salespeople, who will look for and possibly find better compensation plans at your competitors,” I explained. The CEO now got a little defensive. “Then they clearly don’t understand what I am doing with the business,” she stated. “When we cut compensation, especially on the low-producing salespeople, that savings reduces cost. When I reduce cost for salespeople, it reduces our overhead. With overhead reduced, I can lower the price of our products. That will allow our bigger producers to bring in even more business. Sure, the new compensation plan is punitive toward our bottom people, but those bottom people really don’t move the needle in our business. If some of them leave, it won’t impact our business. In fact, it will allow some of our better producers to expand into those accounts and increase sales. So there is opportunity for our sales force to do even better.” “That makes a lot of sense,” I replied. “It absolutely does,” said the CEO. She explained how she had made this move before in a tough market. “It almost always helps. It might reduce the overall size of our sales force, but it will increase our volume in the long run. A smaller, more effective sales force also reduces overhead: lower health care costs, fewer desks, fewer computers to buy, greater efficiency. It is a win-win.” “That sounds brilliant. There is only one problem with it,” I said. “What’s that?” the CEO asked, incredulous. “Your midlevel managers don’t understand those points—they don’t understand why—and so they don’t believe in the strategy. If they don’t believe, neither will your sales force. If this plan rolls out and those executing it don’t believe in it, your plan is far more likely to fail.” “So what can I do to make them believe?” asked the CEO. “It’s easy,” I explained. “Just tell them why.” The CEO finally understood what she needed to do. For my training with the midlevel managers the next day, the CEO made an appearance and kicked things off with a short presentation. “Good morning, everyone,” she began. “Jocko pointed out to me that you all had some issues with the new compensation plan. What don’t you like?” After a few moments of silence, one of the more senior managers finally mustered the courage to speak up. “Cutting into our sales team’s take-home pay hurts,” said the manager. “It may drive some of them elsewhere, and that could hurt us in the long run.” The CEO smiled. She explained the details of the strategy behind the plan: the increased volume, the reduced overhead, the greater capture of existing accounts when handled by higher producing salespeople. The managers quickly saw the connection and understood the benefits of the plan. “Does anyone have any questions?” the CEO finished. No one spoke up. “Seriously. Does anyone have any questions? Don’t be afraid to ask. I obviously didn’t make this clear to you. And unfortunately, none of you asked!” she jabbed. “No, I think we get it now,” one of the managers replied. “Do you think you can explain it to your sales force in a manner that they will understand?” asked the CEO. “I do,” a manager answered. “But I still think some of the low producers will be upset.” “I’m sure some of them will be,” the CEO replied. “As I said, that is part of the strategy here. The ones I want you to focus on here are the big producers and those that you think have the potential to become big producers. I have done this before; we will get results. Anyone else have anything?” The room, now loosened up by the straight-shooting conversation with the CEO, relaxed and broke into some small talk before the CEO went on her way. The class continued. “What do you think?” I asked the class. “That is exactly what we needed,” said one manager. “Now I get it,” remarked another. “I wish we would have known that all along,” a third manager stated. “Let me ask you another question: Who is to blame for the CEO not explaining this to you in more detail?” I asked. The managers in the room remained silent. They knew the answer and nodded as they acknowledged a topic that I had covered in detail earlier. “That’s right,” I said, “you! That is what Extreme Ownership is all about. If you don’t understand or believe in the decisions coming down from your leadership, it is up to you to ask questions until you understand how and why those decisions are being made. Not knowing the why prohibits you from believing in the mission. When you are in a leadership position, that is a recipe for failure, and it is unacceptable. As a leader, you must believe.” “But the boss should have explained this to us, right?” one manager asked. “Absolutely. I explained that to her, and, sure enough, she came down here and did just that. But she’s not a mind reader. The CEO can’t predict what you won’t get or understand. She’s not perfect; none of us are. Things are going to slip through the cracks from time to time. It happens. I made all kinds of mistakes when I led SEALs. Often, my subordinate leadership would pick up the slack for me. And they wouldn’t hold it against me, nor did I think they were infringing on my ‘leadership turf.’ On the contrary, I would thank them for covering for me. Leadership isn’t one person leading a team. It is a group of leaders working together, up and down the chain of command, to lead. If you are on your own, I don’t care how good you are, you won’t be able to handle it.” “So we let the boss down when we didn’t ask questions and communicate with her,” said one of the quieter managers in the back of the room. “Yes, you did,” I confirmed. “People talk about leadership requiring courage. This is exactly one of those situations. It takes courage to go to the CEO’s office, knock on her door, and explain that you don’t understand the strategy behind her decisions. You might feel stupid. But you will feel far worse trying to explain to your team a mission or strategy that you don’t understand or believe in yourself. And, as you pointed out, you are letting the boss down because she will never know that her guidance is not being promulgated properly through the ranks. If you don’t ask questions so you can understand and believe in the mission, you are failing as a leader and you are failing your team. So, if you ever get a task or guidance or a mission that you don’t believe in, don’t just sit back and accept it. Ask questions until you understand why so you can believe in what you are doing and you can pass that information down the chain to your team with confidence, so they can get out and execute the mission. That is leadership.”