Blame Sales Reps for the Meltdown?!?

•  
  kate.dunn@...09/20/08 Report as spam
  1

  RE: Blame Sales Reps for the Meltdown?!?

  I'm a sales professional, although not in the financial services space, I disagree with your position...slightly.
  1. The CEOs knew that their companies were selling high risk loans. They have huge risk management departments to analyze this. They were greedy and figured that they would "make hay while the sun shines." Unfortunately, they must have been napping as the clouds rolled in.
  
  2. Now on to the sales professionals. A true sales professional of which I have been one for nearly 30 years. Knows the difference between good business and bad business. There was plenty of good business out there to find, plenty of people who needed litgitimate loans and had the financial means to handle those loans. If they had prospected a bit better or qualified a bit harder, they could have made plenty of money on good business. I suspect most did. So who is to blame? My hypothesis is that these loans were made by the not-so-professional sales people out there who take the easy way out most of the time. We all know them. They pillage a territory and then move on before it comes back to haunt them. They go after only low hanging fruit instead of cultivating long term relationships with prospects and clients. I believe this is where the bad loans were written.
  
  3. Finally, to paraphrase someone who is not running for election right now, perhaps it takes a village to do good business. You need CEOs with integrity who are focused on making money for their shareholders in a responsible way, you need sales professionals who can deliver those products and servies to the customers managing both their marching orders and the best interest of their clients and finally people need to be smart about their financial decisions because utlimately they will pay the price...one way or another. Did
  all those folks defaulting right now really not know they couldn't afford that house? Or were they just "making hay while the sun shines" as well?
  
  Kate Dunn

•  
  Geoffrey James, Sales Machine09/20/08 Report as spam
  2

  RE: Blame Sales Reps for the Meltdown?!?

  QUOTE: A true sales professional of which I have been one for nearly 30 years knows the difference between good business and bad business.
  
  The problem with viewing the situation this way is that discounts that:
  
  1) if CEOs hadn't made it their corporate strategy to sell such loans, the loan officers wouldn't have been selling them.
  
  2) if the CEOs had been doing their jobs, they would have fired the people responsible for writing the bad loans.
  
  
  
  Instead, the CEOs created cultures that fostered the behavior. While it would be nice if everyone behaved according to the highest principles of morality, the simple fact is that most people are only as moral as the system allows them to be. Sure, the loan officer could have quit, but the entirely predictable fact that many of them wouldn't quit and would continue to write bad loans is a management failure.
  
  
  
  So here's where we really break ranks on this. It's my feeling that because the CEOs are paid ridiculously large amounts of money, it's reasonable to expect them to actually run their companies without destroying investor value and screwing up the economy. It's not the job of the worker in the trenches who is doing what's expected of him.

•  
  ptiseo09/22/08 Report as spam
  3

  RE: Blame Sales Reps for the Meltdown?!?

  "Instead, the CEOs created cultures that fostered the behavior."
  
  Kate is right. As much as you love to create a black-and-white world where sales pros are infallible and every other occupation and position hangs on their wisdom and laurels, it's not just the CEO.
  
  Just like it's partially the CEO's fault for creating a product based on faulty long-term thinking, the sales pro (not the junior one) is guilty for going along with it. Put in other terms, how succesful would the greediest of CEOs have been had the foot-soldiers refused to march?
  
  At the risk of "Godwin-ing" the post, Hitler created the Holocaust, but we tried lower ranks for having toed the line and participated, even in small ways, to building and perpetuating the horror...
  
  Flavors of "conspiracy to commit a crime" come to mind with this "meltdown"...

•  
  Geoffrey James, Sales Machine09/22/08 Report as spam
  4

  RE: Blame Sales Reps for the Meltdown?!?

  QUOTE: we tried lower ranks for having toed the line and participated, even in small ways, to building and perpetuating the horror...
  
  A-dog, I agree that "I was only following orders" isn't much of an excuse. However, I also think that most of the sales reps were not aware that they were doing anything wrong. They were offering the products that they had been given to sell, under terms that their management had told them were both legal and appropriate. I don't think it's fair to expect them to make on the fly strategic decisions about what makes sense for their company and the economy, in direct contradiction to their managers.
  
  
  
  By contrast, war crimes involve activities that any reasonable person would immediately identify as a crime. It's one thing follow orders to kill innocent human; it's another to follow orders to sell a mortgage that might not get repaid.

•  
  pmorote09/22/08 Report as spam
  5

  RE: Blame Sales Reps for the Meltdown?!?

