What Happens To The Train When The Driver Jumps Off ?
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By Dr Supriya Biswas When Sun COO Ed Zander left after 15 years there, Sun’s stock fell 14%, shaving $2bn from its market capitalization. When it was announced Zander was joining Motorola as CEO, Motorola’s stock rose 4.2%, adding almost exactly $2bn to Motorola’s valuation. (Jason Stamper) Users of Oracle Corp.’s database software had downplayed the likely impact they would feel from the resignation of Gary Bloom, an executive vice-president who was in charge of Oracle’s database development activities and numerous other key functions at the company. Oracle announced Bloom would leave as of Dec. 15, 2000 to become president and CEO of Veritas Software Corp., a Mountain View, Calif.-based maker of storage management software. Bloom was the second high-ranking executive to leave Oracle in a span of five months, with his resignation following the July departure of Ray Lane, Oracle’s former president and chief operating officer. According to Phil Russom, an analyst at Hurwitz Group Inc. in Framingham, Mass, the users he talked to “obsess over changes in Oracle’s product pricing and packaging,” he said. “[They] have no interest in Oracle’s management changes. I see [Bloom’s] departure from Oracle as just another short-term glitch.” Other analysts weren’t so sure about Oracle’s ability to withstand the resignation of a second senior-level executive in less than six months. Many had considered Bloom to be a potential heir-apparent to Ellison, particularly after Lane left the company following a falling-out with Oracle’s CEO. (IT World, Canada). The Market Thinks Differently But the stock market reflected the effect in this piece of news. “Oracle slid $4.06 to $24.75. Veritas Software Corp., a maker of software that runs Web sites, said it named Gary Bloom, an executive vice president at Oracle, its chief executive. Veritas gained $2.88 to $107.25. Bloom, a 14-year Oracle veteran, was seen as a possible successor to Chairman Larry Ellison and is the latest executive to leave the company following the resignation of President Ray Lane in July. UBS Warburg’s chief global strategist, Ed Kerschner, removed Oracle from the firm’s “Highlighted Stocks'’ list. In India, look at Samsung’s case. Samsung India had officially written to ChannelTimes, claiming the Vivek Prakash resignation story as “unsubstantiated”. However, it failed to answer channel partner concerns on who the new chief would be and whether he would fulfil the commitments made by Prakash. Samsung said that while Prakash has put in his papers, the company has not yet accepted them. However, conversations with several sources within the company indicate that they would get accepted. Vivek Prakash’s abrupt resignation had, however, sent a section of Samsung partners into a tizzy. “Vivek Prakash is one of the persons who has written Samsung’s success story during the last five years, and [lack of] coordination with the new man might disturb the channels,” said one of the channel partners. A few others expressed doubts about the vendor’s policies. Will Customer & Relationship Manager Click ? Few elite partners had some information about the internal feuds that were going on within the company. For example, Samsung had not submitted the price-list for the January month, which it generally releases during the month-end after product dumping. Citing this as a rare case when a company had not tendered out the price-list, a close source said this was due to some internal audit. Some others spoke about product sorting. Dealers said they even contacted Samsung distributors about the prices when they received this information. A few dealers said that payments were pending with Samsung. “I am yet to receive my payment for a roadshow conducted for Samsung,” said a market source on condition of anonymity. “I have tried to contact the person concerned about my payment, but he asked me to wait till everything is sorted out,” he added. (Chaudhury, Anjali, Channeltimes, Jan 21, 2005) New customer and new Relationship Manager- the probability that both can click evenly, may be high. Both share the same starting trouble, together undergoes the process of learning and once there is success – they become friends. With greater client partner interactions towards positive direction, there is promotion of relationship constructs, namely adaptation, trust, confidence, co-operation, etc. culminating a sense of working as one team. Winning Work Is About Relationships Professional service firms win work when prospects trust them to solve their problems. “Trust” is the cornerstone of winning work and retaining clients. For most purchasers of professional services, trust begins with the key person (rainmaker) who really cares about the client’s problem and can orchestrate a solution. Relationship-based selling is the single most powerful method of securing new clients and keeping existing ones. People don’t care how much you (or your firm) know until they know how much you (and your firm) care. It is a person-to-person business. (Schrag, M Dennis 2003)
Relationship-based issues account for 70 percent of the total impact for winning work, according to Lore International Institute research. The role of the rainmaker in establishing faith and maintaining communications and trust is critical in the process of winning work. An effective Relationship Manager can even command the power equation and assume the role of business advisor-cum-mentor of the client, lending thought leadership for strategy and planning. The Relationship Manager acts as the first guard of the organization to ensure Seamless Business Interest Integration with the client. The value proposition embedded in the role of Relationship Manager in high-end service oriented business is intangible, but it is enormous. Is There A Cycle For A Relationship ? In IT and service industry, the Relationship Managers are the key persons tackling issues from business negotiations to delivery for both sides – client and partner. It is their goodwill that enables acquisition of new business through cross-sell and up-sell. The Relationship Manager though identified separately, but ‘Rainmakers’ are the manifestations of Relationship Managers who live with the clients.
