Getting The Right Sales Mindset

February 28, 2008 | Leave a Comment

Written by Debbie Mrazek

Have you ever noticed when it comes to daytimers or pocket organizers, there are three kinds of people? One kind buys the next year’s daytimer in September so they can hardly skip a beat moving from one year to the next. Yet another group of people pony up to the sales register with organizational tools in hand. They aspire to be organized, yet never seem to get the shrink wrap off. And, finally, there are those who have just accepted they will never be organized and they will have to come to terms with their constant state of disorganization.

And what does this have to do with sales? Simply, put, it’s the same way with sales. Are you the type of person who absolutely hates sales and believes you can’t sell? Or the type who buys all the latest sales books yet hardly cracks the spine? Or do you take sales on with the vigor of an Olympic athlete?

Let me just say, as a member of the 1% club (the top 1 percent of sales professionals), there was a point where I HATED sales (and selling). The last thing I wanted to do is sell. We all move through phases of sales power. Some days it seems like we could sell ice to eskimos. Other days, it takes all we can to summon the courage to pick up the phone to make the calls we know will result in the filled pipeline that we need to continue to be successful. And, then, there are days when we just want to throw in the towel.

And that’s okay. If there’s anything I would like for you to know today it is the idea that you CAN sell and, if you don’t give up, you WILL accomplish your sales goals. I think Woody Allen said it best. Eighty percent of success is just showing up. Be honest with yourself, do your best and it will come. Accept that there will be ups and downs on the way to the finish line.

I wish there was some super magic bullet I could give you that would be the panacea for all of your sales ills. But there’s not. And, truthfully, anyone who says there is may be thinking they have some oceanfront property in Arizona they may like to sell you. The reality is that sales are not a ‘one point’ process where things happen from doing ‘one thing.’ It takes consistent, forward motion to excel in sales.

The best advice I have for you from the field is for you to stay in motion with intention and focus. Do one thing each and every day that adds to your company’s (and your) bottom line. If you stay focused today, tomorrow’s results will take care of themselves!

The 4-Hour Work Week

February 26, 2008 | Leave a Comment

Want a whole new mindset about how to work smarter and not harder? Get this book immediately. Or read a PDF overview now to see if it’s worth a trip to Amazon.com.

29-year old Timothy Ferriss came out of nowhere with his runaway bestseller hit #1 on the New York Times Bestseller list without the aid of any advertising. Utilizing social networking and the power of blogs and other online media, Ferriss’s book has become a subculture phenomenon among entrepreneurs.

If you are an entrepreneur feeling trapped in your own business, The 4-Hour Workweek promises to be the compass for a new and revolutionary world.
Forget the old concept of retirement and the rest of the deferred-life plan—there is no need to wait and every reason not to. Whether your dream is escaping the rat race, high-end world travel, monthly five-figure income with zero management, or just living more and working less, this book is the blueprint.
You can have it all—really.
Join Tim Ferriss, popular guest lecturer in entrepreneurship at Princeton University, as he teaches you:

  • How to outsource your life and do whatever you want for a year, only to return to a bank account 50% larger than before you left
  • How blue-chip escape artists travel the world without quitting their jobs
  • How to eliminate 50% of your work in 48 hours using the principles of little-known European economists
  • How to train your boss to value performance over presence, or kill your job (or company) if it’s beyond repair
  • How to trade a long-haul career for short work bursts and frequent “mini-retirements”
  • What automated cash-flow “muses” are and how to create one in 2-4 weeks
  • How to cultivate selective ignorance—and create time—with a low-information diet
  • Management secrets of Remote Control CEOs
  • The crucial difference between absolute and relative income
  • How to get free housing worldwide and airfare at 50-80% off
  • How to fill the void and creating meaning after removing work and the office

The 4-Hour Workweek also includes the sample e-mails, voicemails, and real-life deals (with dollar figures and all) you will need to master the new world of luxury lifestyle design.

And, if you are interested in hearing all about how Tim worked his magic on the social networking scene, email me, and I’ll give you information about how to tap into his secrets!

