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AUGUST 15, 2018

FRANK V. CESPEDES

DAVID MATTSON

Performance Improvement Consulting and Hi-R-

Me: Making Sales Calls
Instructions: This case concerns a young firm, PIC, seeking to sell its services to a potential client, Hi-R-
Me. The seller brief outlines information available to Mike Finnerty, founder of PIC, before speaking with
Pat Davies, VP at Hi-R-Me. The buyer brief outlines the issues and context facing Davies. Please read the
case and answer the questions at the end of each section. Then, please view the video clips of the initial phone
call between Finnerty and Davies, a subsequent call where they are joined by colleagues, and a face-to-face
sales call. As you view the clips, make notes about what, in your view, are the strengths and weaknesses of
PIC’s interactions with this prospect at each stage.

Seller Brief: Mike Finnerty and Haley Smith of PIC

Mike Finnerty received his MBA from Wharton, worked for three years at a major consulting firm,
and then four years ago left that firm to start Performance Improvement Consulting (PIC). His firm
used a proprietary assessment package to identify process-deficiency issues at potential client
companies and Finnerty had helped to set up and administer these assessments. Based on the
assessment results, the consulting company would then create an ongoing consulting and software
package for the client. Finnerty watched this process play out multiple times and realized that certain
issues kept coming up, regardless of the client industry. These included:

• No documented processes in key parts of the business; best practices were therefore lost
whenever senior people left, and were not captured and shared among current staff members.

• No clear hiring practice in place.

• No onboarding process in place.

• No culture of accountability.

• Compensation packages that reward the wrong behaviors.

HBS Senior Lecturer Frank V. Cespedes and David Mattson (CEO of Sandler Training) prepared this case. This case is not based on a single
individual or company but is a composite based on the author’s general knowledge and experience. Funding for the development of this case was
provided by Harvard Business School. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as
endorsements, sources of primary data, or illustrations of effective or ineffective management.

Copyright © 2018 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied,
or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

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 819-043 Performance Improvement Consulting and Hi-R-Me

The premise of PIC, which now employs eight associates and 30 subcontractors, is that the most
dramatic improvements in quality and performance come about when management and staff address
these five issues first. In addition, PIC helps its clients build into their working culture a consistent
pattern of negotiating, signing, and agreeing to honor highly personalized “performance metrics
agreements.” This approach holds individual employees accountable for specific performance targets
which they help to create, based on factors that are under the individual employee’s control.

Two years ago, Mike hired Haley Smith as the VP of Delivery at PIC. She has an extensive
consulting background, with expertise in administering and analyzing the employee assessments that
drive PIC’s analytical process, and in configuring the customized software packages for clients based
on the data derived from assessments.

More recently, Mike has been in discussions with Venice Yang, a past client, about the situation at
Hi-R-Me.

Project Background
PIC typically conducts a 4–6 week study to determine whether the client company has issues it can
help to resolve. Most of its current clients are small- to medium-sized companies that experienced early
success, but have reached a point where they cannot scale because of a lack of infrastructure. The
typical initial engagement has been a 60-day assessment, costing between $15,000 and $20,000 followed
by an ongoing consulting engagement with fees ranging from $50,000 to $75,000. PIC’s annual revenues
are $10 million; they have 25 active clients. Mike would like to double the annual revenues within the
next few years by bringing in bigger clients who will provide more current income and help him clarify
his exit strategy, which involves selling the company between five and seven years from now.

Mike’s firm has done especially well in the professional services sector, working with law firms,
engineers, recruiters, and architects to create highly profitable new offerings, to document and
formalize the most effective business development processes, and to expand the client’s base of
business. Finnerty sees major growth potential in this market. A goal is to create more successful
relationships with recruiting firms which currently constitute only 10% of the company’s revenues.

A past PIC client is HubWorks!, a job search site based in Texas. The company was experiencing
steadily declining sales. By documenting a viable business development process, designing a new
compensation package, supporting better communication patterns between management and staff,
formalizing personal “performance metrics agreements,” and encouraging front-line salespeople to
share ideas with top management in weekly “what we learned” team meetings, PIC helped HubWorks!
create a culture of accountability and compete successfully in a crowded market.

A year after beginning work with PIC, the HubWorks! CEO gave PIC a glowing review on LinkedIn,
which led to interest from other companies and significant positive press coverage about the
HubWorks! turnaround, which resulted in the saving of 30 local jobs.

The Hi-R-Me Opportunity

Hi-R-Me is an employment-related search engine. Headquartered in Palo Alto, California, with
additional offices around the world, Hi-R-Me is currently available in 20 countries and 11 languages.
It is the eighth-highest-traffic job website in the United States. The site aggregates job listings from
thousands of websites, including job boards, staffing firms, associations, and company career pages; it
also allows job seekers to apply directly to jobs listed on its site, and offers resume posting and storage.

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 Performance Improvement Consulting and Hi-R-Me 819-043

Hi-R-Me offers a variety of products to employers seeking to fill front-line and mid-level positions, and
also has a separate department devoted to executive search.

