Stop Blaming Sales Reps for the Crash!

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  ptiseo09/24/08 Report as spam
  1

  RE: Stop Blaming Sales Reps for the Crash!

  "...There were plenty of underlings warning top management that bad loans being written and that it didn???t make any business sense... My statement that the sales SHOULD be running the company is thus completely consistent with the idea that the CEOs are primarily to blame..."
  
  Wow, I've been excerpted! And, it didn't even hurt!
  
  Now, you *know* I'll have to reply at length...
  
  I do not deny the fact that probably some "underlings warned top management". I even said something similar in my own post.
  
  The sad part of that assertion is that they are few and very far between. The signal was lost and/or willfully ignored in the noise of selling by others, the attitudes of top management and the blind eye of government.
  
  But, the truth you are diverting us from is that there was a lot of ignorance and malice at the level of the "sales pro" too.
  
  "...since the loan agents knew the loans were bad, they should have refused to write them, even if it meant losing their jobs. But that assigns responsibility without authority."
  
  These institutions have hundreds of different investment tools to snag possible clients, so "sales pros" complaining that they were just doing what their bosses told them and that they aren't the decision makers is a bogus argument. They have the authority to steer people into a variety of these vehicles. They chose those that were easy and boosted their commissions.
  
  So, to your first point: "Is the sales pro blameless?"
  
  Your answer is "yes". Apparently, ALL these innocent, doe-eyed sales pros (not the clueless junior, but even the "sales pro") had ABSOLUTELY NO CHOICE but to sell high-risk, poorly-capitalized, misunderstood mortgages to greedy borrowers on behalf of greedy CEOs or otherwise face some horror like having their faces physically chewed off.
  
  My answer is "no". If I hand you a gun and tell you to kill or you'll lose your job, then you and I get fingered for the murder, should you walk? Or, do you have to get your share of punishment for the crime? (The punishment may be mitigated under the circumstances, but there is culpability and therefore there should be related punishement.)
  
  To your second point: "Should sales drive the company?"
  
  You say "yes", partly because you seem to have a deep passion for the sales profession and feel that "they know best".
  
  I say "not necessarily"... or, really, "not exclusively". If the reader believes, like me, that the "sales pro" played a role, I don't know how you can think that they should lead. In this case, unregulated selling of circumspect investment vehicles led to our crisis. I would not give an arsonist a match.
  
  PS: Look at the resumes of the CEOs from the big firms being bailed out. What do you see in their "Past Employment"? Stanley O'Neal? Investment banker, a.k.a. sales plus finance. Henry Paulson? First a politico, then banker like O'Neil. John Mack? Stock trader, not very sales-y, but a little. Certianly not Ops or Engineering. James Cayne? From Wikipedia: "His first job was as a traveling salesman selling copiers in the Midwest." These sales pros WERE put in charge. Look where we are now.

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  ptiseo09/24/08 Report as spam
  2

  RE: Stop Blaming Sales Reps for the Crash!

  Oops. Somehow that all got mushed into one heap of characters. Sorry.
  
  I wish BNet would use a real, robust comment system. Or, at least one that allowed editing.

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  Geoffrey James, Sales Machine09/24/08 Report as spam
  3

  RE: Stop Blaming Sales Reps for the Crash!

  Here's Alph's post with some formatting. Dittos on a more robust comment system, BTW.
  
  
  
  Geoffrey quote"...There were plenty of underlings warning top management that bad loans being written and that it didn???t make any business sense... My statement that the sales SHOULD be running the company is thus completely consistent with the idea that the CEOs are primarily to blame..."
  
  
  
  
  Wow, I've been excerpted! And, it didn't even hurt! Now, you know I'll have to reply at length... I do not deny the fact that probably some "underlings warned top management". I even said something similar in my own post. The sad part of that assertion is that they are few and very far between. The signal was lost and/or willfully ignored in the noise of selling by others, the attitudes of top management and the blind eye of government. But, the truth you are diverting us from is that there was a lot of ignorance and malice at the level of the "sales pro" too.
  
  
  
  
  Geoffrey quote"...since the loan agents knew the loans were bad, they should have refused to write them, even if it meant losing their jobs. But that assigns responsibility without authority."
  
  
  
  
  These institutions have hundreds of different investment tools to snag possible clients, so "sales pros" complaining that they were just doing what their bosses told them and that they aren't the decision makers is a bogus argument. They have the authority to steer people into a variety of these vehicles. They chose those that were easy and boosted their commissions.
  