Google.com and Goog411

February 26, 2008 | Leave a Comment

True You Marketing Loves Google and Goog411

Tired of paying a buck and a quarter for every information call? The planet’s greatest mover of information has an answer for you. I tried this out just a few days ago and was stunned at how easy it was to use, and how fast the voice recognition software worked. “Wow!” was all I could say.

Just dial 1-800-GOOG-411 (1-800-466-4411) from any phone, and Google411 takes it from there. Simply state the business name or type and location. Then choose your number from the list of numbers provided. Once you choose, Google connects the call for free. It’s super easy and it’s f r e e!

Get a Shot in the Sales Arm

February 21, 2008 | Leave a Comment

Written by Debbie Mrazek

Use this prescription to build healthy sales for your business.

Okay, you’ve decided your sales are in poor health. How do you get your sales healthy again?

 
The first step is the sales examination. We’ll talk about where you are and whether the cause is internal (that means you are responsible for what’s going on) or external (that means someone else is impacting your efforts). Internal issues could include fear or lack of certain skills or tools needed to be successful. External forces could point to something in your business or company that affects your sales. This could be anything from poor customer service to unfulfilled customer expectations. What are your sales? How do your sales stack up against your sales goals? How do you set sales goals?

Once you’ve disclosed everything about your sales life, it’s time to move to the diagnosis. Asking someone else to walk through a sale with you can give you great insight into what’s working and what’s not. You need a safe environment to explore what’s going on and then pinpoint what’s causing the pain. Choose someone who can be both objective and honest and has a successful track record in sales. The diagnosis might include something that can be quickly addressed, or it might be something that requires longer treatment. It could be a combination of two or more things. What is important is figuring out what it is and moving past it.

What’s the prescription? During this phase, we look at what you can do today to move your sales in the direction you desire. Perhaps we need to begin with goals. Sometimes it can be as simple as that. Goal setting requires a structure that can ensure you are on the right track for you and your company.
How do you keep sales healthy? Once you have a specific diagnosis, you can develop the plan to keep you from returning to that situation. A regimen is a plan that helps you turn your sales efforts into actual, measurable results. This plan outlines what you will do, how often you will do it, what you can expect from your efforts and strategies on what to do when things just aren’t going as planned. It’s a scaffold for you to develop new habits that will make sales easier and that will not only help your sales grow, but will lock in more profitable sales. It’s not enough to grow sales if you don’t realize more profit at the same time. Who wants to work more and make less? Not me!

Ever have a doctor who sent you out the door with a shot and a prescription? Now, how many of you take every one of those pills you are prescribed. We start feeling better, we get our energy back and the prescription goes by the wayside. We behave similarly with sales. Once you have your regimen and you’ve tested it out and it’s helping you with your sales, it might feel like you are cured. A sales check-up can help you stay on track. Talking about what’s working and what’s not working will ingrain the process even more. After all, we all know we eventually will stop doing anything we don’t enjoy or that isn’t successful. The goal of a check up is to minimize the pain so it’s not necessary to get another shot three months, six months or even a year down the road.
So, let’s say, you’ve stuck with your regimen and we’ve talked about what’s working and what’s not and you feel good about where you are. How do you stay on track? That’s where a coach can make the difference between staying motivated and backsliding. Our clients call us the boss’s boss. Making yourself accountable to someone, even if that someone is yourself equates to bottom line success. In a lot of ways, maintenance is the most important part of your sales program. But how do you maintain your program?

The basics are the same for everyone. Apply the knowledge you’ve gleaned from the rest of the process and continue to expand your sales endurance. Like any good maintenance training program, you have to push yourself out of your comfort zone everyday – just a little. Make one more phone call, use a different sales tool, push yourself to exceed your weekly goal. Every step you take toward growing your sales repertoire makes what you’ve just learned easier. Each skill builds upon another. You can do this!

Counterintuitive Selling Rules During a Recession

February 20, 2008 | Leave a Comment

Written by Debbie Mrazek

5 Tips to help your business weather a recession.

When panic about a sliding economy hits the airwaves, the first impulse is to react. Most business react by constricting into a ball. The strategy is to drop and hide until the recession passes – no matter how long that might take. Businesses that take the counterintuitive track of boldly staying the course and selling more – not less – will find that the competitive landscape is largely void of the usual suspects.

