While there are many obstacles to growing a sustainable, successful company, the most impactful mistake often made by executives in organizations of all sizes, industries and locations, is in hiring the right sales leader. The following real-world case example (using a fictional name) illustrates the impact of many of the common practices in selecting and managing a new sales leader.
Choosing the Sales Leader
Teckno has had strong market adoption and customer penetration within Small to Mid-Size Businesses acquired through the company’s marketing activities. Now the board and CEO, John (who has closed many of the larger customer accounts), recognize that a full-time sales leader is necessary to scale the business.
While they interview a number of candidates provided by headhunters, no one is equal to Sam, who was recommended by a Teckno board member. He brings a strong track record of performance and experience building high producing sales teams for IBM and HP.
During two interviews with John and the marketing leader, Sam enthusiastically discussed ways he would introduce Teckno to his contacts and win much larger deals for the company. Based on this he is offered the role of VP Sales with a compensation package that includes a lucrative base salary and expense provision since it will take some time for him to reach his contacts and close strategic accounts.
Eight months later, Sam has still not produced revenue and while there are a number of accounts in the pipeline, none are expected to close within the next quarter. With the hope of progressing the deals more quickly, John suggests that he accompany Sam on some sales calls. However, schedules just never seem to align for joint calls.
After another month without revenue, John reaches out directly to two of the prospects and some previous customers. It seems that while Sam is spending a lot of time rekindling relationships with his prior customer contacts in larger companies, many of the smaller accounts are not getting attention. Therefore, John and the marketing team redouble their own efforts in the SME market and deliver much-needed revenue results.
Feeling sidelined and frustrated, Sam talks with his friend on Teckno’s board – sharing how he feels that John has taken away his control and authority as VP Sales. Ultimately the board agrees with Sam that the large strategic deals he is working on are key to greater funding and sustainability of Teckno.
Shortly after Sam’s one year anniversary with Teckno, John is asked by the board to step down while Sam (who still had not closed any significant opportunities) is promoted to Executive VP Business Development. He and the board then take a more active role in positioning the company for fundraising or strategic acquisition. The ultimate outcome is a trade sale of the IP within the next year. While John and the board members received some financial return from the sale of Teckno, sadly the company’s potential opportunity in the market was never fully recognized.
What Went Wrong:
From what we know here, Sam was potentially a great salesperson – in fact, he did an excellent job of ‘selling himself’ to the board and John. However, his past successes were in selling complex solutions to large enterprises. The process for developing revenue with Teckno’s primary market (smaller businesses) required different skills and approaches than Sam was accustomed to using. With a background in operations (not sales) John believed that Sam had the contacts and skills to bring new business to Teckno. In the first months of Sam’s tenure, he was impressed (and bit ‘awed’) by the confidence and activity that Sam communicated in weekly executive staff meetings. When, after eight months without incremental revenue, John ‘over-corrected’ moving from hands-off management to insistence on joining Sam’s meetings, Sam felt threatened.
Sam’s resulting outreach to the board set up a ‘winner/loser’ conflict with John. Ultimately Sam was the only winner through the enjoyment of nice salary and an expense account – while the board, John and other equity holders received a much lower than expected return on their hard work and investments.
Common Mistakes in Hiring and Managing Sales Leaders:
While each company’s experiences and outcomes are different, the case of Teckno demonstrates a number of common mistakes that can happen when hiring, onboarding and managing a new sales leader. These include:
- Evaluation of candidates based on prior success selling different solutions to different types of customers.
- Lack of objective, thorough, multi-faceted candidate assessment process.
- Unclear agreement of expectations, level of management involvement and milestones for success.
- Compensation plan not aligned with management expectations.
- Unstructured onboarding, communication processes and initial performance evaluation(s).
Keys to Success in Hiring and Developing Sales Leaders:
To avoid the outcome experienced by Teckno’s board, investors and leadership team, Next Step recommends:
- Clear definition of sales process and skills required for success based on the target customers’ buying process.
- Broad candidate outreach over a two to four month period ensuring that candidates selected for interviews fully meet specific requirements for success.
- Candidate assessment process that includes:
- Behavioral interviews with object rating of candidates’ performance
- Objective style and/ or skill assessment
- Reference checks that reveal candidate’s motivations, approach and results
- Preparation for initial 90 days ‘on the job’ activities
- Sales compensation plan designed to drive and reward achievement of company goals.
- Agreement on sales milestones and strict adherence to onboarding and management processes.