Companies typically spend more hiring their sales forces than any other function in an organization, yet sales managers often aren’t adept at assessing the right skills to make good hires. It’s time to turn that around in order to drive better bottom-line results.
If you want people in the field to understand your strategic initiatives and demonstrate behaviors that will drive profitable growth, then there must be a clear roadmap to drive that alignment, says Frank Cespedes, author of “Aligning Strategy and Sales: The Choices, Systems, and Behaviors That Drive Effective Selling.” He discusses the issue with Anita Bruzzese in the second part of this interview that looks at hiring and how sales will be affected by an improving economy.
AB: When it comes to hiring the kind of sales people that will help organizations to better align strategy and sales, what should hiring managers look for?
FC: That’s a great question. Everybody talks about talent management, and I’ve yet to meet the executive who is “against” talent! But far fewer confront a basic fact: companies typically spend much more money and hire many more people, annually, in their sales function than they do anywhere else in the firm. Most people are surprised to know that even at online companies like Facebook, Google and Groupon, a much higher percentage of employees work in sales than in engineering or data mining.
To improve that hiring and the alignment of sales and strategy, the foundation is this:
Many sales managers hire in their own image because how each manager sold is what got him or her promoted and in a position to hire. But the best results occur when you observe the relevant job behaviors. Technology is making this more possible and affordable via game-like simulations, virtual video environments and online media.
The real constraint in many firms, however, is the lack of assessment skills by sales managers. This makes links between sales and HR important. Sales managers know (or should know) the key sales tasks. But HR managers typically know more about the tools, techniques, and options for assessing behaviors relevant to those tasks.
AB: The economy is beginning to grow stronger. How does that add to the challenge of implementing the changes you call for?
FC: Well, let’s hope the economy is growing stronger. It’s been a shaky, stutter-step recovery for years. A stronger economy is good news for society, but it does add to the challenge of aligning strategy and sales.
For one thing, it puts more pressure on hiring. Across industries, average annual turnover in sales organizations is about 25%, and higher when times are good and there are more job opportunities. This means that the equivalent of the entire sales force must be replaced at many firms every four years or so. That time frame shrinks if companies increase their revenue targets in a recovering economy.
Also, the prolonged recession had an impact on firms. During the past decade, the average S&P-500 company, of necessity, reduced its cost-of-goods-sold by about 250 basis points. That’s significant. But SG&A (selling, general, and administrative costs) as a percentage of revenue has not declined. Business success is about relative competitive advantage. The focus of productivity improvement is moving, quickly, from operations and back-office activities to customer-acquisition activities.
Finally, even a growing economy can take any company just so far. It’s tough to do good things in business without a strategy, and it’s even tougher to achieve growth goals without a sales force aligned with that strategy. Too many companies either ignore this truth or fail to deal actionably with what’s required to make it happen.