Grumpy Sales Dept. Leads Stampede From Knight-Ridder

Knight-Ridder Financial/Americas has seen a steady stream of executives quit during the past few months and the trend doesn't seem to be subsiding. In recent days, four sales and customer support executives -- Ray Baird, Steve Baker, Pam Mitchell and Katie Querk -- have all resigned. The departures come as Knight-Ridder demoted its head of sales Chris Devit.

Though a Knight-Ridder financial spokesperson describes the four who departed as secretaries and clerical staff, they are all in fact relatively senior personnel. Querk is K-R's Leawood, Kans.-based field operations and customer support director. Baird is manager of order processing, also at the Kansas office. Mitchell is manager of agency sales, located in New York City. And, though his exact title couldn't be determined at press time, Baker is a sales executive in Los Angeles. Baker has since taken a job with ADP.

These four join an already crowded roster of somewhat less recent departures -- including financial products marketing manager Mark Daniels (IMD, Nov. 8, 1993), product marketing test specialist Sophie Farago (IMD, April 25), national accounts director Stuart Rubenfeld ( IMD, Feb. 28) and agency sales director Alan Schwartz (IMD, April 25). Schwartz and Daniels left K-R in November, Rubenfeld in February and Farago last month.

Meanwhile, Devit was recently downgraded from vice president of sales to sales manager with responsibilities in the vendor's northeast region (IMD, April 25). Devit had been promoted to vice president -- from a position as northeast regional valve manager -- just ten months before (IMD, June 23, 1993).

All eight departed staffers and Devit either decline to comment or didn't return phone calls by press time. However, sources close to the vendor trace the problem to the surprise shake-up last year that culminated in the exit of Americas managing director Paul Cooper, a nine-year Knight- Ridder veteran (IMD, May 24, 1993).

Sources say that the preponderance of sales execs on the exit list is no coincidence. They say that many in K-R's sales department are unhappy about a new compensation structure introduced by the vendor last quarter. Knight- Ridder management replaced its existing gross commission plan with a net compensation structure -- a policy that leaves a number of sales executives owing their employers money, sources say. These sources also point to a change in the "management culture" -- in the words of more than one -- as a motive for the mass exodus.

Two months after Cooper's exit, industry outsider Patrice O'Grady replaced him as Knight-Ridder's managing director (IMD, July 6, 1993). Soon after she was hired, O'Grady told IMD that among her goals was to make some changes that would be "internal to the organization." Among other things, she promised to make "sure that we have a very competitive, highly motivated sales and service organization" (IMD, Nov. 8, 1993).

Some observers suggest that the exodis represents people who can't take the heat getting out of the kitchen.

O'Grady declines to comment through her secretary, who refers all press inquiries to Jerry Becker, Knight-Ridder's vice president of marketing. Becker would say only that Knight-Ridder's turn-over rate "is no different from any company" in the market data industry. Among other things, he declines to comment on specific resignations.

Still, the perception of Knight-Ridder's current turnover rate as average is not widely held. Says one source close to the firm: "Recruiters can have almost anyone they want from the place."

The majority of sources contacted say that the vendor's new commission structure is one of the key reasons the salespeople have opted to leave. Says one source: "They've lost a lot of their experienced support reps, so there are younger customer-support reps there who don't have that much experience, and right now they're looking for a sales training manager and customer support projects managers. Their support on the street certainly isn't what it used to be."

Another source agrees, describing "massive turnover among senior people" at the vendor. "People want to leave; the place is falling apart. It's losing some of the power that was there with [Cooper]."

A third source says: "It's a different culture now, since Cooper left. There's more accountability.... looking at every detail of every salesperson, for every call that you make, every account you speak to -- and this follows a very good first quarter. It's not a people regime, it's a numbers regime. More paperwork; it's driving people crazy."

Still, this source concedes that some of the griping is "sour grapes" from the salespeople. "What you don't hear," says this source, "is people have had checks that went up to $40,000 at first. People don't complain about that. But then, since those checks are high -- account mistakes, really -- Knight-Ridder takes a cut from them, and people are pissed. Maybe wrongly. See, for most negatives, there was initially a big plus. It boils down to this. The new regime came in and made changes too quickly, and insensitively. People who were there for years weren't comfortable with the changes. But, to be honest, maybe some need that micromanagement. But I feel the new regime is too into list management."

The source continues: "Are there salespeople who have legitimate gripes? Yes. If the disconnects are greater than your installs -- you owe money. It may not be your fault. Sometimes, it's a matter of taking some of the more mature products that cost more -- like the terminals, say -- and you switch to a network product, where you are just putting in software and data. In essence you might have more exposure, but your revenue is down. You owe."

Still, the source thinks events will correct themselves. "If salespeople continue to make the money that they did in the past, they don't [care] about the culture.... They'll adjust. The people that can't adjust to the new culture will fall by the wayside. They'll hire people that didn't know the old regime, that -- from day one -- will be put on doing all the paperwork and all the regimentation that they have now."

The first source quoted above confirms O'Grady's emphasis on procedures and numbers, describing her as "real strong... on paperwork, administration, revenue bottom line."

Meanwhile, some sources indicate that sales departure may represent only one facet of Knight-Ridder's brain-drain problem. One source says: "They just lost five or six programmers. While they just released MoneyCenter for Unix to be sold at the end of March, they are going to wait about six months before the next release, because they're behind the eight ball."