Get Our Email Newsletter

‘Trust, but verify’ is sound leadership advice

Russ Kathrein - Selling our industry

 

Back in the 1980s during nuclear treaty negotiations, President Ronald Reagan said, “Trust, but verify” to describe how the U.S. would proceed with its Soviet counterparts. Since it was actually an old Russian proverb, rather than being offended, their leader laughed and it became part of our lexicon, too.

LBM Resources

White Paper: 3 Ways to Ensure Success with the Right Manufacturing Partner

LBM owners must look for a partner who does more than just sell products.

This phrase is probably one of the most useful things to keep in mind for any leader. It comes into play under three different scenarios. The most obvious, but less common, is that you really don’t trust that someone is going to do what they say they will. The second is when you want to create accountability with your people. “Inspect what you expect” is another way to put it. The third, and most important and useful application of this phrase, is when you challenge the status quo.

When you ask questions about big programs, big customers, or other long-term practices, your people will often tell you things they firmly believe when, in fact, the truth may be completely different. Does this mean they are liars? No, it often means they were led to believe something in discussions with other people, so they accepted it as gospel. Or maybe they only know their small area of a big picture and trust that someone else knows about the rest.

I was new in my position with multiple markets and locations reporting up to me. One market had one of our largest customers. This customer accounted for a great deal of that region’s total volume, and 2/3 of the assigned salesperson’s volume. What made this customer so remarkable was that he participated in just about every program we had. Customized marketing, model home program, vendor trips, specialized inventory, new product introduction, and more. If we offered it, he participated in it and subsequently was viewed as one of our success stories.

- Advertisement -

Being new, I wanted us to understand why this customer gave us almost 100% of his business. As we started looking at each individual program, we saw a similar trend. The owner would personally get involved and then would negotiate his own deal, one that often meant he got it for free, while we were charging all our other customers. He extracted a pound of flesh from every vendor we brought on to partner with his company, and he demanded that he be the first in line for every product and service because he was our biggest customer. As we dug further, and to make matters worse, we learned our salesperson, who was supposed to be managing our interests with this customer, had talked management into continuing to pay him commission on sales, rather than on gross profit dollars as we did with the rest of our sales team. Because so much of his pay was wrapped up in this customer, he spent most of his day as their de facto employee.

Everybody thought that this was a great customer, who while demanding, was a model for how we wanted all our customers to evolve. The problem was that no one was looking at the customer in its entirety. They only knew their small portion that might be outside what we normally do. Surely, we made money on this customer with all the business we were doing, right? The problem was not only weren’t we making any money, we were also significantly overpaying a salesperson for the right to do so.

Another version of this is when one department assumes something is being done by another department, but never really confirms it. Again, we had another large builder who wanted to pay his account with a credit card so he could build up points or miles. When we set this up, the builder agreed to pay the credit card fee. Unfortunately, no one followed up to make sure this was being done on a regular basis. Because this was a one-off program, we had to create a manual charge each month. At some point, we forgot or stopped doing the charge that everyone involved in creating the agreement thought was still happening.

- Advertisement -

So when you are new to a position or situation, take the time to thoroughly research how things are done and why. When you challenge why things are done in some way and the response is, “That’s how we’ve always done it,” that should be the first indication that it’s time for a little “Trust, but verify.”

Russ Kathrein is with the LBM Division of Do it Best Corp. based in Fort Wayne, Indiana.

Get our free newsletter

Join thousands of other lumber and building material industry leaders and keep up with the companies, people, products and issues shaping the industry.

What's New

Digital Partners

Become a digital partner ...

Sales Comp Study

Download this 55-page, in-depth study by LBM Journal of industry trends in sales force compensation and benefits. See how your organization stacks up.

Webinars

- Advertisement -

White Papers

View all ...

- Advertisement -

Partner Content

View all ...

- Advertisement -

Registration is now open for the LBM Strategies 2024 Conference