 
The sales mentality during a recession is just like it is in the summer. Sales people think everyone is on vacation, so they don’t make the calls. Similarly, they think everyone is not buying during a recession, so they don’t make the calls. The sales go to those who make the calls.

Recession-proofing sales begins with a counterintuitive mindset. Your mind might be saying, ‘run, run’ but if you will have the courage to go forward during this time, you will find that there’s actually a better chance for you to rack up sales. I have worked with many companies during recession periods and some of these booked as much as 110% of their goal while competitors were closing their doors.

Here are her five suggestions for surviving – even thriving – during an economic downturn:

  1. Sales and marketing rule. A recession is the time when you really want to pull out the sales and marketing magic. The key here is to stick with what you know works.
  2. Commit to learning. Those who know everything have nothing to learn. In a recession, it’s a great time to look at things from a fresh perspective. How can you do things better? Serve clients smarter?
  3. Go for the long shot. Why not go for gold? This is the time to be bold and go for those big accounts you wouldn’t dream of calling on during a boom time. You just never know what might happen. Chances are you won’t meet with a lot of competition.
  4. Drill deeper. When clients are doing great and you are part of that success, see if there are other opportunities to do more. Think outside the box and have more fun – try new ideas.
  5. Embrace change. Most companies buy into the Big Bad Recession theory and before you know it the wolf is at Grandma’s house! Embrace this time and you’ll weather the recession and do better than you think.

 
If you stay the course, you’ll be that much farther ahead. During a recession, it’s better to break away from the pack.

How to Create a Win-Win-Win Sales Strategy

February 20, 2008 | Leave a Comment

Written by Debbie Mrazek

Think selling ends at the contract? Think again. Most clients, when asked, will tell you the point of contact is the sales person. Why? Because that’s who the client trusts.

Today’s complex marketplace has many demands placed on it by a seemingly never-ending quest for clients. Sales people play a critical role in managing client expectations, enhancing client service and preserving trust in the marketplace.

However, what, exactly, is the sales person’s role? Is it simply hunter?

The sales person is a natural extension of the company, and what many companies fail to realize is that clients don’t trust the company; clients trust the sales contact. This is an important distinction to make because not only is the relationship resting on the sales person, but the external trust a company imparts to the marketplace falls to these company ambassadors.

The win-win-win sales strategy aligns external clients (the marketplace) with the sales person and internal clients (company employees, including customer service representatives) and creates a strategy designed to retain all while enhancing overall brand trust.

Three Wins
Win #1 – The Sales Professional

With a strong labor market, top sales professionals are in demand. No longer can companies count on an endless supply of experienced professionals waiting to fill the sales function. Additionally, with the cost of replacing these positions, companies increasingly find themselves facing higher recruiting costs and, in some cases, the cost of lost intellectual capital, lost revenue, and lost client relationships can top five times a sales professional’s salary. Today, ensuring that sales professionals stay content and challenged is paramount for successful, thriving sales teams. Creating a sales process that promotes the sales professional as a critical component in that process creates a win for the sales professional as well as for client and employer.

Win #2 – The Client

The myriad of choices available to clients in our marketplace is staggering. One of the primary ways that companies differentiate competition is through human capital – the people who interface with the clients. The natural progression of putting people in front of clients is that the relationship naturally falls to the person the client sees most. Companies today realize that there is loyalty in the relationship. Facilitating a sales process that enables the client to interface with the primary sales contact offers the client access to a trusted point of contact, and allows clients an easy way to interact with the company. In many instances, a client will first go to a trusted source – such as the sales professional –before abandoning the relationship.

Win #3 – The Company

Companies seek to find a way to retain clients and to ensure that client loyalty is maximized. The sales sweet spot offers a win for companies because it aligns sales professionals with the client in a way that naturally protects the client’s welfare and, thus, the client’s lifelong revenue with the company. No longer can companies rely on an endless supply of clients or sales professionals. A strategy that serves both of these, in turn, serves the company through enhanced marketplace trust, reduced recruiting fees, reduced client attrition, and increased client loyalty, which, ultimately translates into greater lifelong revenue at a lower cost per sale.