The possibility of a meeting with executives at Hi-R-Me arose out of the results PIC had delivered
on the HubWorks! consulting engagement. As Finnerty put it:

I had been working for months trying to win a meeting with Hi-R-Me. I finally met Pat Davies, their VP of
Sales, very briefly at an industry summit, and I mentioned our ongoing work with HubWorks! We exchanged
business cards, and he said I should give him a call sometime. I couldn’t manage to get Davies on the phone over
the next few weeks, though. I gathered that he was a very busy man. I was, however, able to keep in touch with
his assistant, Mel, reaching out once a week.

Last week, via email, I sent Mel an article that had run in the local press about what we had been able to
accomplish with HubWorks!, and about the jobs that had been saved. I asked Mel to show the article to Pat.

I also reached out to Venice Yang, the newly hired HR Director for Hi-R-Me, who had worked with us on the
HubWorks! engagement when she was HR Director there. When I saw the change in Venice’s profile on LinkedIn,
I reached out. We discussed some of the challenges Hi-R-Me was facing. I asked if she would help me to arrange
a meeting with Pat. She said my timing was good and that someone from Hi-R-Me would be back in touch soon.
Yesterday, I got a call back from Mel indicating that Pat would be available to take my call this coming Tuesday
at 10:00 am.

Hi-R-Me would be an ideal client for us. It could lead to significant add-on business within the company itself
and provide us with entrée to a host of companies who are currently using its services. Given Hi-R-Me’s size and
visibility, a successful engagement would also raise our profile considerably within an important target industry.
In short, this is precisely the kind of company we can and should be doing business with.

The top issues that Venice shared with Mike were:

• Much higher-than-desired turnover rates in Hi-R-Me’s staff of 80 inside salespeople and 20

field salespeople. Pat Davies is responsible for the 80 inside salespeople; the others work on
the executive recruitment side.

• Unreliable sales forecasting.

• Missed or barely attained sales goals among most members of the sales team for the four
new, higher-margin product offerings. (This is taking place even as the top 10% of the sales
force manage to pull down major commissions on these same products, while exceeding
personal quotas.)

• Disparity between the top performers on the sales team and everyone else, and a general
sense of polarization between those two groups.

• A failure to document and implement proven best practices, specifically, in regard to the sale
of the four new higher-margin products.

• The lack of a clear sales process for these new products; specifically, the absence of an
established path for managing a prospect through sales stages in order to convert prospects to
qualified opportunities to customers for the four new offerings.

Questions:

What should be Finnerty’s goal(s) in an initial call with Pat Davies?

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 819-043 Performance Improvement Consulting and Hi-R-Me

If you were Finnerty, how would you try to structure that conversation? What questions would you
ask? How would you communicate PIC’s capabilities?

Buyer Brief: Pat Davies and Venice Yang of Hi-R-Me

Pat Davies, VP of Digital Sales, is the brother of Joe Davies, who is the founder and CEO of Hi-R-
Me. The 20-year-old firm has successfully integrated two very different recruiting models—
relationship-based (which focuses on executive recruiting) and digitally-driven (which typically
focuses on mid-level and front-line positions)—into its client offerings, and is today the eighth-highest-
traffic job website in the United States.

Although the company has created profitable long-term executive recruiting relationships with a
number of major corporate clients, this area of the business is not Pat Davies’s focus. Instead, he is
responsible for continuing the aggressive growth the company has enjoyed in serving smaller
employers via the Hi-R-Me website. Pat’s Digital Sales team has 80 people who use an inside sales
model. Morale is low on his team and has been low for some time, in part because revenue numbers
are down. Pat’s group accounted for 51% of company revenues in the most recent fiscal year, down
from 57% in the previous year.

Pat’s team typically targets small-and mid-sized firms who are setting up an early—perhaps even
their first—recruiting plan for the business. The likely contact for a member of Pat’s sales team is
Owner/Founder, Office Manager, Head of Human Resources, or Head of Operations. Leads for Pat’s
team are generated through a number of sources, including: articles, complete with contact
information, which Hi-R-Me’s public relations firm arranges to have published in a range of popular
monthly business journals; online keyword marketing campaigns targeting executives who are in
search of qualified applicants; referrals from existing clients; and new and returning visitors to the Hi-
R-Me web site. Potential decision makers are pointed toward a brief online questionnaire that secures
contact information and some basic supporting data; Pat’s salespeople then reach out by phone or email
to those who complete the questionnaire.

Background
For nearly five years, Hi-R-Me’s digital division offered only one product, sponsored listings, which
had an interface that made initiating the process extremely easy. Employers using the site could quickly
and with little hassle list job openings for free in exchange for providing Hi-R-Me with accurate contact
information, including the hiring official’s name, title, email address, and phone number. The ease of
use and high ROI for both employers and applicants made Hi-R-Me a leader in their space.

