Peter Smith has more than 30 years of experience building wholesale and retail sales teams. He currently is president of Vibhor Gems.
In recent weeks, we’ve seen a shakeup of senior management at two of the jewelry industry’s biggest names.
There were multiple senior management moves at Signet, and Tiffany & Co. announced the resignation of CEO Frederic Cumenal after less than two years at the helm. That move came just a couple weeks after Tiffany announced they were parting ways with their design director, Francesca Amfitheatrof.
While we can only guess at the internal machinations that led to the departures at those two companies, what is less ambiguous is that the personnel merry-go-round, while not exclusive to our industry, seems to be in a state of constant rage.
After reading the carefully managed press releases from the two industry giants, I began to think about the madness that seems to consume companies when it comes to hiring, or promoting to, senior management positions.
While Tiffany and Signet are public companies and, as such, governed by an entirely more complex set of guidelines (they need to assuage investor confidence, for starters), the general principles remain the same for all businesses and the dangers of miscalculation are certainly not the exclusive domain of the big boys.
Unsurprisingly, companies tend to announce their new senior people with great fanfare, and the love-fest can at times border on intoxicating. We are led to believe that the marriages, if not exactly made in heaven, were at least destined by fate. Nobody on either side allows for the possibility of failure. All goals, aspirations and (ahem) previous company inefficiencies and shortcomings give way to big plans and lofty ideals.
We often hear about the costs of hiring new people--the onboarding, the training, etc. We tend to hear a good deal less about the costs of keeping the wrong people.
Companies succumb to what Nobel economist Daniel Kahneman describes as the “planning fallacy.”
Kahneman writes in “Thinking Fast And Slow” that, “... they make decisions based on delusional optimism rather than on rational weighting of gains, losses, and possibilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations.”
We tend to see what we want to see when announcing important hires or promotions, and we avoid or suppress any concerns in favor of an attitude (at least outwardly) of supreme confidence in our brilliant decision making.
Cumenal had been in the Tiffany organization for a few
years prior to his promotion to chief executive officer, and I still remember the fanfare that heralded the arrival of Francesca Amfitheatrof as design director. Yet, they were both deemed expendable just a few short years into their respective roles.
Staff turnover is not inherently a bad thing. We often hear about the costs of hiring new people--the onboarding, the training, etc. We tend to hear a good deal less about the costs of keeping the wrong people. While many businesses pride themselves on having people in place for years, there are, in fact, studies that show tenure as having an inverse relationship on performance.
There are also many good reasons to change leadership. Sometimes the business evolves or declines to the degree that the existing leaders are no longer well-suited to or interested in navigating the new landscape. Sometimes a change of scenery is needed for all parties, to re-energize and re-engage good people on all sides around a purpose more suited to the leader’s present circumstances and the current needs of the business.
All too often, however, the changes happen for the wrong reasons.
The columnist is also the author of two books, “Hiring Squirrels: 12 Essential Interview Questions to Uncover Retail Sales Talent,” and “Sell Something: Principles and Perspectives for Engaged Retail Salespeople.”
I am not speaking to the aforementioned companies as I don’t know the circumstances in those two cases, but I have seen what Jim Collins wrote about in “Good To Great”--the “Stockdale Paradox”-- happen far too often.
Collins was interviewing Admiral Jim Stockdale and he asked the admiral, and former longtime prisoner of war, why some people managed to survive their captivity in Vietnam better than others.
Stockdale responded by describing a paradox of optimism. He said that those prisoners who believed, without reservation, that they would be released or rescued by a specific date (I’ll be home for Christmas …) tended to fare less well than those who believed that they would eventually win their freedom but who were more pragmatic and realistic enough to recognize that putting timeframes on a situation they had no control over was unrealistic.
This became known as the “Stockdale Paradox.” In other words, it was essential for the prisoners to remain positive and optimistic to ensure that they kept themselves as physically and mentally healthy as possible under the very dire circumstances, but not to be so unrealistically optimistic that they set themselves up for failure.
We have seen this scenario all too often with companies large and small. They have an unrealistic set of expectations and they play the personnel merry-go-round convinced that their (often-blurred) vision will ultimately be realized.
Leaders, managers and employees don’t become stupid or ineffective when a business suffers setbacks. If you have aligned your personnel with the goals and values of your organization and you have given them the requisite assets and support, then get out of their way and let them do their jobs. Make sure that your people are focused on the controllables and judge them on that performance, not the things over which they have no control.
Success in sales does not mean that your people are great any more than failure means that they are bad.
The former, of course, masks a great many sins and the shortcomings (often intuitively understood) don’t become a big issue until the business hits a sustained period of failure.
On the other hand, if you are experiencing a significant run of disappointments, making hasty judgements that your people are responsible and need to be changed is not always true and it’s rarely the best thing to do for the business. If they were the right people in good times, they may well be the best opportunity for recovery in tough times.
Are my personal conduct and ethics consistent with a leader who pursues a higher purpose?
Do I regularly refer to our higher purpose to inspire and motivate people?
Do I tell the truth about today’s realities while trying to inspire hope for the future?
Do I maintain a clear view of what our work means above and beyond success?
Do I help people to see what they can do to make the world better?
Do your homework before you hire or promote a leader. If they align with your values and share your sense of purpose, then recognize that there will be peaks and valleys in performance.
When things aren’t going so swimmingly, what is needed is clear-headed, honest and pragmatic conversations about the nature of the challenges and the best course of action to correct them. Don’t undermine your people by pretending that they alone are the reason for your troubles. Peter Smith is president of Vibhor, a public speaker and author of “Sell Something” and “Hiring Squirrels.” He spent 30 years building sales teams in retail and wholesale and he can be contacted at Dublinsmith@yahoo.com, peter@vibhorgems.com, on LinkedIn, Facebook (Hiring Squirrels), or Twitter, @Hiring Squirrels.
Peter Smithis a principal partner at The Retail Smiths, a consultancy for jewelry vendors and retailers. He is the author of four books, including the recently released “Essentially Human, On Sales and Salespeople,” and he teaches sales behavior master classes. He can be reached at theretailsmiths@gmail.com.