© 2006 The Sales Company All Rights Reserved. Written permission required to duplicate.

Leverage Pays 5 Reasons to Stick with Your Ideal Clients

February 18, 2008 | Leave a Comment

One of the biggest challenges entrepreneurs face is moving from fear to trust. Most new entrepreneurs go through a progression of ‘I’ll take anyone who can write a check’ and move to one where they know the clients that work best for them. What can make this transition that much easier is realizing that there is plenty of business out there. When you combine this understanding with a strategy to attract more of your very best clients (more on this in a future Marketing Mojo) you can have a virtually unbeatable marketing combination.

Here are 5 reasons to stick with your ideal client!

Reason #1 – Taking the Wrong Clients Wreaks Havoc on Your Marketplace Trust

“I don’t trust that if I give up one that I’ll get another one,” the entrepreneur says. Our entrepreneur takes the non-ideal client (misfit vs. perfect fit), loses money on the deal, and then the misfit client goes out into the marketplace and erodes external trust. The misfit tells one, two, 10, 20 people about how awful it was to work with the entrepreneur. Each of those people may tell another two or three, soon that company has a little trust leak that could have easily been avoided. If the misfit enters the online space, then there’s an immediate way for others to know about the less-than-ideal client – and about how that client was underserved.  

Reason #2 – Misfits Offer Opportunities for Leverage

It isn’t about saying one company isn’t as good as another. It’s about having the integrity to bypass the companies that will not be best served by you and your company. These misfits are not a fit for your company; however, they are a perfect fit for another company. If you know what your ideal client is you use your ideal client profile, a misfit may simply be passed up. But, if you understand the law of reciprocity, you can leverage the non-ideal client for future profits. Here’s how.  

Let’s say that you interview a company that is really not a good fit service-style wise. Let’s say you are a high-touch company and this company isn’t really interested in that. This company wants a bargain basement price and does not value highly personalized service. If you have a list of referral sources ready for these occasions, then when a company comes along that wants the lowest price, it is easy for you to refer this client to a reputable firm that will offer a service-match. Likewise, with a strong reciprocal relationship, the referred-to company can refer those companies they meet that want a more high-touch relationship that they simply can’t offer due to low cost.

I see companies that let misfits go, but I don’t see a lot that take the next step to find a solution for their misfit. When you use this strategy, not only do you leverage the relationship of the referred-to company, but you also leverage the referred company – the misfit client. The way it works is that they see that you have their best interest in mind. Because this is true, you’ve ignited the law of reciprocity not once but twice. The law of reciprocity causes an individual to feel the need to reciprocate a kindness. This deal works best when you don’t expect anything. You do your best, take care of clients like they are your mom, and others tend to want to take care of you. Simple, yet oh so powerful.

Reason #3 – Like Attracts Like

One of my favorite benefits of working with an ideal client profile is that there are more ideal clients where those came from! Generally speaking, like attracts like so ideal clients tend to know others that are similar and therefore a source of better referrals. Think about how much time it takes to work with a referral that is not a good fit. It is time-consuming, even though it can still be beneficial (see #2 above). Still, in the end, wouldn’t you rather work with ideal clients who send people who are similar? I thought so! The ultimate benefit to this reason is that getting more ideal clients takes a lot less work.

Reason #4 – Builds Leverage in Centers of Influence

A big buzz word thrown around these days is social networks. The reason these social networks are getting so much attention is because they are powerful. In very short order, a connected group of social networks can build a brand virtually overnight. A good example of this is how Timothy Ferris’s book, The 4-Hour Work Week, debuted at the top of the New York Times Best Seller list after being promoted in key centers of influence through blogs and other means. When you work with your ideal clients, a similar phenomenon happens within your niche. All of a sudden your name is tossed around more than Paris Hilton. You become a big buzz in your ideal client niche. Suddenly, your marketing efforts are earning big dividends – with the same amount of, or less work.

