article | October 3, 2012
A CEO Question: Should You Hire a New Sales Leader?
Bob is the CEO of a successful software company. He wants to grow faster. He thinks a new sales leader is the answer. Matt is his current head of sales.
His CTO just delivered a new product that expanded the company’s addressable market 2x. The development cost was significant. The board expects Bob to double monthly recurring revenue inside of 12 months. Bob appreciates that new products don’t sell themselves. He feels sales execution needs to be improved.
Bob continues, “My VP of Sales, Matt, has taken us to this point. I think he can deliver the growth, but maybe not. Can I get there faster, with more certainty, by hiring a new sales leader? The board thinks I need to bring in a heavy hitter. They want someone who has scaled a SaaS company before.”
At the turn, I asked Bob, “What gaps exist between your sales leader and the new candidate?”
He proceeds to quote to me statistics from the candidates CV. Items like revenue responsibility, number of people under his command, and years of experience.
I ask Bob, “These numbers, are they a function of this sales leader’s skills? Or, a function of being at the right place at the right time?”
Bob did not know the answer. Bob sinks a birdie putt and I am now three down. He asks me how one would go about answering this luck vs. skill question.
On the scorecard, I scribbled a grid that looked something like this:
We approach the tee box. The foursome ahead of us had not hit their drives yet. This allowed me to explain the inputs into this grid:
“Bob, sales leaders get labeled A, B, or C players based on accountabilities and competencies. Accountabilities are numbers, such as revenue growth and quota attainment. Competencies are skills such as launching a new product and building a great team.
You should rank your current leader and the candidate on this grid. Then, you should benchmark their scores versus their peers. This does two things for you. First, you see the strengths and weaknesses of these leaders compared to each other. Second, you see a comparison of these sales leaders with the broader labor market.“
Bob drives his ball 275 yards down the middle of the fair way. He turns to me and says, “I understand. If my current sales leader scores worse than the candidate, I have an issue. If the candidate scores worse than the labor market, I still have an issue. I will still be left wondering if I have the right guy?”
Punching out from behind a tree, I confirm with Bob. If the current leader is as good as the alternatives, do not change. It will not help. The key is answering the sales leadership question correctly. This requires an objective assessment of the alternatives. Accountabilities and competencies need to be benchmarked against the broader labor market.
Bob asks, “How do you determine what to evaluate the individuals on?”
I reply, “It is situational and different each time. Your goal is to drive the new product into the market. There are specific sales leader competencies tied to a new product launch. For example, defining the ideal customer profile for the new offering might be one. Assessing the sales team’s readiness to sell the new product is another. Developing key account penetration plans for the new offering is important. In addition to these, the sales leader also needs to enable the channel partners. Recruiting new channel partners for the new product is a key. Hiring to a new talent profile to sell the new offering might be one. You may also want to test for the ability to alter the comp plan. How about setting accurate quotas for the new offering?”
The Miller Lites at Pelican Hill hit the spot. As two become five, Bob says, “I am not sure on Matt. But, now I am not sure about the candidate either. He looks great on paper. He interviewed well but we asked the wrong questions. An objective assessment, against specific product launch competencies, might be worth it. The risk in taking Matt out is not trivial. He is well liked and has key relationships. I need to make sure the risk is worth it.”
Bob asks, “How do I get started?” I pointed Bob to three items below and recommend the same items to you:
We talked about chasing the little white ball around again. He likes to win and playing me guarantees a victory for him. I will bring you up to speed on what Bob decided to do then.
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