  
  
  
  So, to your first point: "Is the sales pro blameless?" Your answer is "yes". Apparently, ALL these innocent, doe-eyed sales pros (not the clueless junior, but even the "sales pro") had ABSOLUTELY NO CHOICE but to sell high-risk, poorly-capitalized, misunderstood mortgages to greedy borrowers on behalf of greedy CEOs or otherwise face some horror like having their faces physically chewed off.
  
  My answer is "no". If I hand you a gun and tell you to kill or you'll lose your job, then you and I get fingered for the murder, should you walk? Or, do you have to get your share of punishment for the crime? (The punishment may be mitigated under the circumstances, but there is culpability and therefore there should be related punishement.)
  
  
  
  
  To your second point: "Should sales drive the company?" You say "yes", partly because you seem to have a deep passion for the sales profession and feel that "they know best". I say "not necessarily"... or, really, "not exclusively". If the reader believes, like me, that the "sales pro" played a role, I don't know how you can think that they should lead.
  In this case, unregulated selling of circumspect investment vehicles led to our crisis. I would not give an arsonist a match.
  
  
  
  PS: Look at the resumes of the CEOs from the big firms being bailed out. What do you see in their "Past Employment"? Stanley O'Neal? Investment banker, a.k.a. sales plus finance. Henry Paulson? First a politico, then banker like O'Neil. John Mack? Stock trader, not very sales-y, but a little. Certainly not Ops or Engineering. James Cayne? From Wikipedia: "His first job was as a traveling salesman selling copiers in the Midwest." These sales pros WERE put in charge. Look where we are now.

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  Geoffrey James, Sales Machine09/24/08 Report as spam
  4

  RE: Stop Blaming Sales Reps for the Crash!

  You bring up an interesting issue, which is:
  
  
  
  "At what point do you refuse to sell something?"
  
  
  
  I'll ask that question in a future blog post.

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  adman9509/24/08 Report as spam
  5

  RE: Stop Blaming Sales Reps for the Crash!

  Great points on both sides. One minor point of my own, if I may,regarding Alphadog's analogy:
  "If I hand you a gun and tell you to kill or you'll lose your job, then you and I get fingered for the murder, should you walk?"
  
  The difference here is between knowingly commiting a crime and bending procedural rules. One is illegal, the other is bad business sense as directed and decided by management. Underlings had no authority to say no and couldn't change jobs when so many other companies were doing the same thing. They should also have the expectation that management would be held accountable for management decisions.
  Done on a local level, someone in management would have been fired- end of story. The problem in this case is one of scale. Bad practices were committed on a nationwide level. Practices which NOW will be made illegal.
  The gun analogy works if you differentiate between a solder in wartime and a murderer. A solder dutifully following orders is not a murderer. A General committing warcrimes is held accountable as well as any soldier who knowingly follows an illegal or immoral order.
  Thanks for an insightful column.

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  laneycath09/24/08 Report as spam
  6

  RE: Stop Blaming Sales Reps for the Crash!

  Whoa! I wrote my Congressman (Waxman from California) NOT to bail out Wall Street with 700 billion of paper play money. He directed me to his website and comments made. He called it a "moral hazard" I looked it up - according to Wikipedia "...is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution DOES NOT bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of these actions."
  
  I would add to Congressman Waxman's opinion and say the issue was and IS an industry with management AND salespeople who acted amorally - who were driven by commissions and bonuses and ignored their conscience... AND home buyers who knew the information they gave was inaccurate and who didn't want to buy the American Dream they wanted to HAVE and LIVE IN the American Dream at any cost.
  
  I believe if Congress could hear from people who tried to work with their mortgage company and were told NO ....lost their home ....and now that home is being sold for LESS than they owed. Clearly the corruption and deception is continuing. The usury industry (aka banking & mortgage) is depending on Uncle Sam to pay for their amoral and hazardous actions.
  
  I believe we need to have the MORAL tenacity to do what our founding fathers did when they were being blackmailed by England - they sacrificed their comfort and pleasure by THROWING THE TEA into the water. Bailing out Wall Street will NOT solve the problem it will delay the repercussions onto the next generation and the elderly. We need to take a deep breath - prepare to live a little simpler and the end result will be a stronger nation....creativity will abound ....and we won't see our dollar absorbed by a euro or amero coin.
  
  lorriane

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  Geoffrey James, Sales Machine09/24/08 Report as spam
  7

  RE: Stop Blaming Sales Reps for the Crash!

