Let's look at the use of power for selling and properly managing a sales staff. We are definitely talking about transformational leadership with these two applications.Leadership is the use of power and influence to direct the actions of followers toward others to goal achievement. I define power as the ability to influence the behavior of others and resist unwanted influence in return. The existence of either or both does not, however, mean that you will be able influence anyone. That is where the strength of the leader comes in.
The general dependency postulate
Effective leaders use power to create subordinate dependency on the leader. Part of sales and management leadership is making others dependent on you. This sounds obvious, but it is a profound concept that you should consciously seek to achieve. This is the General Dependency Postulate. It simply means that the greater Person A depends on Person B for something, the more power Person B has over Person A. While simple in concept, it is a profound management tool. Remember this tool, as we'll apply this basic concept to selling and to managing salespeople effectively.
Last month we talked about different types of power. We discussed position power (the power of your position in your organization), coercive power (the ability to manipulate and subdue subordinates), expert power (power that comes because people seek you out because of a particular expertise you have that they want), and referent power (that innate talent to influence people and make followers primarily because of who you are and for no other reason). Let us remember these power tactics as this column progresses.
Using power in negotiations
You have power. Use it in one of two ways. The first technique is called integrative bargaining. This is when you negotiate a win-win outcome. Everybody comes out feeling good. The other technique is distributive bargaining. This is when you strike a deal where one party wins and the other party loses. Both have a place in selling and managing salespeople.
For example, you have some power over one or more of your subordinates. It probably makes sense to use integrative bargaining negotiations when trying to get him or her to do what you want. Play win-win. You do not want to use distributive bargaining because someone will lose in the negotiations, and something tells me it will be the subordinate. The outcome of that negotiation may damage morale. Now, assume that your subordinate's job is on the line. In that case, win-lose bargaining may be the ticket because you threaten to take something away from your report unless he or she improves.
Integrative bargaining in practice
You are the sales manager. You have a productive salesperson under your care. The general dependency postulate states that he or she is dependent on you for a job, pay increases, perks, etc. Your management of this salesperson must include integrative bargaining as a leadership technique. Here's why: You do not want to lose this A-class performer, but you do want to exercise the producer to get the most out of him or her and develop the latent superstar within. You employ win-win bargaining using bonuses, ever-increasing goals with greater rewards for achievement of goals.
Distributive bargaining in practice
You have a C-class player in your ranks. You've worked with him or her, but the producer just doesn't have the right stuff and is not meeting sales expectations. If you had your druthers, you would want all A-class producers to maximize sales production and camaraderie. You decide that you and your producer need a tough negotiation. In that meeting you lay out the producer's failure to meet expectations. You discuss the basics of blocking and tackling in the sales process. You decide that this producer does not fit that A-class team you are striving to create. You tell the producer you will support him or her, but going forward the producer faces an ultimatum: Practice the proper sales techniques and meet established sales goals or face termination.
I once worked in an insurance brokerage that used the distributive bargaining technique on all rookies and some veterans who went soft. The owners recognized that new producers were anxious to produce and that the sales culture demanded nothing less. The new producers did produce to a point, but then production ceased. Management of this brokerage had a distributive bargaining policy of terminating producers who they deemed would not make it for the long haul. They owned their book, so the initial sales made were owned by the house.
They would fire the lackluster producer and assign his or her meager book of business to the producers who were successful, at least to that point, and thus help build their overall book of business in the process. The house won while the failed producer lost. That is distributive bargaining in its most basic form.
This brokerage realized that this situation would occur occasionally with new people, so they instituted a 25% turnover policy. The bottom 25% of new recruits would be terminated and whatever they produced would be distributed to those producers who showed promise.
It was a great deal for producers who produced acceptable sales and could hang on in the early years of their tenure because their book and job security grew at the expense of the losers who were termed for not being A-class players. The tough strategy worked. That is distributive bargaining in practice.
What about the surviving producers who reaped the windfall? As a manager schooled in the link between creating a general dependency postulate with your clients and staff, you use opportunities that come your way to create a strong dependency on you.
A true story
Sales leaders assert themselves with clients. I once worked with a successful producer who was very bright. His intelligence gave him an unusually high level of confidence in the advice he doled out to customers. He was usually right, and on items that many other producers considered too risky to tackle. He was fearless - one trait of a sales leader.
This bright, confident producer told customers what they were going to do, sometimes in defiance to what the customer actually wanted to do. Almost always, the customer was wrong and he was right, and the customer knew that. In working with this producer, his clients came to realize that he had expert power and that created a dependency upon him for his advice from his clients. He achieved the general dependency postulate and that alone made him a very wealthy go-to person.
Another true story
This story involves using the general dependency postulate with your staff. It works but I do not recommend this tactic because of the negative side effects it has on the people who report to the manager and the poor morale it cultivates among disaffected staff.
I worked for a manager who liked to gather and, in many cases, make up information about his reports. He would call me in the office and try and get me to cough up dirt on my colleagues. I did not offer up information in this disingenuous display of corporate dishonesty. What about you? What price would you have paid to gain favor with this type of boss? I did, however, notice that some colleagues offered up negative information.
Over time, boss man would reward those tattlers who heard or witnessed gossipy red meat. The perks and strange sense of job security for partaking in these periodic exchanges were great and intoxicating. The lesser peers would run into the corner office to tell the boss what they knew. The boss would eat it up and reward the corporate Gollums (a character taken from J. R. Tolkien's Lord of the Rings) for slinking into the corner office.
The boss used transactional rewards in return for getting vile information on his employees and using his own employees to accomplish these dastardly tasks. The general dependency postulate worked here. The boss created an inner circle of reports that became dependent on the boss for his good favor in return for their giving up integrity and shredding their character. The inner circle guys gave up a lot to gain favor with a superior, so much that they were viewed suspiciously by co-workers as unfaithful traitors. They paid a tremendous cost for their security and allegiance to the master. The general dependency postulate works very well, but it can have a dark side.
Davidson, CEBS, is founder of futureofficenetwork.com and the creator of the MedAnalyzer suite of health care claims analytics and mysalesrockstar.com. He is also on the faculty of the Sheldon B. Lubar School of Business at the University of Wisconsin, Milwaukee.
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