Executive Briefings

Nobody Does This in a Recession

Unemployment stood at 10.4 percent last month, so from the standpoint of the American worker, we're still in a recession. Bosses call the shots; they don't have to offer their employees anything more than a regular paycheck.

Looks like Ken Steers didn't get the memo.

Steers is president of Freight Solution Providers, an airfreight forwarder based in Sacramento, Calif. He offers a highly specialized service - the "white-glove" handling of pricey items that are extremely time-sensitive. Or, as Steers calls it: "The stuff the other airfreight forwarders don't want or can't handle."

So don't think of FSP as a typical services company that can hire anyone with half a brain, a decent haircut and a willingness to learn the business. In fact, Steers is having trouble finding good salespeople. Never mind those tales of companies flooded by resumes from qualified candidates who were cut loose by corporate downsizing.

Which may help to explain the perk that FSP offers its own sales force. In the airfreight-forwarding business, reps draw a commission on accounts they have managed to nail, but the deal rarely lasts very long. As the revenues generated by a given customer grow, personnel are added to manage it, and the arrangement becomes a house account within a couple of years or so. So much for that commission.

That's not how things work at FSP. The salesperson who brought in the account continues to earn a commission over the life of the relationship. He or she remains responsible for the revenue flow, with a strong motivation to keep it going. Meanwhile, a designated program manager takes care of day-to-day doings with the customer, freeing up the salesperson to troll for more accounts.

You might think that the extra incentive would cause a sales executive, fearful of losing the account, to ride herd over the program manager. In fact, some individuals pride themselves on their ability to terrorize those who hunker in the operational trenches. Steers works hard to avoid that dynamic. "We don't want that sort of person," he says. "We want someone who feels comfortable with our sales infrastructure, who isn't worried that he's going to lose the account." In any case, he says, the point isn't to please the immediate customer. The real target, as always, is the customer's customer.

Would you be surprised to learn that FSP has zero turnover in its sales force? Steers can't abide the notion of a revolving door in that part of the organization. Closing a big account takes between 18 months and three years of hard work, he says. And FSP deals with some of the biggest - Hewlett-Packard, IBM, Dell, Johnson & Johnson, Panasonic. None of them is shy about punishing providers for service lapses. So keeping the forwarder's sales staff happy is just good business.

Customers end up happy, too. They like the kind of continuity that's represented by seeing the same sales reps year after year, even if they aren't dealing directly with those individuals on a frequent basis. Steers remembers all too well his days as an agent working on commission, in partnership with his wife Leilanie (who happens to be the founder and chief executive officer of FSP). "As soon as we got cut out of the deal," he says, "they [the service provider] would lose the account."

Employee longevity creates its own problems, of course. It makes for little in the way of fresh blood, and raises the dilemma of what to do when existing workers approach retirement. That's the current situation at FSP, where Steers needs some new faces - and soon. The training curve is steep, and "there's no college that teaches my industry." You can get a university degree in logistics, but not in airfreight forwarding. He estimates that it takes about three years of on-the-job experience in customer service, operations and performance management to get individuals "to where they're worth it to me. So it's really expensive to lose them."

Reality check: FSP's sales team consists of just four people. (Not bad for a company that does more than $50m of business each year, and upwards of 24,000 shipments a month.) So can this beneficent setup be scaled? Steers, who is looking to hire more salespeople in addition to replacing those who are ready to retire, is convinced that it can. Regardless of the size of his sales force, he says, there's still the need to hang on to skilled, talented individuals - and to incentivize them to give customers the best possible treatment. Assuming that a business doesn't provide a commodity that's entirely price-driven, "I think it's the way it should be."

In my next post, I'll stay on the topic of the human element in supply-chain management, and examine the challenge that procurement organizations are facing as millions of skilled Baby Boomers contemplate retirement.

- Robert J. Bowman, SupplyChainBrain

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Unemployment stood at 10.4 percent last month, so from the standpoint of the American worker, we're still in a recession. Bosses call the shots; they don't have to offer their employees anything more than a regular paycheck.

Looks like Ken Steers didn't get the memo.

Steers is president of Freight Solution Providers, an airfreight forwarder based in Sacramento, Calif. He offers a highly specialized service - the "white-glove" handling of pricey items that are extremely time-sensitive. Or, as Steers calls it: "The stuff the other airfreight forwarders don't want or can't handle."

So don't think of FSP as a typical services company that can hire anyone with half a brain, a decent haircut and a willingness to learn the business. In fact, Steers is having trouble finding good salespeople. Never mind those tales of companies flooded by resumes from qualified candidates who were cut loose by corporate downsizing.

Which may help to explain the perk that FSP offers its own sales force. In the airfreight-forwarding business, reps draw a commission on accounts they have managed to nail, but the deal rarely lasts very long. As the revenues generated by a given customer grow, personnel are added to manage it, and the arrangement becomes a house account within a couple of years or so. So much for that commission.

That's not how things work at FSP. The salesperson who brought in the account continues to earn a commission over the life of the relationship. He or she remains responsible for the revenue flow, with a strong motivation to keep it going. Meanwhile, a designated program manager takes care of day-to-day doings with the customer, freeing up the salesperson to troll for more accounts.

You might think that the extra incentive would cause a sales executive, fearful of losing the account, to ride herd over the program manager. In fact, some individuals pride themselves on their ability to terrorize those who hunker in the operational trenches. Steers works hard to avoid that dynamic. "We don't want that sort of person," he says. "We want someone who feels comfortable with our sales infrastructure, who isn't worried that he's going to lose the account." In any case, he says, the point isn't to please the immediate customer. The real target, as always, is the customer's customer.

Would you be surprised to learn that FSP has zero turnover in its sales force? Steers can't abide the notion of a revolving door in that part of the organization. Closing a big account takes between 18 months and three years of hard work, he says. And FSP deals with some of the biggest - Hewlett-Packard, IBM, Dell, Johnson & Johnson, Panasonic. None of them is shy about punishing providers for service lapses. So keeping the forwarder's sales staff happy is just good business.

Customers end up happy, too. They like the kind of continuity that's represented by seeing the same sales reps year after year, even if they aren't dealing directly with those individuals on a frequent basis. Steers remembers all too well his days as an agent working on commission, in partnership with his wife Leilanie (who happens to be the founder and chief executive officer of FSP). "As soon as we got cut out of the deal," he says, "they [the service provider] would lose the account."

Employee longevity creates its own problems, of course. It makes for little in the way of fresh blood, and raises the dilemma of what to do when existing workers approach retirement. That's the current situation at FSP, where Steers needs some new faces - and soon. The training curve is steep, and "there's no college that teaches my industry." You can get a university degree in logistics, but not in airfreight forwarding. He estimates that it takes about three years of on-the-job experience in customer service, operations and performance management to get individuals "to where they're worth it to me. So it's really expensive to lose them."

Reality check: FSP's sales team consists of just four people. (Not bad for a company that does more than $50m of business each year, and upwards of 24,000 shipments a month.) So can this beneficent setup be scaled? Steers, who is looking to hire more salespeople in addition to replacing those who are ready to retire, is convinced that it can. Regardless of the size of his sales force, he says, there's still the need to hang on to skilled, talented individuals - and to incentivize them to give customers the best possible treatment. Assuming that a business doesn't provide a commodity that's entirely price-driven, "I think it's the way it should be."

In my next post, I'll stay on the topic of the human element in supply-chain management, and examine the challenge that procurement organizations are facing as millions of skilled Baby Boomers contemplate retirement.

- Robert J. Bowman, SupplyChainBrain

Comment on This Article