Top Sales leaders are decision makers. They are successful because they establish priorities and set direction. They are always seeking innovative ideas and creative initiatives to reach their objectives. When it comes to HR improvements, these decisions can be especially challenging. Which initiatives have the most value? A common obstacle is answering the question, “Can we afford to make the needed improvements?”
Quantifying the value of any new initiative can be difficult. This is especially true for HR projects which don’t seem directly connected to revenue. This post is for HR business partners who support Sales leaders, but the content is also useful for other types of initiatives. Click on the link to get your copy of SBI’s How to Make the Number in 2016 guide. It’s loaded with ideas to turbocharge your sales team.
This post helps to justify funding for your projects. The solution is to use a Feasibility Model that quantifies the value of the initiative. Click on the link for a downloadable tool. The Feasibility Model can be a lifeline for business partners to gain traction with essential improvements. Developing a solution to a problem is not the challenge. Justifying the investment and getting funding approved is the difference-maker.
Compare the Alternatives.
The Feasibility Model enables an objective comparison of the costs of the initiative and the expected benefits. It goes a step further. It compares the proposed initiative against 2 other options. This gives the decision some context.
The first option is called “Do Nothing.” It’s actually not literally “do nothing.” It’s do nothing different. It’s the costs and benefits of staying with the status quo. Sometimes this is the best choice. The outcomes are predictable, there’s no disruption and the costs are already budgeted. Doing nothing is always an option. It’s the option that every proposed idea must compete against.
The model also includes an “Option B.” This one is not as obvious as “Do Nothing.” Option B requires some creative thinking. What else could you do to solve the business problem? It doesn’t have to be a fully formed or elaborate solution because it’s not likely to be selected. But it provides additional contrast against the status quo and the recommended solution. Often, it’s just the cost of adding or removing headcount.
Many solutions require a process change to improve productivity. But adding more people can also increase sales results. It’s usually not as efficient, but it can be a viable alternative. Likewise, if the objective is to reduce costs, sometimes the solution is to simply decrease the payroll. The costs for Option B are usually easy to calculate – multiply the amount of headcount times the average fully-loaded earnings. The value of the change is also easy to estimate. An additional sales person will generate roughly the same revenue as an existing headcount. This can be adjusted downward to allow ramp up time for new hires.
Example: Time to Fill
Let’s look a real life example. A technology solutions provider seemed to be running in place with sales talent. No sooner would a vacant territory be filled when another would open. The organization was always short-handed.
The “Time-to-Fill” averaged 6 months. The quality of the new hires was compromised. HR could not solve the problem alone. Reps who covered open assignments cherry-picked the easy opportunities while overlooking their own more demanding prospects. Making the Number was becoming an impossible dream.
One solution was to hire ahead and create a bench. This would provide a steady stream of ready sales reps. This was probably too expensive to be practical – it was Option B. Another solution was to implement a Virtual Bench program. This would oblige Sales Managers to have candidates ready to hire instantly. The solution would require launching a program that included training, change management and coaching. It seemed like a good idea, but it required an investment. Could they afford to do it?
Enter the Feasibility Model
The Feasibility Model answered the question. Using the tool, the HR and Sales leaders were able to make a fact-based decision. It enabled the following:
- Comparison of 3 alternatives: Do Nothing, Hire Ahead, or Virtual Bench
- Estimate the lost revenue caused by Open Territories
- Quantify the costs associated with each alternative
- Project the overall affordability and pay-back of the decision
- Produce a decision format that the leadership team could act on
HR leaders face a strong headwind in supporting Sales leaders. Important initiatives are put on the shelf because they can’t compete. Investment dollars rain down on CRM projects and Marketing Automation. But HR improvement ideas are passed over.
The Feasibility Model is a convenient way to break through and show the impact. Many HR projects have value that is difficult to quantify. Using the model makes the value clear. Sometimes it validates “Do Nothing.” Other times, it’s the stimulus to move forward and make a critical HR investment. Here’s how to get started:
- Download the Feasibility Model
- List the Recommendations and Assumptions on the Option Comparison tab
- Estimate the Projected Benefits
- Identify the Operating, Capital and One-Time Expenses
- Present findings to the decision team
The Summary tab of the Feasibility Model displays the output. Work with your Sales Operations and Finance partners to fine-tune the values and assumptions. The Model will validate the wisdom of a decision to move forward with the initiative.
The Feasibility Model can get important decisions unstuck. It makes choices easier and more compelling. Start now and ensure that your team will Make the Number.