  QUOTE from AlphaDogg: Look at the resumes of the CEOs from the big firms being bailed out...These sales pros WERE put in charge. Look where we are now.
  
  They went over to the dark side of the sales force.

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  l50mph09/25/08 Report as spam
  8

  RE: Stop Blaming Sales Reps for the Crash!

  NOT BIZ BLAB but an old saying that may apply here - "The captain goes down with the ship" It's the person at the top that should take ultimate responsibility. Yes blame can be apportioned to many areas, however if those below are doing it wrong, the captain should be aware and steer the ship back onto the correct course! (as so to speak)

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  Freshjve09/25/08 Report as spam
  9

  RE: Stop Blaming Sales Reps for the Crash!

  As an ex-mortgage broker myself just awaiting the next boom...lol, I would like to make a few comments as to were I believe most of the blame should go and who is being overlooked. We have many saying the CEO's, other saying the brokers/sales pro, my question is at what point do we hold the consumers accountable? When did we throw common sense out the window? Are consumers to be looked at as sheep being surrounded by wolves?
  
  I completely understand that consumers go to sales pro because that is what they are pros. This by no means excusses the consumer from doing research and educating themselves on the most inportant and influencial transaction of their lives, ther home!! CEO's approve these types of fundings, underwritters push them through, sales pro's continue to write the loans yet the transaction does not go threw without a consumer's signature! No signature equals no CEO's to say "just do it", no underwritter to approve and no broker to write that loan. As a broker who has a responsability to put food on his family's table and pay his bills, he would most definately write the popular loan requested by..."Consumers". The loans that were written were not bad loans, just not the right consumer, but when the consumer will not sign anything else regardless of risk, then what choice other than do it and explain the risks of it do I or any other morally correct broker have?
  
  Just some food for thought...
  Just

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  Geoffrey James, Sales Machine09/25/08 Report as spam
  10

  RE: Stop Blaming Sales Reps for the Crash!

  QUOTE from Freshjve: what point do we hold the consumers accountable?
  
  You make an interesting point, but not a very relevant one. Each consumer who signed up for a bad loan can only own about .001% of the blame, because that's about how much that particular bad loan contributed to the problem. Furthermore, you can't expect a consumer to understand the broader implications and that the bad loans, in total, would cause an economic disaster.
  
  By contrast, there were only a handful of CEOs involved in this debacle, each of which could have had a major impact on avoiding the problem had they had the balls to do their jobs and take care of their companies.
  
  Similarly, there is a relatively small number of politicians whose job it is to protect consumers from their own stupidity. Laws and regulations play an important role in a civil society. For example, if there weren't speed limits, lots more people would get killed because of stupid people who think it's OK to go 120MPH on a city street.
  
  
  
  The problem with blaming the "consumer" is that you're actually blaming nobody, because each individual consumer was powerless to affect anything other than their own loan. The CEOs and politicos had the power and either misused it or bungled it.

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  Sid Herron09/25/08 Report as spam
  11

  RE: Stop Blaming Sales Reps for the Crash!

  Geoffrey James: Similarly, it was the job of the government to regulate the financial industry. Since most of the impetus toward deregulation came from the Republican party, I think it???s fair to hold them more responsible than their Democratic enablers.
  
  That's an extraordinary comment, when, in fact, a 2005 attempt by Republicans to put stronger oversight in place over Fannie and Freddie was blocked by the Democrats in a straight party-line vote. It also ignores the political pressure (and occasional strong-arm tactics), exerted largely by Democrats, over the last 30 years or so to make more home loans available to lower-income Americans, regardless of whether their income status made those loans more risky. And, by the way, which political party has controlled the Congressional banking committees - which are supposed to be doing that oversight - for the last two years?
  
  You write an excellent sales blog. But if you're going to cross over and start writing a political blog, please educate yourself on the facts first!

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  Geoffrey James, Sales Machine09/25/08 Report as spam
  12

  RE: Stop Blaming Sales Reps for the Crash!

  QUOTE: That's an extraordinary comment, when, in fact, a 2005 attempt by Republicans to put stronger oversight in place over Fannie and Freddie was blocked by the Democrats in a straight party-line vote.
  
