From Forklifts to Software
A change in focus can have unpredictable effects on employee morale
From the time Robert Abel & Co. opened shop in 1922, it has sold hoists and cranes, forklifts, and conveyor belts. So when it sold its first computer-controlled automated warehousing system in 1987, it bought the software it needed from an independent developer. After all, what did this $12-million Woburn, Mass., company know about software?
But soon after the system was installed, a 22-year-old forklift repairman pulled aside a company vice-president to show him a warehousing software program he had developed in his spare time. By 1988 the forklift repairman had become a full-time software designer, and computer-controlled warehousing systems that automatically grab parts out of inventory were Abel's fastest-growing product line. Writing its own software gave the company an edge over the competition, but helping Abel's 50 employees adjust to a new, higher-tech corporate culture has been a major challenge for chief executive officer Rocco Nenarella.
To start with, there was the issue of the work habits of the software designer and a second programmer hired to assist him. They insisted on strange working hours. "People would be getting in on Monday morning just in time to see those two leaving after working 48 straight hours," says Nenarella. Even worse, the erratic schedule threatened to anger customers who called during the day with software problems, only to find no software expert available to help them.
Moreover, the two programmers resisted pinning their development efforts down to the rigid schedules by which the company had always worked. "Software isn't as predictable as conveyor belts," they claimed. The programmers also liked to experiment with new software design ideas, often freely incorporating them into projects that had already been precisely specified.
Under normal circumstances such idiosyncrasies might have been enough motivation to provide an employee with a one-way forklift ride out the front door. But because the computerized warehousing systems were so important to the company, Nenarella was willing to compromise. The programmers could keep unusual hours during crunch projects but had to have a cellular phone or beeper with them when they were out during the day. They didn't have to fill out detailed timetables for every project, but they did have to meet at least once a week with other managers to discuss their progress. Experimentation was OK, too, as long as they warned Nenarella about what they were doing and were willing to accept an occasional rebuff. The programmers attend more management meetings and help sales by meeting with customers. As an incentive, Nenarella also approved a plan that would give the two a share of software-related profits.
Nenarella managed to control the programmers' work habits, but Abel's move into high tech was also creating waves among its aggressive eight-person sales force. For one thing, Nenarella and sales and marketing vice-president John Croce had decided that selling the new systems required specialized expertise. Since only one salesperson knew the software side of the business cold, they made him a systems specialist and insisted he be called into all software-related deals. And Nenarella, concerned about burdening the fledgling software department with overly ambitious commitments, refused to approve contracts involving difficult delivery dates -- even if it meant walking away from business.
The sales force chafed under the new rules. Calling in the systems specialist meant getting only half of the usual commission, no matter how hard they worked on the sale. And refusing to meet a customer's deadline could mean losing a commission altogether.
Croce took the complaints seriously. He developed a new commission structure based on how instrumental the salesperson was in closing the sale, among other key points. (See "Learning to Love High Tech," below.) At the same time, Croce raised the maximum commission. As a result, salespeople rarely expect to get the full commission, but the partial commission averages out to be at least as generous as under the old practice.
"We all usually agree on who contributes how much to each sale," says Croce. "It also provides an incentive to the sales force to learn more about the systems business, so they can play a bigger role in every sale."
Asking customers to wait an extra two or three months beyond the normal three- to five-month lead time hasn't cost the company any business. "When we refuse to commit to a tight deadline," says Croce, "the salespeople do what any good salesperson would do: they sell the prospect on why we're worth doing business with anyway." In addition, Nenarella and Croce make an effort to bring salespeople in on decisions to reject tight deadlines.
As a result of the new policies, says Nenarella, morale has climbed. So have software-related revenues: Abel recently closed a $1.4-million automated-systems deal with a major manufacturer and made its first software-only sale to another warehousing-system vendor for $50,000. Employees' improved attitudes have been crucial to these successes, maintains Nenarella. "The way our people come off to customers makes all the difference," he says.
Abel's culture-tweaking efforts have succeeded, he says, because they were built around asking people to understand and buy into the company's long-range goals. "You can't implement these sorts of policies by edict," he explains. "Everyone has to believe in them and realize that the changes we want to make will benefit every single person in the company."* * *
David Freedman is a business writer based in Brookline, Mass.
LEARNING TO LOVE HIGH TECH
How to help a sales force adjust to a more complex product line
If a sales force is used to a low-tech sell, entering a high-tech market can be tricky. Here's how Abel & Co. coped.
* Make one rep the expert. Instead of replacing its sales force because of a lack of software expertise, the company took its most computer-savvy rep and made him a specialist, bringing him into any software-related sale. The regular reps still do the groundwork, but the specialist closes the high-tech deals.
* Adjust commissions. To make sure reps didn't feel robbed of compensation under the dual-rep approach, Abel developed a system that bases a commission on several measures, including whether the salesperson found the customer; how much software development work is involved; and how instrumental the salesperson was in closing the deal.
* Offer training. Abel won't force reps to learn about the software side of the business. But the company offers voluntary after-hours training; the commission structure ensures a good turnout.
* Involve reps in the development process. So that they don't see the software side of the business as a black box, Abel reps meet every few weeks with the company's two programmers to swap ideas. In addition, the software developers occasionally accompany them on sales calls to give prospects a firsthand look at Abel's technical muscle.
* Bring salespeople into key decisions. Because they're often treated as part of the management team, Abel reps don't feel victimized by difficult decisions -- such as when the company balks at a sale that requires too much software development in too little time. Besides, good reps know the customers best and can often represent their interests.