Keeping Morale Up in a Down Market
By Tim Triplett, Editor-in-Chief
Industry sales managers point to lessons learned as they look back on the most difficult market
conditions in their careers.
In late 2008, when the phones and faxes suddenly grew silent and e-mails to customers went unanswered, sales managers at service centers across the country found themselves in a fix. As the economy slowed to a crawl and metals prices plummeted, most companies scrambled to downsize their operations, slashing expenses and laying off employees—even the “revenue generators” in the sales department. Morale took a serious hit. Now that the smoke is clearing and market conditions are on the upswing, sales managers look back at what they learned from the experience.
Morale at Samuel, Son & Co. Ltd. is good today, especially compared to the recession years, says Bill Hutton, corporate vice president of marketing and national accounts for the Mississauga, Ontario-based company. “That was a difficult period for salespeople. For every 10 calls they made, they might get one that was good news.”
Even today, as metals prices climb, some market segments are weaker than others. Morale still has not returned to peak levels, he says. “When you [try to pass on] price increases, it can be frustrating as well. But it is certainly better than conditions two years ago.”
Ken Sichelski, vice president of sales and marketing at Marmon/Keystone LLC, Butler, Pa., describes a similar workplace. “Marmon’s salespeople are still stressed, but they are getting more positive as their earning opportunities improve,” he says. Sales managers still feel some pressure as they scramble to pick up the slack at facilities that remain short-staffed. “We are hiring, but we are not there yet,” he adds.
Soon after the bubble burst, it became clear to most sales managers that they would have to rethink their sales compensation plans—and fast. “We knew things were happening beyond anyone’s control, so we tried to soften the blow as much as we could,” says Bill Jose, director of sales at TW Metals in Exton, Pa. “We put programs in place internally to move out that high-cost metal as quickly as possible.”
Sales incentives based on company profitability suddenly made no sense. Salespeople needed permission to sell material at the going price, even if it was unprofitable, without taking a hit personally. “Not only did we not penalize them, we then incentivized them on key products. We actually gained market share during the worst times,” Jose says.
“We altered our incentive programs to reflect the market changes,” echoed Sichelski. “We always monitor them to make sure we are being fair and our people are taken care of.”
Samuel also had to rethink its compensation formula. “We tried to be fair about it, to reduce their incentive targets to make them attainable, but they still had to work hard for them. If we had not done that, the morale would have been much worse,” Hutton says.
While it is never easy to let anyone go, the service center industry is a sales-driven business, Hutton notes. Laying off salespeople, who bring in the dollars, engenders some extra reluctance among sales managers. On the positive side, the process does allow a company to weed out the weaker performers and effectively reward top achievers, say executives.
Samuel was able to head off some dismissals by transferring good employees to other areas of the company. Hutton recalls one instance where an inside salesperson with good technical skills became a trainer in the company’s computer group.
Psychologically, reducing the size of the staff is actually better for morale than instituting a companywide pay cut. Workers forced to leave may resent the decision, but those who remain on the job feel that much more appreciated, sales managers say.
To keep salespeople engaged during the down period, Samuel gave individuals additional responsibilities. Some were assigned to “champion” a market segment, and become experts in serving a particular niche. “We created Samuel automotive, Samuel aerospace metals and Samuel wind energy, for example, and they have been quite successful with champions strategically located throughout North America. Following that model when the economy declined was another way of keeping morale up and keeping people motivated,” Hutton says.
Communication is especially important in a rapidly changing market. Uncertainty causes anxiety. “We lost one good person who took another job because she was fearful she might be next [in line for a layoff],” Sichelski recalls.
Even during the down years, TW Metals continued to bring key personnel from around the country together into one room for their annual planning conference, despite the cost of travel. “It really sets the tone. Everyone leaves there knowing what is expected of them,” Jose says.
Some companies took advantage of the lull in business activity to spend more time on training. Samuel has internal training programs in finance, operations, quality, purchasing and sales. Using a mix of group and one-on-one sessions, interactive workshops, webinars, outside speakers and other methods, the company helps its employees learn the skills they need to succeed. “It shows that you are making an investment in them, and it makes them feel good about the company,” Hutton says.
When Jack Elrod became president and CEO of TW Metals, he made a commitment to employee training, hiring an outside contractor for the job, and has never looked back, Jose says. “No matter the business cycle, we have never stopped training. Almost like a high school graduating class, people who meet during training here retain a special bond with others in their class throughout their careers,” which contributes to a tight-knit, collegial sales force, he notes. “That has been a big part of our success, that the training has been ongoing, even during the downturn. It’s a part of our culture.”
Like Samuel and TW Metals, Marmon/Keystone is looking for sales talent as it gradually returns to prior staffing levels. “It is always a challenge to find the right person and get them through the training stages. Some of our sales managers like to look for experience. Others like to start from scratch and train the person the Marmon way. We are pretty good at bringing in people and training them from the ground up,” Sichelski says.
Well-trained salespeople are a valuable asset. Now that many service centers are back in a hiring mode, companies have to be wary of losing good people to competitors. “We spend a lot of money and energy to train our people, and they are very marketable commodities to other companies,” Hutton says. The best way to keep from losing them is to treat them so well they won’t want to leave, he adds. “As a fifth-generation family owned company, Samuel tries to keep up a family culture. We make it a nice place to work.” n