BHAGs are “Big Hairy Audacious Goals.” The term was, apparently, developed by Jim Collins and Jerry Porras. I first became familiar with it from TJ Rodgers, CEO of Cypress Semiconductor.
What I find fascinating about BHAGs is to achieve them, you are forced to rethink everything you do. Doing more of what you currently do, or even doing better at what you currently do is, usually, insufficient. Generally, you have to reinvent everything you do to achieve them.
I decided to do a thought experiment, establishing a BHAG, asking each of you to reflect on what you would do.
By introduction, selling is increasingly complex, regardless of your role. If you are a sales person, you have to make sure your activity levels are sufficient to achieve your goals, you have to continuously build pipeline, manage deals, move things forward. And we tend to have metrics that track everything we do; daily dials, emails, contacts, meetings, proposals, how many sheets of toilet paper used going the the bathroom—OK, I haven’t seen that one yet.
Likewise, managers have all sorts of metrics/goals, there’s always the “number.” Other things like pipeline, forecast accuracy, gross margin, and so forth have to be balanced out.
Despite our ability to measure virtually everything and to set huge numbers of goals, our YoY performance is plummeting. People are confuse and overwhelmed, not knowing what to focus on.
Now here’s the BHAG. If sellers could have a single metric/goal by which they were measured, what would you choose? Likewise, for managers/leaders, if there were a single metric/goal, what would you choose?
Now, I know all of you are reacting, Dave, this is a waste of our time, it’s impossible. Plus we have all this data, why not have all sorts of metrics that we can track?
And that’s, often, my reaction, why not use everything and track everything. But in doing so, the complexity starts overwhelming us, we have endless numbers and reports, which do we pay attention to, which has the highest leverage on performance.
So try this experiment, for each of those roles, if you could only choose one metric/goal, what would you choose?
(Insert a musical interlude so you can think a little–kind of what they do on Jeopardy.)
OK, what did you choose? Let me know in the comments.
Here’s what I would choose for each role.
For sellers, I would choose YTD quota attainment.
We need them to achieve the organizations revenue and growth goals, so YTD quota attainment show the progress made against those goals. If they are on target or above, we can assume they are doing more of the things they need to be doing to achieve those goals. They probably have a satisfactory win rate, a sufficient pipeline, and are doing the prospecting activities critical to regenerate pipeline.
As the goals increase, YoY, they have to keep improving their ability to execute, staying on target. Initially, they might be driven to do more, work longer, or harder, but at some point that always breaks down, they have to figure out how to improve. Perhaps improving their in rates, average deal size, improving prospecting to maintain pipelines.
As managers tracking their performance, when they start falling below their YTD quota goals, it’s your job to start figuring that out. You pose the question why, and you start drilling down. Is their win rate the problem, the deal size. Do they have sufficient pipeline, are they maintaining that pipeline, are they generating the right quality opportunities to achieve their goals. As you start identifying the key issues impacting their ability to maintain YTD quota, you assess the sellers and their performance. Do they have the right skills, do they need skills development/training? Are they using the tools most effectively to achieve their goals? What should you doing in coaching and developing them to achieve the YTD quota goal? As some point, with some individuals, you might have to ask, do I have the right person in the right role, or do you need to make a change?
Now some of you might be thinking, “Dave, you are cheating on us, there are all these sub-goals and other data we have to be using, why don’t we establish these as metrics as well.”
My response is, Yes, but…. we really don’t need any of that until something starts going off on performance. All we need to know is if someone is making their quota or not. When they aren’t we have to drill down to see what one thing most impacts their ability to perform? For some it might be win rate or deal size. Or there might be some that have great win rates, but they don’t have a sufficient volume of business.
Perhaps we make things simpler, by tracking one metric, then drilling down when things go wrong.
Let me move onto the manager/leadership metric. What would you choose for managers?
The temptation might be to measure the same thing, overall quota performance of the team or the organization.
But what happens when you consider the role of the manager and the seller as different. The seller is responsible for making the numbers. But managers are responsible for maximizing the performance of each individual, their teams, and the organization.
So making the numbers, in a roll up of all quota performance, may not be indicator of organizational performance, particularly over time.
What would be a better metric for managers?
I propose that single metric might be retention/attrition. For example, what is the organizational voluntary/involuntary attrition rate? Alternatively, what is the average tenure of our people in the organization.
Let’s dive into why I think this is such a key metric.
Today, we have a revolving door of people. Average tenure is 11 months (at all levels). I see attrition rates exceeding 40%. This means we have huge amounts of waste! Imagine a manufacturing line with failure rates of 40%!
If we were to use retention/attrition as the key manager metric, here are some behaviors we would start seeing from managers.
Earlier, looking at the sellers, I said managers would have to pay attention to poor performers, figuring out what was wrong, training, coaching working with them to improve their performance. And if it couldn’t be corrected, move them into different roles (sometimes outside the company).
But if at the same time, involuntary attrition, driven by bad performance, adversely impacts the manager’s performance, managers would be driven to do a better job. They would be more careful in recruiting, onboarding, coaching and performance management. They would be doing everything possible to minimize bad performance because that adversely impacts their personal metrics on attrition/retention. And by doing a better job at this, they would enable more of their sellers to achieve their YTD quota attainment goals.
But there’s a more strategic view on retention/attrition.
The longer we have high performing sellers working for us, they continue to increase their productivity. Their experience, deep expertise enables them to grow and perform at much higher levels. They are both highly effective and highly efficient. We lose that when tenure is 11 months, and their collective quota performance plummets and our costs of selling skyrocket.
Retaining people for longer periods time, drives a higher performing culture. People feel valued, they feel heard, their engagement levels skyrocket. And we get to develop those people to take on greater levels of responsibility, driving yet higher levels of performance.
It creates this iterative loop, we have fewer and fewer low performers, enabling more people to perform at higher levels.
We not only drive higher level of performance over longer periods of time–if we have strong retention goals. But we significantly reduce costs of selling, which positively impacts net profits.
Our people are responsible for making the numbers–that’s why YTD quota performance is a great measure for them–it’s what they are responsible for.
As leaders, we are responsible for maximizing performance of the organization, not just this month, quarter, year–but over time. And the best way to to this is maximizing retention—we constantly minimize low performance and maximize the possibility for high performers to grow/thrive with our organizations.
What do you think?
The seller quota performance metric is quite common, but we burden/confuse them with all sorts of other metrics–which distract them from their core jobs.
But few managers have a retention/attrition metric. And without this it is virtually impossible to build high performing teams that stay that way over time.
What would you choose as the single metric for individual contributors and why?
What would you choose as the single metric for leaders and why?
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