Assignment type (3) – Think through your own experience and find a story that relates to the week’s readings. This blog entry will be a commentary piece on the Wren reading: Chapter 7, The Advent of Scientific Management, pp. 121-155.
While reading about the history and principles of ‘Scientific Management,” and the father of this “mental revolution,” Frederick Taylor, I couldn’t help but think about the efficiencies that could be gained from applying his principles to the sales organizations I have been a part of. Namely, there are two realities that give me a unique perspective in regards to the application of scientific management: (1) The management of a sales force (sales) presents a unique set of challenges for management; and (2) I have been a witness to the operations of three companies in the span of 5 years, which has given me a perspective on the failings and successes of three very different approaches to management.
In my estimation, the management of a field sales force presents one of the biggest conundrums in today’s business world. A field sales team is a group of individuals who are tasked with maintaining existing business and pursuing new business for the firm. As a work force that primarily operates outside of the confines of a firm’s headquarters, a sales force must be managed remotely. This reality presents a host of challenges to a management team.
I will examine two management strategies utilized by the companies I have been with while considering what Fred Taylor would have thought about these strategies.
Human Resources
Fred Taylor discovered that an employee’s ability to perform efficiently within an organization depended a great deal on the agreement between his talents (background, mental disposition, skill set, etc.) and the position the company placed him in. Taylor’s “first class worker” was one who was assigned to a position that he could thrive in while “non-first-class workers would be those who were physically or mentally unsuited for the work to which they had been assigned.” (Wren, 129) Stryker Corporation – a medical device company that I was employed by in 2010 – has applied a scientific management approach to their human resources department. In working closely with the Gallup Organization to recruit and assign people to the various sales representative roles, Stryker refused to solely depend on face-to-face interviewing as the method of hiring new sales representatives. The make-or-break aspect of the Stryker interview process involves a 45-60 minute interview with a Gallup employee, after which Gallup decides if a candidate is the right fit for a position at Stryker. In typical scientific management fashion, Stryker and Gallup have partnered to interview and analyze the mental makeup and behavior of Stryker’s top sales men and women from previous years. After calculating the data and coming up with a profile of this ideal “top salesman,” Gallup performs an interview –entirely impersonal in nature to eliminate the influence of confounding variables such as interpersonal connection with the interviewer – which consists of a list of questions designed to rate the candidate’s profile against that of its top sales reps. After my experience with Stryker I take their hiring approach to be one of the biggest reasons for the company wide success in sales. Selling medical devices successfully in the operating room environment requires a competitive, smart, and intense individual and Stryker finds these people year after year who are willing to put everything on the line for the sake of the company.
McKesson and the Quest for Improved Incentives
At every organization I have been with, a sales representative is incentivized to sell more of a company’s solution – service and/or product – to a designated client base. One would think that a simple pay scale – higher sales means a higher salary (much like the Taylor’s differential piecework system) – would be a worthy model for any sales force. To the contrary, it is obvious in my experience that constructing an effective incentive plan for a sales force is a complex task. I compare this task with the incentive theories of Taylor, which includes his three part plan. Taylor realized that there are several factors to consider when incentivizing a worker to work in such a way that aligns with the goals of the company. Taylor’s multi layered approach would have served my current company (McKesson) well. I believe there are several flaws in McKesson’s pay scale and this is one of the reasons that our sales organization has suffered through a poor year of performance. As the year has progressed my company has changed the incentive plan on several occasions to motivate the sales force to pursue a common goal. For example, I believe one of the inherent problems in the McKesson incentive plan is the base and incentive salary. Sales reps are paid a high base salary and given inefficient compensation for a sale. This system makes for a non-aggressive sales force. Many of the reps can live comfortably without making their quotas while those reps that sell key company solutions are not paid enough for their efforts. Perhaps a Fred Taylor study on our pay scale and the “human element” of incentive driven performance would allow McKesson to craft a more scientific incentive plan that aligns the motivations of a sales force with the goals of the business unit.
