After a halting start, your small business is finally on an upswing. It’s attracting a healthy stable of clients and generating revenue. The timing is good to hire a sales rep that will increase your product distribution and/or business presence.
However, months or years later, you are finding out that what began as a promising arrangement is not working out due to a variety of factors, some of which you may not be able to control. Do you stick it out and hope that more time, or some additional training, will help? Or do you let the sales rep go? At some point you need to decide that it’s time to cut your losses. Here are some reasons why:
#1: The sales rep is not meeting your quota
Of all the reasons to terminate a sales rep, this is arguably the most popular and understandable. You have a small business to run and goals to meet in order to pay your bills and generate income. If your sales rep has not been able to meet basic sales goals per a specific schedule (i.e. daily, weekly, monthly), then you may have to reassess whether he/she is the right fit for that position.
Questions you need to ask yourself to ascertain whether your rep is meeting his or her quota, according to Mike Schultz, president and founder of RAIN Group, a sales training firm that frequently services small business clients, are:
- How many prospects should enter the rep’s pipeline?
- How many of them should turn into opportunities for new business?
- How many leads should close within a certain timeframe?
- What is your company’s pricing and profit criteria?
- What should repeat business rates look like?
Sometimes, even the most capable sales rep could flounder on the job by not knowing the answers to these questions. “The key for small business is that they don’t know what the criteria for success should really be,” explains Schultz.
Yet letting a sales rep go and doing it in a way that respects the work that he/she has done can be a difficult chore, particularly if the employee has shown dedication and diligence and was one of the owner’s first hires.
Jeff Goldberg, a sales trainer and consultant who often works with small business owners and runs his own business, Jeff Goldberg & Associates, faced a similar predicament years ago when he was working as the national sales director of a market research company.
“I had an inside sales rep that was a great guy, very likeable and hardworking,” he recalls. “However, he never hit quota. He would sometimes come close but never hit his numbers. Other reps were hitting the same number, so I knew the expectations were realistic and reasonable. I worked with him regularly for nearly 30 days, observing his work habits and listening to his phone
conversations with prospects while offering advice. I believe he was doing his best, but it wasn't good enough. My strong feeling is that if I've done my best, and the rep has done their best, and they still can't succeed, I'm not doing them any favors by keeping them as an employee.”
Your sales rep has finally snagged a coveted appointment with a potentially lucrative client. Unfortunately, the meeting implodes due to the rep’s unorthodox or unsettling conduct. That scenario makes termination something of a no-brainer. Sometimes, though, the behavioral infraction may not be so obvious. As the small business owner, it will be up to you to define what constitutes an acceptable standard of conduct for your sales reps to uphold when dealing with clients or prospects.
Cammie Scott, president of CK Harp & Associates, a 17-year-old insurance agency based in Springdale, Arkansas, offers an example of a rep she hired to assist clients with insurance claims.
“She was going through a divorce and had a number of personal issues,” recounts Scott, who oversees a staff of 10. “When someone came in expecting help, she would begin to cry and could not contain herself. This was not what clients wanted. They wanted a compassionate person who could point them in the right direction.”
After several conversations with the rep about her unprofessional behavior in front of clients, the rep was let go and given two weeks of pay to “come and go as she pleased to help get another job.” The rep did find another job soon after and according to Scott, has referred numerous potential customers to Scott’s insurance agency.
The experience proved to be a compelling best practice on how to terminate employees without tarnishing your reputation in the process. “The moral of the story is even if a person is not the right fit for your position, make sure you don't burn any bridges as they will be right for another position,” counsels Scott. (For tips on how to execute this termination process smoothly, see sidebar below.)
#3: The sales rep is dishonest
In this instance, it doesn’t matter how many leads the rep has generated or how much revenue he/she has brought into the funnel; if he or she lies or fabricates, then it’s time to let the rep go. It will not benefit you keeping such an employee on your payroll; it may even harm your business if you continue to do so after the sale rep’s deceptive behavior has been exposed.
#4: The economy or sales cycle has become too sluggish or uncertain
Although sales cycles can fluctuate depending on the time of year (e.g. holidays), if they stagnate or dip indefinitely due to a bad economy or other factors, then a small business owner may be forced to let an otherwise high-performing sales rep go to keep costs down. In the wake of the recent recession, layoffs were endemic in corporate America.
Letting a sales rep go is never an easy undertaking. But if an employee’s behavior or lackluster performance is preventing your business from advancing to the next level, it may be your only viable option.
Disclaimer: The opinions expressed are solely those of the author and interviewees. You should consult a qualified HR professional to assist you in developing and implementing sound personnel policies and practices.
How To Fire a Sales Rep Without Tarnishing Your Reputation
You’ve tried your best. You’ve counseled the sales rep about his or her lackluster performance or questionable conduct and have put him or her on probation for a few months. Yet it’s still not working out. What you are about to do is something every employer, from the smallest mom-and-pop shop to the largest institutional brand, has had to do. But how do you let your sales rep go in a manner that will be civil without incurring undue harm to the business you’ve built from the ground up? Following are a few key best practices:
- Do not engage in personal attacks. Treat your outgoing sales rep with dignity and respect. “Remember this is a person,” advises Cammie Scott, president of CK Harp & Associates, a small insurance agency located in Springfield, Arkansas. “How would you like to be treated if this were happening to you?”
- Be detailed about the reasons for termination. “Make sure that you refer to specific goals that were not met,” says Kelly Daugherty, managing partner and co-founder at Smashing Golf & Tennis, a small business that manufactures golf and tennis clothes for women and was launched in 2011. “Do not just say, ‘You aren't growing the business enough.’ What were the goals laid out for them? What was the timeframe?
- Make sure you heed all legalities beforehand. If you fire a sales rep without due cause or if you do it in a manner that runs afoul of labor regulations, you may risk opening up yourself to a lawsuit. Such a dire scenario could have negative repercussions on the survival of your small business. To avoid this, “consult a labor law attorney to make sure you are complying with all laws and doing everything legally,” notes Scott. “There are lots of new laws and lots of changes to laws. It is better to be safe than sorry.”
- Do it face-to-face. Firing someone via e-mail or on the phone is neither professional nor an effective way to preserve your reputation. “If being face-to-face is not possible, use Skype or some other video service,” suggests Daugherty.