Is there any pre-defined life cycle of such continued relationship? How long can the client and partner enjoy such comfort level of this partnership? The answer is: as long as there is least or no irritation lies in between. There could be issues of product, delivery, after sales service and so many others with the client and partner. The Relationship Manager can play a vital role to negotiate issues, resolve conflicts. To cap it all, after relationship stabilization, his mere physical presence helps clients to proactively address the problems. But nothing is permanent except change. If the change is concurrent in both the camps, this can be desirable. New faces on both sides once again reciprocate each other’s comfort and discomfort to have a smooth sailing in relationship building process. Possibility of such concurrency can be remote. The client may suddenly change person to handle the business or else the client’s person may quit either. Departures Are Common Now From partner’s end, the existing Relationship Manager can also quit the job. True when he rediscovers his own worth through client‘s mirror. These situations in the industry are not uncommon. The fall-out affects business performance of an organization.
There are other ways of tackling this change. According to one Vice President of East Coast Specialty Consulting Engineering Firm in US: “The departing seller and replacing seller met face-to-face with each client. They tried to focus the meeting on the positive energy of the firm in providing seamless service. Usually a senior executive would also attend this relationship transfer meeting. There was enhanced communications during the first few months of the transition. Because of the problem of rainmakers leaving the firm, the organization is seeking more employees within the firm who can have a relationship with the client organization.”
With expanding globalization and free flow of FDI, this is very common issue in the Indian industry. The pervasive nature of such ‘Rainmakers’ turnover is predominant in the knowledge sector, namely, IT, professional education and training, media, FMCG etc. Companies with large of pool of professional can survive this change of guards. For others, the only option left is to perish or to be acquired when there is mass exodus of such change in the guard if such exodus is not handled with care. Problems Down The Line
These examples have focused on the outcome when any or some of the top executives of management pyramid quits. In the middle level, where a senior executive who builds up a day to day rapport with the customer quits, company business also suffers a visible setback. In the contextual plane of Relationship Marketing, it is more important to undertake necessary preparation from vendor’s end to live with such change. If the first guard is fairly successful, he can use his experience and learning to tackle matters when there is a change in the customer’s person. But when the first guard quits the job, have pity for the next person in command for pitching in and live up to the expectation of the client. Longer and successful the relationship, it becomes more painful for the new driver of relationship to drive the vehicle with the same speed with fewer jerks. The reason is simple: it is difficult to assimilate in a short span of time the experience, the learning that the other has earned over a period of time in a different environment. If the client is less critical about person, (its likelihood would be very less) the second guard will be lucky enough to pass the test. Normally, client demands much more than ‘the already enjoyed comfort level’ with the previous guard. Incidentally, this is the reality in business. New Guard Must Work Harder Then the new guard is expected to stretch and exert multiple times of the previous guard’s effort, just to reestablish some degree of client’s earlier confidence. This is an enormous task and entails great responsibility. The irony is, there is always an advantage of being the first that the second can never have even if first has just one feather in his cap. Hence, the struggle for establishing the identity of the second guard begins right from introduction and it is a painstaking exercise.
Organizations subscribing traditional and conservative business value system, a change in person triggers tremendous psychological impact in the client’s perceptual map for next person’s acceptance. It is observed that the client always refers the earlier successful relationship manager as the role model and insists his style, methodology should be followed. Therefore, sufficient and adequate care needs to be taken to plan this activity. If it fails, the relationship gets a dent and become fragile. There is one point to note. While tackling the change, the first and foremost concern is the selection of the right replacement of the first guard. The replacement of old guard is expected to have enough capability and potential to sustain the existing relationship and thereafter take it forward. However, apart from briefing the new guard, it is preferable that there is a simulation of business fire walk for the new person for sometime. Such situation takes the new guard somewhat close to the reality. Hence confidence to act to earn faith and goodwill of the client becomes a matter of relative convenience. Get It Insured As Well To mitigate such risk of key person’s exit, new category of insurance cover has been introduced in some countries, known as Key Person Insurance. Key person insurance is designed to minimize disruption to your business if one of your key staff members was taken out of the picture. Regardless of the worth of a business in terms of equipment, property, inventory, goodwill etc, the biggest asset is usually those people whose efforts and skill drive it. They are the people who provide the ideas, initiative and talent that generate the profits needed for the survival and growth of the business. The sudden loss of a key person can have an adverse effect on the sales and profits of the business and, until a suitable replacement is found, the business could be faced with recruitment costs, possible loss of clients, and negative impact on goodwill and credit rating
In conclusion, the relationship manager is one of the vital touch points between the client and partner with a role that is envisaged in guarding the business interest of the partner’s organization. Therefore, strategic planning for effective change of guard can prevent undue tension and irritation in business relationship causing client attrition and business loss. ************************************************************* References:
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