To be continued…
Managing a sales force team is incredibly exhausting. Am I right? The fact that the team is never grounded in one location makes it difficult to maintain an incessant flow of communication. Moreover, the incentive plan for McKesson is definitely flawed. Due to the high salary, one would not have any reason to work harder for an unrewarding incentive. Motivation has to be present at all times.
ReplyDeleteI couldn't agree more. It has always been easy for me to underestimate the amount of work it takes to manage a sales team. After reading about Fred Taylor I have a newfound appreciation for management in general. You can't argue with science; mix in the human element and you have yourself an equation for success.
DeleteHi Casey - Do you see any drawbacks of Stryker's approach to human resources? Does this type of formulaic hiring take away the human aspect of the organization? What would Weber think of this process?
ReplyDeleteIn your second example, we are seeing the same problems that happened before Taylor's time. The chapter explains that peice-rate systems were failures because standards were poorly set, employers cut pay rates with increased output, and workers tended to shortcut (p. 124). What do you think Taylor would recommend to this company? What would you recommend?
Hi Courtney - Interesting that you asked that question about Stryker. I left Stryker after about 11 months to transition to my current position at McKesson. During the exit interview with the Nat'l VP of Sales he asked me why I was leaving the company. I kept my answers as politically correct as possible: "I really respect the way you guys do business and I think that it is a business model that is best suited to your market," etc. Upon hanging up the phone I realized that one of the primary reasons I left Stryker was because I felt dehumanized to a certain degree. It was the first time in my life where I realized that "money can't buy happiness," or worker satisfaction, for that matter, since Stryker is known to pay very well.
ReplyDeleteWhy did Stryker make me feel this way? One need not search farther than the bureaucratic model that Weber promoted. Stryker's organization had many bureaucratic characteristics: (1) Performance rules were enforced to such a degree that it resulted in some apathy from me (Wren, 232-233). To make your quota at Stryker meant that you were accepted into the legal framwork of what it meant to be an effective worker. To not make your quota meant you were a complete failure, regardless of the circumstances. This environment was effective for the goals of Stryker, as employees like me were motivated so much to make the quota that we worked 80+ hours some weeks to get there - as I did. (2) Stryker lacked the human element that Taylor preached and Fayol referenced. Because of the legalism I had little loyalty to the company. I thought to myself, "these guys don't really care about me so why should I pass up a better career opportunity." Stryker is a bureacratic model that is true to form: It works effectively for larger business units but there are some missing elements that result in a few disadvantages.
If Taylor were to work as a consultant for McKesson his first step would be to research our market and do some time studies by applying analysis and synthesis to calculate what a significant work rate was for a sales territory. Taylor would also take a closer look at our organization chart. Taylor would like some aspects of our organization chart, such as my position as a Strategic Product Specialist. My position has many similarities to the "functional foreanship" (Wren, 130) model in Taylor's task management system.
What would I recommend at McKesson? Well, that's a loaded question. This might surprise you but as a business man I am really driven to be successful at all costs. I would probably bring some of "Stryker" to McKesson; meaning I would integrate some bureacratic aspects into the McKesson model. I think McKesson has too much of a "human element" and someone needs to light a fire under these people.
ha..I'm laughing at what I just wrote, but I meant it. When I become a manager I will definitely bring some of Stryker with me. For this reason, I treasure my year of experience at Stryker.
Hi Casey - I was part of a field sales team for a few years, so it's really interesting to hear about the challenges you face of managing a field sales team.
ReplyDeleteWhen I look back on my time in field sales, I seem to recall that my managers subscribed in many ways to Fayol's principles of coordination and control. One way they did this, the one that stands out most in my mind, is their planned bi-seasonal "ride-alongs" when they would tag along with me as I made sales calls. At the end of the day, the manager would pull out a chart and we'd discuss strengths, weaknesses and set goals for the next three months.
I'd be interested to hear your thoughts as a manger about their method.