It’s never easy to cut sales positions.
But every business hits a rough patch. Sometimes cuts are the only responsible decision to make.
We believe a systematic approach can ensure that the reductions are done decisively and humanely. While the VP Sales will take the lead, the human resources leader needs to ensure that the process is fair and legally compliant.
In this post, we’ll walk you through a five-phase process for working with HR to get through this tough time. A systematic approach ensures that reductions are done decisively and humanely.
Phase 1: Understand What Went Wrong
Sales missed the number. That’s the bottom line, but it’s more complex than that. Where in sales was the miss? Maybe it was inside sales, or key account management, or e-commerce, or somewhere else.
Find out – it wasn’t department-wide. Obviously, some reps are failing. But others may be performing like champions. You need to see the whole picture to zero in on the weak spot.
At the beginning of the year, the sales V.P. develops a sales plan. It’s linked to the corporate/revenue plan, which slices revenue into constituent areas. Look for the disconnect from corporate strategy and you expose the miss.
Once you know where the breakdown was, you can act. Follow best practices. Be asymmetrical, to correct the problem areas in the business. Base your cuts in fact and fairness. Fire the group that isn’t producing and keep the group that is.
Phase 2: Evaluate Performance to Identify Whom to Cut
Now it’s time to focus on the people and determine who must go. You need to fire them and restore financials so the company can survive. Sales operations should take the lead on analysis.
Quotas count, but they’re not the only measure of a sales rep. Behavior matters. Look at leading and lagging indicators. Is the rep doing all the right things?
Potential is important, too. Maybe you’ve recently hired some people whose onboarding shows rock-star promise. And maybe you’ve got some reps who haven’t hit their quotas in years. They’re at the bottom of the performance management criteria. Decisions become clear.
This will help:
Our Sales Team Assessment Guide was developed to help you objectively assess your sales team. It provides a quick way to identify your A / B / and C players. You can download it here.
Phase 3: Collaborating for the Best Process
The sales VP needs solid HR support for a reduction that generates positive results. Human resources brings the performance management system, the legal view, and key perspectives. Tenure in the HR role is invaluable.
This work may seem demanding, but it’s important. Stack ranking is lazy. Don’t just cut the bottom of the department’s roster or follow “last-in, first-out” thinking.
These approaches force you to reallocate the work to produce revenue. They cause customer disruption. That costs money. And it reflects the absence of a true performance plan.
Don’t overlook contributions from others in the company, even when it’s outside their jobs. They may be able to make candidate referrals.
Phase 4: Accountability up the Chain
When there’s a deep cut, an executive should be first out the door. Your reps, customers, partners and the markets need to see accountability. If you don’t do this, you create a corrosive executive-versus-frontline mentality.
So fire the executive, announce it and tie it to the major job cuts.
Then make the rest of the cuts rapidly. Drawing it out suggests the company doesn’t know how many people to let go.
Implement an internal and external communications plan. Explain what happened with the miss. Clarify how the business will move forward. You need to restore people’s confidence in the company.
Phase 5: Prevent Future Strategic Misses
Analyze what went wrong. Conduct a post-mortem. What caused the breakdown? How do you keep it from happening again?
Ask the hard questions. Was there a problem in the performance condition configuration? You may find there was – a flaw that cost jobs. If so, change conditions to create a better platform for reps going forward.
Where does what you learn take you? You may see a need to hire over the next few months and quarters. Maybe Go To Market has a systemic problem that needs addressing. There may have been industry assumptions — a product launch that flopped, for example.
If you don’t do the analysis, you risk starting down a path to repeat.
An Expensive Process
The costs of sales force terminations are high. They upset the normal flow of business. They remove reps who, though they missed the number, did produce some revenue. Company image may take a hit. And then there is rehiring.
With human resources as an ally, the sales VP can better manage costs. In the end, those are an investment in a better company.