Would you pay somebody $9,400 to ‘hold the fort’ while you had a day off? If this sounds like an expensive day off to you prepare to be shocked: there are many leaders who pay this kind of money to non-performing salespeople for little more than the luxury of having somebody in the office while the leader rests.
I recently spoke to one leader who was on the verge of closing his doors. He cut almost every expense he could; he even considered operating out of his home. This leader’s wife went to work every day. The leader worked hard every day. But one expense this leader refused to cut was the salary of a ‘salesperson’ that had not made a sale in over two months.
There comes a time when ‘nice guy’ turns into ‘soft touch’. This employee was taking advantage of his leader, who was too weak to terminate the services of a chronic non-performer. For a person to draw a salary yet steadfastly refuse to do the actions that lead to results is, in my book, fraud. If a person will not do the actions, and will not either begin doing the actions or resign, this should be a criminal offence – it is taking money under false pretences.
If this sounds like an extreme case to you, it is not. Although most leaders would not allow a salesperson to go two months without making a sale, many allow team members to turn mediocrity into a career path.
While they may not pay $9,400 for a day off, these leaders still pay huge amounts for the luxury of time away from the office. Any money paid to non-performing salespeople is totally wasted. And if you are paying people like this ask yourself, “Why am I doing this?” Is it because you are too weak to fire them, lack the skill to lead them, or because you ‘need’ them because not having them means you have to list and sell?
None of these are valid excuses for holding onto non-performers.
In the Real Estate Agency Management Program we show leaders how much profit they lose by not having their team size at optimum level – at least four of your expenses are around $50,000 per month. A team of five will be more than $100,000 more profitable per annum than a team of three at the same level of income.
The team size, however, does not refer to just the number of people on the team.
To get this extra profit, all team members must produce approximately the same income per month.
This means that your team must be consistent performers. It also means that as a leader you must become obsessed with building a winning team, not just a sales team of a specific size. All people on your team must perform.
Instead of working with people who show no signs of improvement, the leader who paid a non-performer $9,400 for no sales would have done better had he put that money into hiring advertisements.
Had he done twenty First Interviews with potential winners each month, he would have been able to part company with somebody who clearly will not do the necessary actions to succeed and give an opportunity to an enthusiastic recruit who would.
The trouble is, this leader had hardly done a First Interview all year. Without the hope of fresh people joining the team, he held onto a ‘no-hoper’. The result: the business was devastated.
So the next time you reach the end of the month and see that one or more of your people have not performed to your standard ask yourself, “If I keep this person, am I paying big bucks just to have a day off?”
Be honest. Then act.