  "You can delegate authority, but not responsibility." Stephen W. Comiskey
  
  It can be argued at which corporate level this should've been stopped. Personally, I don't think it's the lowest level. By the time they realized something's wrong, someone at a higher level had much broader and better information and the ability to take action other than just resigning or refusing to follow orders.
  
  Yes, we can assign some of the blame to SRs but I think the responsibility by far is on top shoulders.

•  
  bnetgeo09/22/08 Report as spam
  6

  RE: Blame Sales Reps for the Meltdown?!?

  OK. You hit my hot botton. Deep breath..here goes... I'm going to take a different position. I think we have left one person out of this mess - the consumer! Yes, the consumer. Who in their right mind takes out a variable loan for 30 years and can't cover the extremes of the interest rates? Who thinks its a good idea to take out a zero down loan hoping the home values rise enough to make it a good investment or knowing they can barely make the payments as it is? At what point does the consumer say, I can't afford this, the risk is too high?
  
  Please spare me the diatribe! Everyone wants smaller government but nobody wants to take responsibility for their own actions. If people took it upon themselves to understand what they are signing we wouldn't need a large government writing copious laws to "protect" our well being. Ya can't legislate stupidity out of existence.
  
  I vote that the consumer is equally culpable as the CEO who mismanged this stuff, the gov't who sat on the side lines and the watch dogs who licked their...well, groomed themselves.
  
  At one level I admire these CEO's who thought up such a clever ploy to get the government to cover their bottom side. J. Paul Getty summed it up like this...owe the bank $100 and its your problem. Owe the bank $100 million and its their problem.
  
  Same thought goes with the economy. Have a problem that affects 100 people and its your problem. Have a problem that affects 100 million and its the governments problem.

•  
  Geoffrey James, Sales Machine09/22/08 Report as spam
  7

  RE: Blame Sales Reps for the Meltdown?!?

  QUOTE: Who in their right mind takes out a variable loan for 30 years and can't cover the extremes of the interest rates?
  
  Well, that sounds reasonable, except that you're bundling millions of individuals into a giant fictional entity and labeling it "the consumer." And then using that straw man to deflect blame.
  
  
  There's no question that some people who got the loans were stupid and didn't realize that they could get into trouble, or gambled wrongly that housing prices would continue to go up, or even lied about their income in order to get the loan.
  
  
  Even so, each little consumer -- an individual -- had no idea that they were going to destroy companies, destroy an industry, and possibly destroy the world economy. And, in any case, each individual only contributed .00001 percent to the problem, regardless of whether they guessed what might happen on a global scale.
  
  
  
  In the case of the CEOs, they were paid BIG BIG BIG money to know these things. It was their decision to offer loan products that could be abused, and to give people money who had no chance of paying it back. The consumers didn't have a gun to the CEO's heads. If a cash machine in a third world country starts spouting money, it makes more sense to blame the machine (and fix it) than blame the people who pocket the cash.
  
  
  
  As for the government, it is their JOB to make sure that stuff like this doesn't happen. I read in todays NY Times that McCain's campaign manager was a lobbyist for Freddy Mac and Fanny Mae -- and his job was to keep the government from passing stricter regulations. Nice to know what kind of government we'll get if we elect the man, eh?
  
  
  
  Your "blame the consumer" concept doesn't hold water. It's just a way to spread the blame around so that the real culprits don't get the blame that they deserve.

•  
  ptiseo09/23/08 Report as spam
  8

  RE: Blame Sales Reps for the Meltdown?!?

  "I also think that most of the sales reps were not aware that they were doing anything wrong."
  
  Some were probably ignorant of what they were selling. But, some knew exactly what they were selling... and didn't care because the fat commissions helped them forget.
  
  And, like most bell curves, most fell somewhere in between: wondering if what they were doing was kosher, but too scared to delve deeply. However, ignorance of the law usually only mitigates punishement, not culpability.
  
  That's if you consider the entire sales force in that industry. A *sales pro* is more than some patsy who follows a corporate-edition, spiral-bound sales script.
  
  "I don't think it's fair to expect them to make on the fly strategic decisions about what makes sense for their company and the economy, in direct contradiction to their managers."
  
  Don't get me wrong: I'm not saying the sales pro is wholly to blame. However, you are saying they are not to blame, and I have a problem with that. This absolves them of their critical role as the executor that makes the CEO's idea happen. Without them, how would this have started snowballing?
  
  Secondly, you often use this blog to say that each company's success rest fully on the shoulders of its sales staff. That therefore the sales staff should, in fact, be in charge of the company. Jettison the marketeers, the engineers should follow whatever sales says, etc.
  
