Creating An Objective

Assuming your company outlined high-level goals and objectives, it is time to create personal objectives for your team.

Say you have an objective to grow online sales by twenty percent in 2008. If you are responsible for the e-mail program, with a list of 100,000 subscribers receiving 52 e-mails a year that generate $0.25 per e-mail, your e-mail program drives 100,000 * 52 * $0.25 = $1,300,000 on an annual basis.

If online sales are supposed to grow by twenty percent, your e-mail volume had better grow by at least twenty percent next year!

Therefore, your objective might look something like this:

Increase annual e-mail volume by at least twenty percent in 2008 on a program that includes one campaign per week and a twenty percent increase in the total e-mail marketing budget. Increases can come from file growth and productivity per e-mail delivered.

Performance Measurement:

• "A" = $1,755,000 or more annual volume.
• "B" = $1,625,000 to $1,754,999 annual volume.
• "C" = $1,495,000 to $1,624,999 annual volume.
• "D" = $1,365,000 to $1,494,999 annual volume.
• "F" = $1,364,999 or less annual volume.

Notice that a grade of "C" is average --- a "C" represents expected performance.

Notice that the objective says little about "how" the objective will be met. There is language that insures that e-mail campaigns will be "weekly" --- the team cannot achieve this goal by sending a campaign every-other-day. There is language that dictates the annual marketing budget, this language will limit the ability of folks to go hire a high-powered vendor, for instance.

After outlining the rules, it is up to the staff managing the program to figure out "how" this will happen.

At the end of 2008, performance is measured against this standard. Employees should feel good about earning a grade of "C" --- it means they delivered performance necessary to meet company objectives.

It is really important to set these objectives before the fiscal year starts. Employees need to be given a chance to impact business, to be given a chance to plan ahead and secure the resources necessary to achieve great performance. Some companies roll out objectives or bonuses well after the fiscal year begins. Employees cannot impact annual results when this happens.

Your turn --- what have you observed when it comes to creating performance objectives?

Multichannel Retailing Week: Human Resources

We're at a very important crossroads in multichannel retailing, one that is well suited for the talents of your beloved Human Resources staff member.

There are at least four important issues that I've experienced, issues requiring leadership from the Human Resources teams I've worked with.

The first issue is talent, or more specifically, a lack of talent. This doesn't mean the folks working at multichannel retailers lack talent. Instead, the demographics of America are conspiring against multichannel retailers.

Through the 1980s and 1990s talent was plentiful. Baby Boomers were generally between the ages of 35 and 55, filling the lion's share of management positions at growing multichannel retailers. This was a wonderful situation for Baby Boomers, but a frustrating situation for my generation, dubiously labeled 'Generation X'. Career opportunities have been far less plentiful for Gen-X individuals, trapped by Baby Boomers who are firmly entrenched in their career trajectory.

As a result, Gen-Xers have taken different paths to achieve career objectives, becoming the most entrepreneurial generation in history, according to a recent article in the Harvard Business Review.

The smaller number of Gen-X individuals (compared with the Baby Boomer generation), coupled with alternate career paths crafted by Gen-Xers have created a talent shortage at the Sr. Analyst, Manager and Director level. Adding to the talent challenge is the fact that Gen-Xers who are working at multichannel retailers are heavily focused on online and e-mail marketing disciplines, and are less focused on traditional jobs.

Human Resource individuals have the opportunity to re-invent the multichannel professional workplace. Via telecommuting and work-life balance, HR staffers can add to the talent pool of the multichannel retailer in non-traditional ways.

A second issue I've observed surrounds compensation. With Baby Boomers firmly entrenched in management positions, Gen-Xers and Gen-Yers are largely trapped in entry level and middle management positions. Multichannel retailers have largely put the clamps on compensation over the past decade, allowing marginal salary increases that barely keep pace with inflation. I've watched this practice cripple talented teams across many companies. Our HR team members have a huge opportunity to craft compensation packages (bonuses, stock options, additional paid time off) that reward entry level and middle management professionals for outstanding performance without significantly increasing base pay.