Reason #5 – Creates a More Powerful Brand and Company

When entrepreneurs try to serve anyone and everyone, it spreads resources thin and dilutes focus. By focusing on an ideal client base, you, the entrepreneur can then dedicate time and energy to serving and constantly meeting the needs of your very best clients. The result is usually a higher per-customer sales average, a more loyal client base of raving fans, and a client base that grows with you as you grow. The more consistent your message is and the more direct your services and offering, the more powerful you appear to your market. Clarity of vision feeds clarity of the ideal client which results in strong sales and a never-ending opportunity to serve those you work with best.

In the bigger picture you do business a certain way – we all are unique in who we are. This unique service style combined with the services you offer are a perfect match for certain individuals and companies. That’s the short of it. Just like a puzzle piece, there’s an interlocking fit between you and your ideal client. Those clients that are not a good fit are free to bypass your door and move to the best company to serve them. What could be better, right?

Nothing is much better, honestly. If you are a services company, then you already know how painful (and very unprofitable) a client that is not a good fit can be. Face the fear, refer the misfits, and serve your ideal clients. It’s a winning combination that makes profit and sense.

Understanding Financial Ratios

February 16, 2008 | Leave a Comment

Even the most business-savvy person is tempted to ask, “What does this mean?” when faced with rows of numbers stacked into pages of columns on financial statements. Fortunately, some quick ways exist to analyze financial statements and get an understanding of this data. Known as financial ratios, these rules of thumb can help you:

  • Benchmark operational standards against industry averages and your competitors;
  • Analyze overall financial and operational health; and
  • Predict the results of future operations.
  • You can also use financial ratios to measure:
  • Liquidity (ability to pay current bills);
  • Activity (rates of inventory turnover and accounts receivable collection);
  • Leverage (ability to borrow money and pay off debt); and
  • Profitability (performance and efficiency at turning a profit).

In your analysis, you can choose from a variety of financial ratios. Here are some of the most common.

Current Ratio

Equation: current assets ÷ current liabilities

What you can learn: How well a company is able to pay its bills — short-term solvency. It indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted into cash in the near future.

Quick Ratio

Equation: (current assets – inventory) ÷ current liabilities

What you can learn: What percentage of assets can be quickly turned into cash. Inventories are typically the least liquid of a company’s current assets, and that makes them the assets on which losses are most likely to occur in the event of liquidation. Therefore, the quick ratio is a measure of the firm’s ability to pay off short-term obligations without relying on the sale of inventories.

Inventory Turnover

Equation: cost of goods sold ÷ average inventory

What you can learn: Frequency with which inventory is sold. The ratio depends on the industry and in some cases, even the time of year. Faster turnovers are generally viewed as a positive trend because they increase cash flow and reduce warehousing expense.

Debt to Equity

Equation: total liabilities ÷ net worth

What you can learn: Relationship of dollars creditors contribute (debt) to capital invested by owners (equity). This ratio indicates the degree of financial leverage that you are using to enhance your return. A rising ratio could mean that new debt should be restrained. Most investors feel safer investing in a well-capitalized company than in a highly leveraged business. A company is generally considered well-capitalized if the owners generally have a significant amount of their own funds at stake.

Return on Equity

Equation: net profit ÷ net worth

What you can learn: How well owner-supplied funds are being used to generate profits. The higher this number, the better. It shows what you have earned on your investment. The higher the ratio, the better the funds are being used to generate a good return on investment for shareholders and the greater the profit.

One Caveat

While benchmarking against other companies can be valuable, it also presents pitfalls. Comparing apples with oranges can distort results. Look out for differences such as:

  • Accounting methods (for example, using the first-in, first-out instead of last-in, first-out inventory method leads to dif­ferent inventory and cost-of-sales figures on the income statement).
  • Fiscal year-ends (especially important for seasonal companies).
  • Methods of computing financial ratios (for example, before-tax basis vs. after-tax basis).

Who Else Uses Financial Ratios?

Business owners and managers aren’t the only ones who can benefit from looking at financial ratios. So can:

  • Investors, to make informed and intelligent investment decisions.
  • Corporate financiers, to spot potential takeover targets.
  • Creditors, to evaluate business loan risks.
  • Investment advisors and banks, to find prosperous companies that might need their services.

