Kill the 80-20 Rule

For years, I’ve managed salespeople and sales managers. Over two decades later, now an author and Executive Sales Coach™, the one resonating philosophy I hear when speaking with managers that is still alive and well is the 80-20 rule.

Here’s what the 80-20 Rule implies: 20 percent of your sales team will be responsible for roughly 80 percent of your sales volume or achieving productivity goals within a collaborative team environment.

Considering the vast resources and growing number of professionally trained, certified business coaches available to assist managers and owners in developing a high-performance team, this culture seems a bit antiquated; one that should have gone by the wayside like pagers did once mobile phones became easily available.

How can this rule still exist and proliferate today? Granted, I know many companies where this philosophy no longer applies. But what about the population of companies that still breed this culture?

“That’s just how it is in my business” is the most common response I hear. After all, when something is always going on, we either accept it or become blind to it. Companies continue to surrender to this belief and rather than challenge it, they work around it. This toxic myth has become so engrained that their entire recruiting strategy has been developed around this core principle.

I hear, “Keith, when I need to hire salespeople, I know most of them won’t work out. So, what I have to do to compensate for this is hire about 10 salespeople, knowing that at the end of our training program I’m left with about three or four. A few months later, I’m down to one or two, if I’m lucky.”

“Lucky”? I’ve never been an advocate of using luck as a strategy for success. It’s the same as a salesperson using “hope” as a selling strategy. (“I hope one of the leads I ran this week turns into a sale.”)

Building your sales team around the 80-20 rule contradicts the core objective of leadership which is, to make your people more valuable. Feeding into this rule by investing your time into people whom you know won’t work out is counterintuitive because it neglects the very people in your company who are the ones responsible for achieving your production goals. Instead of investing into the superstars who out-perform the rest, we reward the underachievers with our time and resources instead. Then, we’re surprised when our top performers leave.

So, what does this say about the manager? If the manager is responsible for hiring, then the real problem is that managers are making poor hiring decisions and subsequently invest in the wrong people.

The 80-20 rule now takes on a new meaning: 80 percent of the time, management will make a costly hiring mistake.

Unfortunately, this statistic isn’t far from true. So, it’s no wonder that managers are only getting it right 20 percent of the time. If you don’t have an HR department or someone strictly dedicated to this function, then the burden typically falls on the business owners or management, the same managers who are also responsible for other people’s production and quite often their own personal sales and productivity goals.

If you’re still a victim of this philosophy, then look at your recruiting and retention system. Do you have a recruiting process which reduces the mistake of mis-hires, while continually offering your people the coaching and training they need on a weekly or biweekly basis? (Not just four times a year, once at the annual conference or only when there’s a problem.)

Just take a look at where most of your time is spent. Are you coaching a sales champion to stay on top of their game or trying to get an underperformer to perform “good enough” to justify their existence? A depiction of insanity — managing people who shouldn’t be there in the first place.

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