A third issue involves professional tension surrounding the "marketing digital divide". Take your marketing employee working in the advertising department, supporting newspaper advertising. This individual can do outstanding work. How do you prove the work drove an increase in sales? Now take a marketing employee working in the paid search department. This individual can do average work. Yet, there are a veritable plethora of metrics that prove there was an increase in sales. This individual may be viewed more favorably by management. Our Human Resource partners can help create career paths that reward outstanding employees, regardless which side of the marketing digital divide they work on. In addition, our HR teams can provide 'cross-training' opportunities, to get employees over the marketing digital divide.

The fourth issue I've observed holds back multichannel retailers. This issue combines "under-staffing" with "metrics obsession".

I spoke with a marketing director today who told me he has never worked harder in his entire twenty year career than he has worked in the past two years --- and his hard work has largely gone unrecognized by Sr. Management.

A combination of lean staffing and too many unimportant real-time metrics have created a level of 'busy work' that is unprecedented in multichannel retailing. We can measure changes in paid search conversion on a minute-by-minute basis, causing so much more tension than existed fifteen years ago when we measured marketing effectiveness once a week, or once every twelve weeks! This 'busy work' causes all staff members to focus on unimportant issues. We fail to focus on strategy, because we have to understand the reasons why the Monday e-mail campaign performed 3.8% below expectations (though we don't have the tools to measure if it drove a 3.8% increase at retail). HR staffers can partner with business leaders to address time management skills, helping employees focus on 'big picture' challenges instead of short-term metric-based crises that are not relevant to the overall momentum of the business.

As I mentioned at the start of this article, these times are well suited for the talents of the Human Resources leader.

Your turn --- what challenges are you observing in your multichannel organization that are well suited for the talents of the HR leader?

Analyst or Manager Compensation

When business doesn't meet expectations, heads roll. One or more executives will receive a tidy compensation package as part of their exit from the struggling business.

Professionals, folks who are not Directors or Vice Presidents, are also ousted when business stinks.

For those of you who are not Directors or Vice Presidents, which compensation package would you sign up for, if your company offered you a choice? Alternatively, recommend a different package if you don't like any of the three presented here.


Package #1 = A base salary of $62,000 per year. Employee is not bonus eligible. Employee is at risk for downsizing if business is poor.

Package #2 = A base salary of $60,000 per year, plus a bonus that could be up to ten percent of your base salary, depending upon company and individual performance. Possible salary range = $60,000 to $66,000 per year. Employee is at risk for downsizing if business is poor.

Package #3 = A base salary of $40,000 per year, plus a bonus (paid quarterly) that could be up to one hundred percent of your base salary, depending upon company and individual performance. Possible salary range = $40,000 to $80,000 per year. Employee is at a much lower risk for downsizing if business is poor.

Profit And Loss Responsibility

About two months into a new fiscal year, the occasional ups and downs in a business begin to average out. You begin to have a good idea whether your year is heading in a positive direction, or if it is starting to become difficult to achieve bonus levels this year.

If you have profit and loss responsibility, your year is at an interesting inflection point. Most of the folks working in our multichannel businesses don't get to see the interplay between executives, especially when sales levels are not meeting expectations.

The merchandise executive feels a lot of pressure. Her merchandise is not selling, and there could be many reasons for this. Maybe the database marketing executive didn't mail the right customers. Maybe the online marketing executive isn't attracting the right traffic to the site. Maybe the brand marketing/creative leader is depicting the merchandise in an unflattering manner. She needs help understanding what is happening in the relationship between her customers, and her merchandise. No focus group of nine individuals, no survey of 3,000 loyal purchasers will provide the insight she needs to make decisions today.

Working with merchants who take accountability for sub-par business results is an absolute blessing.

The inventory executive feels a lot of pressure. He is bonused on outstanding fulfillment, great gross margins, and rapid inventory turn. When the business goes south, he needs to liquidate merchandise quickly. He'll demand additional clearance catalog mailings, increased e-mail frequency, free shipping, 20% off your order, whatever it takes to sell out from under the pile of unwanted garbage the merchants bought. The customer experience becomes secondary to moving merchandise at any cost.