At the same time, the customer history and other information were important data for both the
executive recruiting and digital sides of Hi-R-Me, even though they were run separately. Employers
who posted free listings became leads that Pat Davies’ sales team could approach for possible
conversion to the sponsored listing level, where employment ads showed up first in the online searches
of prospective candidates and where employers could use images and go into greater detail about the
opportunity in question. Because sponsored listings typically received 3–5 times more clicks as free
listings, and because a carefully targeted marketing budget could attract steady streams of qualified
applicants to the Hi-R-Me site, Pat Davies was able to show significant revenue growth over the past
five years.

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 Performance Improvement Consulting and Hi-R-Me 819-043

But increasing competition for applicant traffic and advertiser dollars from sites like Monster,
ZipRecuiter, and Indeed, who invested heavily in developing similar user-friendly platforms, created
challenges. Hi-R-Me’s leadership responded by expanding the marketing budget to reach qualified
applicants and broadening the product line it offered to employers.

In addition to sponsored listings, Pat Davies’ sales team has, over the past year, been given the
responsibility for generating revenue from four new products:

• industry-specific resume searches,

• recruiting campaigns that enable applicants to apply for jobs via the Hi-R-Me app,

• large-scale “featured employer” advertisements promoted on the Hi-R-Me web site and its
affiliates, and

• detailed company pages that profile the employing enterprise as a whole, rather than a single
opening.

So far, the results of the new product launches have failed to meet expectations. The challenges Pat
Davies now face include:

• Much higher-than-desired turnover rates in Hi-R-Me’s staff of 100 salespeople, eighty of

whom are inside reps who report to Pat. (Addressing this problem was a major reason Pat
recruited Venice Yang, the new head of Human Resources. Venice had worked with
Performance Improvement Consulting at her previous employer, the local job search site
HubWorks! She credits PIC with helping her to reduce companywide turnover and increase
revenue performance on the sales team there. She has been on the job at Hi-R-Me for about a
month.)

• Unreliable sales forecasting.

• Missed or barely attained sales goals among most members of the sales team for the four
new, higher-margin product offerings. This is taking place even as the top 10% of the sales
force manages to pull down major commissions on these same products. The top 10% of the
sales force have increased their commissions and exceeded their quotas by successfully selling
the four new, higher-margin product offerings. But 90% of the sales force has missed or just
barely attained sales goals for the new offerings.

• A compensation plan that isn’t getting the job done and that Pat is unsure how to fix.

• Comfort zone issues—and perhaps a lack of appropriate training—on the new product
offerings. Most of his salespeople prefer to default to the more familiar path of selling
sponsored employment advertisements. These, however, now provide insufficient margin,
following pricing changes based on competitive pressures from Monster and Indeed. Pat
wonders if the problem is insufficient product training.

• Disparity between the top performers on his sales team and everyone else, and a general
sense of polarization between those two groups.

• The loss of several key sales contributors to competitors—compounded by the realization

that their best practices were not recorded before they left.

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 819-043 Performance Improvement Consulting and Hi-R-Me

• On a similar note, a failure to document and implement proven best practices, specifically in
regard to the sale of the four new higher-margin products.

• The lack of a clear sales process for these new products, in particular the lack of an established
path for managing a prospect through sales stages in order to convert prospects to qualified
opportunities to customers for these offerings.

• A difficulty, among most members of the sales team, to articulate a compelling reason for
prospects to convert from their current service.

In addition, Pat faces a succession challenge common to family-operated businesses. He is on track

to take over the company when his older brother, Joe Davies, retires. But both he and his brother are
uncertain that Pat’s business unit—the digital division of the company that targets smaller
companies—can deliver the growth it provided in the past. Last fiscal year, Pat’s team missed its annual
revenue target by 18% and its margins were, in Joe’s assessment, “unacceptable.” Pat’s brother Joe
wants to retire in a year but is reluctant to do so until (in Joe’s words) “Pat puts the digital division’s
house in order again.” Meanwhile, Pat himself is uncertain about the steps needed for his team to
rejuvenate sustained profitable growth.

Looking for Help

After spending months telling himself that the problems in his department would “eventually work
themselves out,” Pat had an in-depth discussion about his department with his brother, with whom he
has an excellent working relationship. Joe Davies strongly suggested that Pat find an outside consultant
who could help him turn things around in Digital Sales—and also suggested that Pat’s ability to
address this challenge would “say a lot about what happens next at the leadership level for Hi-R-Me.”

The point of the conversation was clear: If Pat wanted to move up to the CEO level, he needed to
re-establish his company’s competitive advantage in the digital space. As a result, Pat had, a few
months previously, hired a local consulting firm, told them to examine his team’s current practices and
“make us better,” and had recently received a report from that firm which he found to be disappointing
because (in Pat’s words), “It’s too abstract and not actionable.”

Questions:

If you were Pat Davies, how would you prioritize the various issues facing Hi-R-Me? Why?

If you were Davies, on what basis would you decide whether to hire another firm to help address these
issues and, if so, which firm to hire?

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