What to do when you can't afford to hire experienced people.
What do you do if you can't hire experienced people to work for your company? Perhaps you can't pay them what they want -- or they won't budge for other reasons. At first glance, it's a problem for most young companies. But some don't see it that way. Instead, they choose to grow their own.
One such company is Physician Sales & Service Inc. (PSS), a $31-million business headquartered in Jacksonville, Fla. Since its founding six years ago, PSS has discovered that young, inexperienced people can be a tremendous asset in growing a business. Of its 258 employees, for instance, fewer than 40% had worked for another company. The availability of young employees -- and their eagerness to learn and grow -- has enabled the company to open 14 offices throughout the Southeast. "As the company grows," says chief executive officer Patrick Kelly, "the goal is to have about 80% of our sales and marketing people homegrown."
The decision to hire young people and teach them what they need to know can be intimidating. For one thing, it's a commitment of limited time and money. But it can pay off in many ways. Many of the early PSS hires, in fact, have moved into management positions. "One of the great advantages of hiring young people," Kelly notes, "is that we can introduce them to our way of doing business. We don't have to change a lot of bad habits."
Back in April 1983 when Kelly and executive vice-president for sales and marketing Bill Riddell started the company with two other partners (who have since left), they didn't think they had much choice about where to get people. Having worked in sales for another medical-supply company, they realized that top performers who already knew the business would be too expensive to hire. The challenge, then, was to find a way to teach inexperienced employees the ropes quickly and economically -- and to provide them with a sense of purpose along the way. Fortunately, Kelly had given this a good deal of thought at his old company. So by the time PSS opened its doors, it had come up with an interesting approach.
The problem with the way most small companies develop people, says Kelly, is that it's so haphazard. "Even when they make an effort, it's usually disorganized." His own experience a decade earlier was typical of the industry.
No matter what their ambitions, young people were typically assigned to work in a warehouse, Kelly recalls, where they stocked shelves and pulled orders day in and day out. They did this until a position opened up -- usually 12 to 16 months down the line. Nobody ever told them how long they would wait, so turnover was high. And when people finally moved up, they had to learn new skills from scratch -- things they hadn't been able to pick up working in the warehouse. It usually took two to three years before young salespeople, for example, contributed to the bottom line, so the entire learning process lasted three to four years. "There was a lot of wasted time," Kelly says.
On one level, the approach at PSS wasn't that different. New hires aspiring to sales jobs were required to work a normal 40-hour week doing all the routine jobs -- unloading, stocking, delivering, and so on. The big difference was in how these jobs were presented. Far from being an end in itself, unloading boxes, they were told, was a great way to learn about the range of products the company handled. And making deliveries? It acquainted them with doctors' offices and how they worked. Kelly and Riddell went out of their way to let employees know that they wouldn't be doing these things forever. The result, says Riddell, was that "the enthusiasm level was incredible." With young trainees doing a portion of the grunt work, PSS found that it needed fewer full-time permanent employees in warehouse and customer-service jobs.
The daytime regimen, however, was only part of what went into growing new employees. On nights and weekends, for example, sales trainees were required to learn about the vendors they'd be representing, their products, and medical terminology. To assist in the process, Kelly pulled together relevant material into two thick binders. Aspiring salespeople had weekly assignments -- and took weekly tests. They were also expected to participate in evening role-playing exercises in which they "sold" products to managers and peers.
The basic program for introducing new employees to PSS today follows much the same format. "Our goal," explains Riddell, "is to give people as much experience as possible before they get into real-life situations." Assuming a sales trainee does what's expected, he or she will be in a selling position within four to six months. "Obviously, you can't learn everything in that short a period," offers Gene Dell, one of the first employees. "But it gives you a good sense of how things work and how to approach different kinds of situations." The purpose isn't to tell them everything they need to know, Kelly adds. "It's to build confidence and show them where to find the answers."
If growth wasn't a factor, PSS wouldn't need to show so many people how things work. But given its rate of growth -- more than 40% a year since the company's founding -- it's helped considerably. Last year, for instance, PSS hired 33 employees right out of college, which allowed it to open new offices in Birmingham, Ala., and Nashville and to expand its recently acquired operations in Mobile, Ala., and New Orleans.
As the company has grown, Kelly and Riddell have played less of a personal role than they used to. Increasingly, they've looked to branch managers to assist in the development of new employees. In addition to working with new hires, the managers are required to supply the company with at least two new "PSSers" each year. Because almost all of the future salespeople are just starting out, they're far less set on where they want to live. A willingness to go anywhere is, in fact, a key criterion for hiring. Generally, says Riddell, "we look for people with lots of enthusiasm who can grow into other jobs."
This isn't to say that everyone the company hires works out. Riddell and Kelly estimate that about 20% of the college graduates are asked to leave within two months. Usually, says Riddell, they don't like the pressure of weekly assignments and the lack of free time. "Different people have different goals in life," he comments. "Our feeling is that the demands we make during the early months aren't a whole lot different from the work they'll do later on. So it's better to know this early." But once people make it through the first few months, they tend to stick around. For example, 81 of the 88 young people who've become salespeople are still around, earning some of the highest commissions in the industry. More than half of the employees have purchased stock in PSS.
Growing your own employees may require less up-front investment than raiding your competitors. But free it's not. Riddell figures that PSS invests anywhere from $20,000 to $25,000 in an aspiring salesperson during his or her first 18 to 24 months. That figure includes the salary earned during the initial months and the support received during the subsequent year, when the salesperson is still a cash drain on the business until he or she is on full commission. But it doesn't reflect all that PSS gets in return: highly motivated employees driving delivery vans and learning how to sell. "When these people are successful," Kelly says, "we make money. I don't think there's a company in our business that can bring people on stream as quickly as we can."
How the benefits add up
Skeptical about hiring young people who have no background in your business? If so, you've got plenty of company. But before you dismiss it, think about the advantages the way Patrick Kelly and Bill Riddell of Physician Sales & Service Inc. (PSS) do. Among other things, they can:
* Get routine jobs done enthusiastically. When young people know there's a plan for their advancement, they'll happily do things they'd never consider doing without that assurance. "We sell them on the idea that it's temporary," says Riddell. "Six months, not two years." As a result, PSS gets highly motivated men and women to drive delivery vans and sweep the floors.
* Show people how to do things their way. Most employees who have worked for other companies have attitudes they'll need to put aside. By hiring inexperienced people, says Riddell, "you can spread your culture better and faster." In the instances where PSS hires people with industry backgrounds, it "surrounds" them with rookies. That way, Riddell says, "we can begin to turn them in our direction."
* Tackle new markets quickly. By having a stable of ambitious young people already working in the business, the lead time for expansion is short. "At any point in time," notes Kelly, "we have a bunch of our own people who are ready to move."
* Cultivate an image among college grads. By demonstrating a commitment to inexperienced employees, PSS is already reaping rewards. Over the past year, it recruited at about a dozen campuses. But it found several of its new employees by word of mouth. Mike Wilkinson, for instance, heard about the company from a young sales rep in the waiting room of a doctor's office. A few weeks later, Wilkinson, 24, was on board as a sales trainee.