The database marketing executive feels a lot of pressure. She is often the first person to be blamed for sub-par business results. It is so easy to assume that the wrong customers were mailed catalogs, that the e-mail campaigns were not actually delivered to the customer, that the post office forgot to deliver 200,000 catalogs, that the techno-geeks who forecast sales made big mistakes. It is hard for executives to accept the fact that customers didn't want to purchase our merchandise. This is the time of year that the database marketing executive starts trying to craft a story about customer behavior --- a story that doesn't offend folks, but adequately gets her off the accountability hook.

The finance executive feels a lot of pressure. He knows that additional mailings, online advertising, price reductions, shipping promotions and any of a number of additional incentives will cause expenses to not leverage well against sales. He'll demand that the database marketing executive re-forecast the customer file, and re-forecast sales for the remainder of the year. The board/owner will need to know the expected profit impact of the sales implosion. The finance executive will take more heat from the board/owner than is deserved.

The brand marketing/creative executive feels a lot of pressure. She is trying so hard to provide an outstanding experience for the customer. She reads a dozen blogs that preach the critical importance of "managing the brand". She reads another dozen blogs that constantly harp on how brands fail to treat customers well, marketing blogs that take repeated potshots at companies for failing to meet customer expectations. Then she looks at her business peers, who are about to trample the customer experience to move merchandise at any cost.

How does she convince them that this is bad for the business?

Worse, how does she provide a viable alternative for clearing $10,000,000 of overstocked merchandise, one that doesn't trample the customer experience? Do any of the marketing bloggers have a credible, creative solution to this problem? How about the vendor community?

This is a key element of profit and loss responsibility that vendors, bloggers and pundits fail to appreciate. There is tremendous pressure to bail out the profit and loss statement, tremendous pressure to get out from under yesterday's poor merchandising decisions today, tremendous pressure to save one's job. Few of the options (discounts, promotions, price cuts, free shipping, additional mailings, additional e-mail contacts, you name it) are good for the long-term customer experience or are good for "the brand". Comments like 'the brand should have offered great merchandise that the customers wanted to buy in the first place' fail to solve the problems the executive has to navigate through today.

Without viable alternatives, the brand marketing/creative executive is in a no-win situation. You can see why the average Chief Marketing Officer lasts 23 months --- no viable short-term solutions to move overstocked product, no way to protect the customer from the impending onslaught of advertising of crappy merchandise, no way to truly succeed in her job.

The operations executive is nervous, because a continued downturn in business results in staffing cuts in the phone center and distribution center. Who wants to go through that experience?

The human resources executive deals with secondary issues created by stress. Employees begin snipping at each other. Some employees quit, heading instead for the lucrative surroundings of a successful business. HR is not a fun place to be during a downturn.

The information technology executive is nervous, because the executive team is demanding that website improvements be completed now, to improve business. The executive team also is demanding business intelligence solutions from information technology folks --- the executives want to know why customers aren't purchasing, and cannot articulate questions in a way that an information technology executive can effectively program into a report.

Profit and loss responsibility changes the way one thinks about a business.

When business exceeds expectations, it is easy to think about theoretical issues like return on customer, providing an exceptional customer experience, enhancing the "brand", developing new business opportunities, figuring out how to grow to three billion dollars in sales, giving customers a say in advertising, developing a CEO blog, you name it.

But when the business fails to meet expectations, all that fun stuff goes out the window. One bad year costs the executive her bonus. Two bad years costs the executive her job. Short-term decisions are made to save the profit and loss statement, to buy another six months of time to acquire new merchandise that the customer might want to purchase.

And when the company is publicly traded, all of these issues are magnified by shareholders demanding a return on investment today. Most of you reading this blog are indirect shareholders --- you have 401k accounts, and you're not patient when your 401k account loses value, are you? You indirectly contribute to the problems you openly grumble about.

One can see how special visionary leaders are --- the rare individual who can keep an eye on strategic, visionary issues, while navigating choppy waters every-other or every-third year.

Today's online marketing executives have not gone through a lot of these business cycles. The online channel has pointed straight up for a decade. It's only a matter of time before the pressures all executives feel are thrust upon our new generation of online marketing executives.