  One vote against a badly-written bill is hardly a smoking gun. Let's talk about the real cause of the problem, which isn't the mortgages themselves, but the way that they were packaged into securities and sold by organizations that ended up being woefully undercapitalized.
  
  
  
  
  The economic collapse (as opposed to what might have been merely a series of bad loans) is the direct result of the elimination of the Glass-Steagall Act, a depression-era law that restricted the activities of large financial firms. The last vestiges of Glass-Steagle were killed by a Republican Congress during the Clinton administration.
  
  
  
  
  The co-sponsor of the bill that killed Glass-Steagall was former senator Phil Gramm, who until recently was McCain's chief economic adviser. That's the smoking gun, and Gramm's "nation of whiners" is correctly identifying the crisis with failed Republican economic policy, which has emphasized the de-regulation of financial markets since the Reagan years.
  
  
  
  
  As for this being a "political" blog, these are business issues, plain and simple. It is valuable, nay essential, to know, when you're planning your career or forecasting your quota, whether or not the people who might be elected to office are the same ones who made a pig's breakfast of the economy.

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  Geoffrey James, Sales Machine09/25/08 Report as spam
  13

  More on Politics Versus Business

  I have to admit that I'm getting a bit weary of readers assuming that I'm a Democrat based upon my opinions about the current economic situation. If this were 1978 and we were mired in stagflation, I'd be just as accusatory towards Democratic ideology, which tends towards OVER-regulation.

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  Sid Herron09/26/08 Report as spam
  14

  RE: Stop Blaming Sales Reps for the Crash!

  Hmmm... I don't see anybody on this page, including my own post, making statements about your party affiliation. (Maybe you're referring to private email messages?) I frankly don't care whether you're a Republican or a Democrat. I found your comment to be extraordinary because of the chain of implied assumptions behind it:
  
  1. The crisis was primarily the result of deregulation.
  2. The Republicans are more responsible for deregulation than the Democrats.
  3. Therefore the Republicans are more to blame than the Democrats for the crisis.
  
  The biggest problem I have is with assumption #1, but, again, I don't feel like this is the best venue to debate a complex issue that was decades in the making and where there is plenty of blame to go around. Suffice it to say that I don't agree with that implied chain of reasoning. And since I don't feel that this is the best venue for an extended political discussion, I will say no more here.

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  Geoffrey James, Sales Machine09/28/08 Report as spam
  15

  RE: Stop Blaming Sales Reps for the Crash!

  QUOTE from sidherron: I found your comment to be extraordinary because of the chain of implied assumptions behind it: 1. The crisis was primarily the result of deregulation.
  
  You might want to check out Saturday's NY Times, front page, article: "S.E.C. Concedes Oversight Flaws Fueled Collapse" before going on about my ideas being extraordinary.
  
  What's extraordinary is that anyone can still believe that deregulation -- taken to an almost insane degree under the Bush administration -- isn't to blame.
  
  Of course, if your goal is to spread the blame around and not point it where it belongs, that's another matter entirely.

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  ptiseo09/29/08 Report as spam
  16

  RE: Stop Blaming Sales Reps for the Crash!

  @adman95: "The difference here is between knowingly commiting a crime and bending procedural rules. One is illegal, the other is bad business sense as directed and decided by management. Underlings had no authority to say no and couldn't change jobs when so many other companies were doing the same thing. They should also have the expectation that management would be held accountable for management decisions."
  
  The beauty about analogies and generalizations is that they are generally useless...
  
  I'm sure you can take my example and twist it, and split hairs, and so on...
  
  But, if someone creates an environment to perpetrate a crime, and someone else does it, they are both to be held culpable. The charges may be different, but both have to pay the piper...
  
  So, to say that the CEO of investment firms, and the regulation-phobic Administration, created an environment that others used to their individual benefit, without holding the executors partly to blame, is very, very lame.

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  ptiseo09/29/08 Report as spam
  17

  RE: Stop Blaming Sales Reps for the Crash!

  @adman95: Actually, I'll add that my analogy wasn't too far off. You introduce grey into my analogy, but all it does is confuse it. So, instead if I asked: "If I hand the guy next to you a gun and tell him (crime committer) to kill and tell you to drive the car (rule bender) to let him get away, or you'll lose your job, then you, him and I get fingered for the murder, should you walk?"
  
  Comparing the "sales pro" to a soldier following orders doesn't help me. That's precisely the reason why I think they are partly to blame for this fiasco...