  So, what is it? Are they the corporate thought and truth leaders or the innocent script-followers?
  
  The problem here is that trying to find ONE role to blame is totally futile. (It also exposes one's personal biases.)
  
  Most people shy away from complexity; it'd be nice to have one scapegoat we can focus on. But, it is the whole system that is to blame, from the government and its regulation phobia, to short-term-cashing-out CEOs, to managers and sales pros that executed a faulty plan, to the consumer who didn't stop to think that should the variable ARM they took out shift into credit-card-like interest, they'd never be able to foot the bill.
  
  What I am saying is: You ALL f****d up and I'm stuck footing the trillion dollar rescue tab and having to acquiesce to a financial dictatorship led by Paulson!

•  
  Geoffrey James, Sales Machine09/23/08 Report as spam
  9

  RE: Blame Sales Reps for the Meltdown?!?

  I respond to Alphadogg's comments in the following blog post:
  
  
  
  http://blogs.bnet.com/salesmachine/?p=509

•  
  Educated Worker09/23/08 Report as spam
  10

  RE: Blame Sales Reps for the Meltdown?!?

  There is only one function of a company and that is to create profit for its shareholders. No more, no less. Add any other requirement and it is no longer free enterprise, it is socialism or some variant thereof.
  
  Consumers are to blame and it is more than .000001 percent as you claim. Each person, perhaps, but overall, we are a society which wants to place blame. Had 100,000 individuals not by their choice (and don't tell me they didn't know, they were well aware that they could not get financed before and they were well aware that interests could go up) signed up for something they could not afford, the mortgage industry would be in better shape. Had 1,000,000 of those same people not made the decision, the mortgage and banking industry would be fine. I'm sick and tired of hearing everyone complain that someone else needs to fix their problem. You want to live in New Orleans? Fine. Accept the risk that you live on the coast where hurricanes hit. Some obnoxious lady in another blog ranted that Houston was not hospitable to the New Orleaners who came there, and she was mad that she did not get a bigger hand out. Here's an idea--make a better decision up front if you can't afford the risk on the other end.
  
  Sales people to blame? Come on. Did they forge the customer's signature? A few did, and they got rightfully punished. But no one forced any consumer to buy, they entered into the transaction on their own free accord. If they could not afford it because of a bad decision, welcome to education which is expensive.
  
  It's time to stop pointing at the Republicans as the center of blame. De-regulation is not the problem. The buyer is the problem. Regulation is supposed to safeguard the consumer. Instead, we've become a society which thinks the government should safeguard your stupidity. The Democratic party wants to make it your right to be stupid and then give you a free handout to start over, taken from those who were smart enough to make the bad decision that led to a personal individual downfall.
  
  America is in trouble because individuals, one by one, all across this land, have stopped holding themselves personally responsible for their actions. We have too many lawyers telling us that someone else caused your problem, all the way from you driving your car in a manner that led to your accident (gee, look up that word in the dictionary sometime) and now you want some automaker to pay for your dumb mistake, to someone investing money in a company without accepting the fact that an investment by definition carries risk when your anticipated return for that investment is higher than inflation.
  
  Our forefathers would be ashamed of all of this.

•  
  Geoffrey James, Sales Machine09/23/08 Report as spam
  11

  RE: Blame Sales Reps for the Meltdown?!?

  QUOTE: The Democratic party wants to make it your right to be stupid and then give you a free handout to start over, taken from those who were smart enough to make the bad decision that led to a personal individual downfall.
  
  Gee, and here I thought it was the Republicans in the Bush Administration who wanted to give stupid CEOs a $700 billion handout so that they can start over, and then hand the bill to taxpayers. Guess I had the story wrong.
  
  
  
  QUOTE: De-regulation is not the problem. The buyer is the problem.
  
  
  Memo to Chinese parents: Stop complaining that your children are dying. You were the buyer, so it's YOUR problem. However, you can console yourself that the companies that poisoned your kids will probably go out of business. It's all part of the wonderful way that markets correct themselves.

•  
  Educated Worker09/23/08 Report as spam
  12

  RE: Blame Sales Reps for the Meltdown?!?

  Typical misconception of how a company works, especially a public company nearing bankruptcy. CEO's were not given a $700 billion dollar bailout, the shareholders were, followed by the employees who would have been otherwise unemployed. The CEO's are losing their jobs and will most likely be unemployable in the future. OK, they were paid well along the way and that is the risk of their decisions. You might also take a lesson in management and see that the CEO was not the only person who was part of the bad process, but will be the figurehead who gets cut off. And by the way, look at the vote on the bailout in Congress. It must have support on both sides of the aisle.
  
