January 04, 2016
John Addison on Field Leadership: A Healthy Company Starts with Good Cash Flow to the Field
John Addison, now President and CEO of Addison Leadership Group and Leadership Editor for SUCCESS magazine, engages and inspires audiences with his relatable messages. Most recently, he served as Co-CEO of Primerica Inc., a company he joined more than 35 years ago. Publisher and Editor in Chief Lauren Lawley Head had an opportunity to sit down with him this month to talk about his vision and the future of direct selling. Below is an excerpt from the interview.
DSN: John, you have often said that the key metric for assessing the health of a direct selling company is cash flow to the field. How did you come to recognize that?
JA: Just through the experience of being a part of the business through all of those years. In about 1984, I was responsible for field compensation. Bo Adams, who was Art Williams’ right-hand man, used to tell us that the most sensitive nerve in the body of a salesperson goes from the wallet to the brain and that as long as checks were going up everything was great, but when checks were going down everything was a disaster. He told us we needed to understand that the cash to the field was the life blood of leading a sales organization.
If a person’s income—cash flow—is going up, attitude is good, and that person works harder. And it’s the same when it goes the other way. If cash flow is down, attitude is down and that person works less. Cash flow is what drives attitude, which drives activity, which drives the business.
DSN: If the company starts to see a negative trend in that area what process do you advise the executive team to use to determine what’s causing the decline?
JA: In addition to all of the metrics that manage the business, executives need to have monthly metrics focused on the key leaders in the salesforce, looking to see whose cash flow is up year-over-year and whose cash flow is down. Now, there will always be some people up and some people down at the same time, because this is a business of momentum cycles. You need to understand what is going on in the pockets, and therefore the hearts and minds, of your salesforce. When you see negative trends, you’ve got to figure out what’s happening. If a key leader was down, I got on the phone and asked, “What’s going on?”
It’s also the executive’s responsibility to create momentum when things aren’t going well, looking for ways to make a surge in the business. When cash flow to the field is down, you must cause activity to go up, which therefore causes cash flow to go up. You need to understand that your business is not an organization, it’s an organism—it’s a living breathing thing and you’re either growing or you’re dying. And you’ve got to manage it that way.
DSN: Are there some specific incentives that you’ve seen inject some positive energy?
JA: The field’s cash flow is fundamentally dependent on what’s happening on the front end of the business with new people. A direct sales company is about new people bringing in new people. If you’re having the same old meeting with the same old people, you’re not growing. You’ve got to have new people coming in, new heroes emerging. You have to make sure there are incentives at the front of your business to drive new sales to customers.
You also have to find what works for your specific business. I can speak to what worked for us, and that was cash and trips. We didn’t use a car program, though that works for some companies. We created momentum around a great trip, Hawaii for example, and we always made sure there were plenty of slots for new people to achieve.
DSN: You’ve spoken before about your time at the helm of Primerica and your relationships with your senior leaders. Can you elaborate on how those relationships impacted your leadership style?
JA: Well, you can’t run a direct sales company and not know your people. Not just how they are, but how they think. It’s important to understand that the term ‘salesforce consensus’ is an oxymoron. They are not all going to think the same. They are going to violently disagree on some things. You have to be able to deal with that and realize there are decisions you are going to make as a leader that some people are going to love and some people are going to hate. It can be difficult to manage because these folks have very strong personalities and very strong opinions. The only way to manage through all of that is to have developed very strong relationships with them over time. There has to be a level of trust, even when you disagree.
People can smell a phony a mile away, so never try to be something you aren’t. You have to develop trust and earn respect. It doesn’t happen overnight, and there will be difficult times. I always told the field “Look, I’m not going to talk to you about things I don’t know about. I know this business and I know this company, and I’m going to be a person you can trust.”
DSN: You advise leaders of all kinds of organizations to focus on what they can control and let the rest take care of itself. When you look at direct selling companies today across the spectrum, where do you see leaders tend to go wrong in that area?
JA: If you are a founder or a CEO and you get focused on your end game, and not focused on their cash flow, you are going into a death spiral of momentum in your business. You better be constantly focused on their attitude and their activity and be honest about where you are. The other thing I think is very easy to do is you get short-term focused on hyper-growth too quickly. You’re going to crash and burn. You’ve got to build a business day-to-day but in a healthy way. Don’t get focused on short-term recruiting or short-term hype.
I think some companies try to hype “get rich, get rich,” and “look how many rich people we got,” when in truth what I think they need to be focused on is how many part-time people earn $1,000 a month or $2,000 a month. You know, for a guy who is a school teacher making $40,000-$50,000 a year to now make an extra $1,500 a month, that’s a big deal, that’s a huge success.
DSN: As you look at the direct selling landscape as we head into 2016, what do you see as the greatest leadership challenges and opportunities for the channel?
JA: In the world we are in today, it’s almost like success has become a bad thing. I mean I hate to say it, but there’s almost an attitude that if people are making a lot of money they must be doing something wrong. I think the way you change the image is that you make sure that there are real people having real success in your business model.
I’ve said many times, you’ve got to ask yourself, “Would people buy what I’m selling if there was no opportunity attached to it?” Art Williams was great at selling the toughness. He never told people, “Hey, join our company and you’re going to get rich.” He said, “It’s going to be tough, but some of you are going to be great.” Make sure your underlying business is really producing people who make money and that you’re servicing real customers.