Return on Investment - Leadership Assessment

QUESTION: WHY SHOULD I SPEND MONEY ON CONSULTANTS FOR LEADERSHIP ASSESSMENTS OR LEADERSHIP DEVELOPMENT WHEN REVENUES AND PROFITS ARE DOWN AND CASH IS TIGHT?

The answer is simple. The question is not about “spending money”. Rather, it is a question of “investing money”. Any worthwhile program must generate a good return on the investment…its all about the ROI!!

  • Cost: When business is down, leaders think about how they can cut costs. One of the first cost cuts is the use of consultants, leadership development and training activities. They are perceived to be soft costs that do not directly contribute to an increase in revenues, profits or productivity. However, the decision could be expensive and counter productive! Many successful leaders have invested in enhancing their programs because they are getting a quantifiable, short term and longer term returns on their capital investment. If your in house training and development personnel or your current outside Vendor or Consultant can not quantify and can not guarantee an acceptable return on investment for each of these programs, the programs should be cut.
  • Consultants: In the past, you may not have had a good experience with consultants who evaluated a business situation in your company, made recommendations and left.  In most cases, they were not accountable for the success of those recommendations nor did they quantify or demonstrate the value or return on investment of the programs they recommended. We strongly recommend that any consultant you use, in good times or bad, must:
    • Be able to articulate a capability to be your short term strategic partner.
    • Understand your business and have the business acumen to help you achieve your business goals.
    • Be able to demonstrate the value and quantify the return on investment of any recommendation.
  • Urgency: In short, today’s business leaders must implement business strategies quickly and efficiently to outperform the competition. Selecting the right consultant, who has a track record of successfully helping entrepreneurs and business leaders solve problems quickly, is a good investment of time and money. 

CASE STUDY - Leadership Assessment and Leadership Coaching and Its Impact On Performance and ROI

  1. What Was Keeping The President Of A $100 Million Company Awake?

    Why is my VP of Sales not achieving his sales goals? Is he the right person for the job? Is he doing the right activities?

  2. The Problem
    • Revenues are down 45% due to market conditions.
    • Customers are not buying as much product.
    • Margins are slipping. Customers perceive the product to be a commodity and want to purchase the product for less cost.
    • The VP of Sales and the sales team are not being successful in bringing in enough new customers to offset loss of business from current customers.
  3. What Did The President Do?

    He hired Richard James & Partners to assess the leadership skills and potential of the VP of Sales.

  4. Report From The Richard James & Partners

    What Activities Was the VP of Sales Doing Right?

    • Leadership Assessment – The VP of Sales has excellent leadership potential.
    • Manager’s Skills – A super salesperson, but not a super manager.
    • Training - Demonstrates his considerable sales skills on joint sales calls.
    • Incentives – Has an excellent bonus reward for bringing in new customers.
    • Metrics - Measures revenues, profits and sales activities.
    • Leadership Development – The VP of Sales is hungry for development.

    Areas That The VP of Sales Needed to Improve?

    • Develop and enhance Sales Management Skills
    • Coach the sales team on how to bring in more new customers.
    • Better estimate customer market share information.
    • Develop better metrics – sales people are reporting sales activity, but some of that reporting may not be accurate.
    • Work more effectively by focusing on the right leadership activities.
  5. What Did The President Do With The Information?
    • Leadership Assessment and Leadership Coaching –After looking at his VP of Sales leadership assessment scores, the President decided that the assessments confirmed that the VP of Sales has exceptional sales skills and strong leadership potential, but could benefit from leadership coaching on how to manage people and manage the right activities.
    • Leadership Coaching - He authorized Richard James & Partners to establish a leadership coaching program to shift the VP of Sales from a super salesperson to a professional manager and leader. Included in that program was a multi rater evaluation of the VP by the President, his peers, his direct reports and several of the owners of the company.
    • Sales Assessment and Sales Training – The President decided to pose a similar question about his sales team. “Do we have the right sales people for today’s customers?” He had Richard James & Partners assess the sales skills of each sales person and it was determined that all but one had the right interpersonal skills and motivation for success. Although the company employed experienced sales people, they did not have the prospecting skills needed to bring in enough new customers to offset the drop in business from current customers due to economic conditions. Since the company had no formal sales training program, the President authorized a new program designed to move the sales organization from a feature, benefit and price selling approach to customer need, value added and solution selling.
    • Metrics – The president expected the new sales training and leadership development programs to [a]result in both a short and longer immediate impact on revenues and profits; [b] demonstrate tangible proof of increased market share; [c] increase the number of new customers; [d] develop the VP of Sales from a “super salesperson” into a “leader”; and [e] clearly show that the investment in training had an exponential return on investment.
  6. Results Within 4 Months – What Was The ROI?
    1. Sales Skill Enhancement – The VP of Sales, in partnership with Richard James & Partners, developed a new customized sales training program that was enthusiastically embraced by the sales team. It focused on:
      • Customer needs, problem resolution, and value selling, instead of selling features, benefits and price.
      • Enhanced the sales team’s ability to respond to objections.
      • Customized materials and training that was designed to develop sales skills around gaining more market share from current customers.
      • Customized training that focused on enhancing sales skills when cross selling additional products to current customers.
      • Customized programs designed to enhance the corporate strategy to have multiple relationships inside each customer.
      • Customized phone marketing programs, designed to measure the effectiveness of sales people accessing and selling to non customers.
    2. What Were The Results and ROI?
      • Improved Selling Skills: After 12 weeks, all but one of the nine member sales team gave specific examples of how they achieved new sales as a direct result of the customer needs focused training program. One person reported a sale of $160,000 to a new customer.
      • Increased Margins – Price, the number one objection, faced by the sales team, was being handled significantly better. The VP of Sales was celebrating increased margins successes at his weekly meetings.
      • Market Share Focus Change – Within 8 weeks, the VP Sales determined that sales people were only getting 16% of the $500M potential business from their customers. He modified the bonus program to also reward for market share increases.
      • Increased Market Share - Within 90 days, a number of new customers were added. This was attributed to the focus on coaching the sales team on how to skillfully gain access, and sell, to non customers.
      • Leadership Development - The VP of Sales, with his Richard James & Partners leadership coach, is successfully moving from a super sales person to a trainer and leader, who develops talent.
      • The return on $15,000 investment for the program was excellent.

CONCLUSION: In this situation, the organization did have the right person in the job and he was doing some activities well. However, after assessing him and his sales team, it was recognized that he was not setting appropriate goals and not leading and developing his talent well. This VP of Sales is now energized. The company enjoyed an exponential return on the investment they made for sales training and sales management coaching.

For more information about Leadership Assessment & Coaching, please contact us.

 

 

 White Papers