I was reading a McKinsey white paper on managing IT costs in a downturn and was struck by an otherwise typical and innocent statement. In describing a case-study in a retail bank they wrote, “A team of business and IT staffers reviewed branch operations and quickly identified areas where focused action could produce substantial gains. The distribution of leads to the sales staff was automated, and more of them were directed to reps with the best performance in previous campaigns” (italics mine).
In a “normal market,” in a market that Nicholas Taleb might describe as being in Mediocristan, this makes eminent sense. If a group of 100 salespeople are equally given a fair share of leads in a campaign some will flourish, most will produce reasonably, some will fail. In the next campaign we’d all give a few more leads to the flourishers. Most sales management will have dismissed those who failed.
If we applied this logic to recent investment banking events then the sales staff to keep are those who successfully and willfully sold exotic mortgage backed securities and CDO’s. In mortgage banking it’s the brokers who sold Sub-prime and Alt-A products, the “liar” and adjustable loans who would be relied on to lift us out of our doldrums. These were the salespeople with highest revenues. They were also the salespeople who did the most harm to the company.
Working on Step 2:
It seems to me that instead of directing leads to the sales staff with the best performance in previous campaigns one should direct leads to sales staff best aligned with current and future campaigns who also demonstrate the professional ability to perform. Today an investment bank, or a mortgage brokerage, might keep the sales people who can sell AND balance short and long term risk, who can communicate value and transparency.
The company would want to understand the skill sets needed going forward, adjust the sales plan to reflect the behaviors preferred, and reward staff that meet today's needs first and foremost.