  RE: Chinese milk comment guy.
  There is a difference between safety standards and regulation in this tragic story. Safety standards were ignored and no amount of regulation would change that. If the government owned the dairy, there could still be a blatant ignoring of safety standards with the same result. When an individual chooses to not follow such standards, when a train engineer fails to follow safety standards and is text messaging while driving the train, people get hurt. But that is not regulation. Regulation is that there is only one cable company per territory, and then look what happens--high rates and poor service. Let competition in and the consumer wins, not loses. Why do you think AT&T (or whatever local land line provider you have in your area, also due to regulation and not safety standards) wanted in to the cable TV market, which was not an option to them when they were regulated? Because they knew that without getting in, they were dead meat in a short period of time.

•  
  Geoffrey James, Sales Machine09/23/08 Report as spam
  13

  RE: Blame Sales Reps for the Meltdown?!?

  QUOTE: The CEO's are losing their jobs and will most likely be unemployable in the future.
  
  It's not at all clear that they will all get fired, and if they do, they're likely to get golden parachutes. And if the career of Michael Milken is any indication, most of them will be back, and have their shot at their next billion. In their world, getting the government to privatize profit and socialize debt is a big win.
  
  
  
  QUOTE: There is a difference between safety standards and regulation in this tragic story.
  
  Not really. The question is whether the government should protect consumers from rapacious businesses acting on behalf of their investors. Except in the (many) cases where regulation has been instituted to protect entrenched industries, that's what regulations are supposed to do. Your thinking is ideologically wedded to the concept that de-regulation is good, which is why you have to blame everybody except the culprits -- the people who didn't protect their companies and the people who weren't good stewards of the economy.

•  
  Educated Worker09/23/08 Report as spam
  14

  RE: Blame Sales Reps for the Meltdown?!?

  And you are ideologically wedded to the concept of no personal responsibility for your actions, not a long leap from the person who claims that he is not responsible for being a murderer because he didn't get good grades in school. Too extreme? Ok, how about the person who can't get a good job because he or she did not study in school and then says it was the school's fault because the school did not make it comfortable or interesting or relevant or in the right language or some other excuse. And don't bother to tell me not everyone can get good grades and graduate. I've taught in school. If you can't get a B, you aren't trying.
  
  If you have some spare time, go do some research on how many CEO's of companies that go bankrupt 1) get a golden parachute 2) are fully employed later at the same level and 3) if they are not a F500 company also lose their personal residence in the process. And you trust the government to put in CEO's and boards who can run these companies and make them a highly effective team like you write about in your books? The same government that cannot balance a budget or keep from scratching their own backs with pork after pork after pork, and doesn't even believe in team building in its own organization as the high level jobs are turned over every time an elected office changes hands? You are living in a fantasy world.
  
  By the way, next time you're CEO of a company larger than 5 people, make that, if you are ever CEO of a company of more than 5 people, you'll find out that your impact on the daily operations is not as great as you think it is and that the management below you has a much greater impact on the profitability than you ever will.
  
  If you don't like our free enterprise system, feel free to move north, south, east, or west. There are countries all over the world that will welcome another person to socialism or its derivatives thereof.

•  
  Geoffrey James, Sales Machine09/23/08 Report as spam
  15

  RE: Blame Sales Reps for the Meltdown?!?

  QUOTE: By the way, next time you're CEO of a company larger than 5 people, make that, if you are ever CEO of a company of more than 5 people, you'll find out that your impact on the daily operations is not as great as you think it is and that the management below you has a much greater impact on the profitability than you ever will.
  
  Jeff, I don't want to get into a comment war with you. You seem to think that I'm some kind of socialist just because I think that the Bush administration was asleep at the wheel. I'm hardly alone in that perception, which includes many people from all sides of the political spectrum.
  
  As for CEOs, I've made this point previously, but I'll make it again, just for you. Either the CEOs of these giant financial firms are worth the money they are being paid or they're not. If they can't have enough impact on daily operations to make a difference between success and massive failure, then they should be paid a single-digit percentage of what they're currently making. And not a cent more.
  
  But since these big name CEOs do pull these obscene salaries, and claim credit for success, then they should bear the brunt of the blame for corporate failure. But they aren't, partly because people like yourself are willing to let them off the hook by blaming people whose involvement was minimal and personal.

•  
  zainone09/29/08 Report as spam
  16

  RE: Blame Sales Reps for the Meltdown?!?

  These are the issues that lead us toward the hands up situations. and these issues..... put a blame all on the big agencies..