Take Advantage of Financial Ratios

In addition to using ratios to evaluate the performance of your own company and benchmark it against the competition, you can use them when considering the financial health of potential business partners and the viability of investment options. Keep in mind, though, that financial statements often provide only one part of the big picture,true performance management relies on other means of measurement.

Redefining Employee Roles Can Increase Performance

February 14, 2008 | Leave a Comment

How well do your employees understand what’s expected of them, and how well do you or they manage those expectations to increase performance and meet company goals?

Effectively managing staff and communicating each employee’s role are perhaps two of the most difficult tasks you will face as an entrepreneur or executive. Performance expectations based on performance may appear bipolar depending on whether the employee knew what was expected of them. Many good-hearted managers are well-intentioned professionals who advanced into management based on their own job performance. As a result, unless they receive proper training or coaching, these managers lack many of the skills required to skillfully manage employees and positively impact performance and productivity. To add fuel to the fire, many companies lack the tools necessary to adequately address an employee’s work performance because job descriptions are either dated or may not exist at all.

Lack of both job expectations and the knowledge it takes to communicate the expectations can take its toll on properly managing employees because employers constantly must redefine employee roles. In a perfect world, the astute employee would know what’s expected, and would turn those expectations into increased performance, and, ultimately, an increase to your company’s bottom line.

So how can you redefine employee roles to increase performance? Perhaps it’s best to follow Stephen Covey’s advice and begin with the end in mind. However welcome or dreaded, a well-delivered performance review is a good indicator of not only expectations, but how well the employee is progressing within his or her role. The evaluation also is a good time to set next year’s goals and expectations.

Here are five ways to establish expectations and align employee roles with performance.

1. Maintain an Updated Job Description With Written Expectations. It is difficult for you to create an evaluation without a benchmark. It is even tougher for an employee to self evaluate on an ongoing basis if s/he has only a vague idea of what results s/he should achieve. A job description and a statement of written expectations provide the criteria to perform the employee evaluation while leaving the employee with a clear set of job expectations.
2. Meet One-to-One With the Employee. Periodic (monthly or quarterly) meetings can help you and your employee monitor progress and performance. For example, a short, scheduled meeting provides the time to review past objectives and professional development. You become more aware of the employee’s strengths, accomplishments and areas to develop, while the information focuses the employee’s performance on key behaviors.
3. Provide a Monthly Progress Report. Continuous reports help you gather information on employees’ performance and allow them to track their progress. At the end of each month, ask employees to submit a short report stating their accomplishments, major tasks in progress, any training received and areas identified for improvement. Your job is to review this report, discuss it during the one-to-one session, and keep the reports as a reference tool for annual and semi-annual performance evaluations.
4. Conduct a Self-Evaluation. Most employees welcome the opportunity to provide constructive input. Ask each employee to draft a self-evaluation. These personal insights will help you immensely with setting performance goals and aligning your expectations with employee competencies.
5. Other Forms of Feedback. Without being too intrusive or sly, solicit feedback from customers and co-workers about each employee’s performance. Concentrate on behaviors, not subjective ideas about a person’s motivations. For example: Johnny attends to customers in a slow manner vs. Johnny is lazy and isn’t concerned with attending to customers. A word of caution: Be sure the information you receive is accurate and sources stay protected.

What can a job description do to help define roles?

A good job description will:
establish, communicate, and document management expectations   and employee understanding and acceptance;
form a basis for establishing employee goals and for conducting   employee performance evaluations;
communicate and document changes in employee responsibilities   during the course of a performance year;
identify training needs;
help determine employee job classifications;
inform job candidates about prospective positions; and
assess employee workload so managers can make strategic staffing decisions.

Most employees want to hit the target; often, they just don’t know what the target is. Taking these points into account can help ensure performance meets expectations, but more than that, it helps produce skilled, knowledgeable employees who will work even harder to produce your desired results. If you are interested in learning more about how incremental improvements in performance can significantly impact your company’s bottom line, gives us a call today.

Skip-Level Reviews and The Benefits of 360-Degree Feedback

February 12, 2008 | Leave a Comment

When was the last time one of your employees told you he or she had an effective performance review? While this may be a rhetorical question, it’s a valid one given today’s volatile business climate and the need to receive consistent feedback on performance.

Today, a direct manager’s or supervisor’s review of an employee may, indeed, not be enough to adequately provide the employee with enough information. One of the trends occurring in business is the “skip-level” review. Also known as “360-degree feedback,” employees are reviewed by their manager or direct report’s manager, employee peers and even subordinates.

There are many benefits to this process. For the individual, perception is reality and the skip-level process helps workers understand how others perceive them. While many may tell each other day-in, day-out how they feel, getting these thoughts on paper in a stylized, confidential process is a completely different matter. The individual also benefits because feedback is essential for learning, and individuals can better manage their own performance and careers.

Maintaining a skip-level review also benefits the “team” by increasing communications among and between team members, and supports the teamwork process by involving everyone in developing the appraisal methodology. Organizations, too, benefit by promoting better career development for employees, improving customer service by having customers contribute to evaluations, and directing the training process.

A national human resources consulting firm quantified the reasons for skip-level reviews. According to a recent survey, HR managers said that 360-degree feedback is being used for management and organizational development (58 percent), performance appraisal (25 percent), supporting strategic implementation and culture change (20 percent), and team development (19 percent).

Naturally, there are a variety of methods to gather data by using paper-based forms, diskettes or other storage, through an electronic network or by interviews. Scoring can be conducted on-site or through central scoring by an external vendor.

One, burning question is the frequency of the review – how often should the review be conducted? While annual performance appraisals usually suffice, skip-level reviews may be done more often. Since employees need time to make the changes proposed on the last set of reviews – and because it takes some time for others to perceive that change has taken place – six-month intervals make sense. This time frame allows people to create change, and then get feedback on their progress so that they can develop next-level goals and action plans. However, some organizations prefer to conduct surveys of just 10 to 15 questions, focusing on a specific topic. These smaller-size reviews are done monthly in conjunction with training on that certain topic.

Next comes the matter of whom should be the reviewer(s). The method in which organizations set the criteria for this important step could make or break the review depending on a variety of circumstances. For example, the length of time the respondent knows the subject is important, as is the amount of contact. You also may want to choose reviewers who understand what the subject does, as well as some who work well with the subject and some who do not.
After the review is conducted, the subject is the only person who gets a copy of the report. The manager gets group and organizational data, but no individual information. While giving the data could increase accountability and enable the manager to quantifiably track progress, there are a variety of pitfalls to giving the manager a copy of the report. Here are a few examples:

  • People will fear the process.
  • Feedback comments will not be as constructive.
  • Scores may be higher.
  • Data can become a weapon, not a development tool.
  • The manager may lack the ability to interpret the data appropriately.
  • The manager may reprimand the employee for not doing well.

Another consideration in skip-level reviews is whether feedback should be linked to performance appraisals. While skip-level reviews or 360-degree feedback and performance appraisals can be complementary, they should not be linked. If 360 is linked to compensation decisions, it loses its power as a development tool. With compensation as the outcome, individuals quickly will learn how to play the game, a.k.a., “I’ll scratch your back if you scratch mine.”

If ratings are lower than expected, morale can decrease when the review is linked to performance appraisal. However, when low scores are used purely for development, the scores tend to be viewed as constructive feedback. Be sure that team members are coached on the rating scale so feedback is consistent across the board.

Introducing skip-level reviews to a potentially resistant organization isn’t insurmountable. First, start at the top and conduct a pilot. Directly address, up front, the issues that are at the source of the resistance, and focus on the benefits for the individual or group. When possible, use an external consultant to minimize fears of confidentiality and inappropriate data usage.

Are skip-level reviews ever inappropriate? In some cases, yes. For example, if the person receiving feedback is too new to the group or organization, there probably aren’t enough respondents who truly understand the full scope of the individual’s responsibilities. In addition, during a time of major change like a merger or acquisition, skip-level review may not be very effective because the staff is focused on other, more important, efforts. An environment with a high degree of mistrust is a red flag that also would inhibit the process.

Skip-level reviews or 360-degree feedback can be a cost-effective, measurable method to the appraisal process.

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