You require a change in sales leadership. What is the best path? Should you hire from within, specifically, from the existing sales team, or should you go outside the organization and hire from the market?
The choice is tricky, you don’t have much time to determine the right approach, and you need to get it right. Here are key questions and a checklist you can use to assess whether you should start your search internally or externally. If you are asking yourself if its time to make a change, here are some things to think about.
The Turnover & Tenure Carousel
Change is inevitable, particularly in sales. Change can be healthy, ushering in new opportunity and direction, or disruptive, creating ambiguity and discord.
The pace of turnover in sales leadership has quickened. Among the 100 largest sales forces, 25% experienced turnover in sales leadership over the past 12 months. Exacerbating this turnover is tenure decline in the sales leadership role.
The average tenure of a VP of Sales is 19 months and has experienced a 6% year over year decline since 2010. A well-executed sales leadership transition can lead to improved company performance. The damage from hiring the wrong sales leader can take several quarters, and in some cases several years, to repair. This is a hire you can’t afford to get wrong.
Central to the decision of leadership change is replacing from within or selecting an external sales leader. This decision is a critical factor that should be decided early in the process. At stake are two key sales driven factors: customer satisfaction and revenue growth. Both are impacted by changes in the sales organization. However, this is tricky and the decision of internal vs. external is dependent on several key factors.
6 Questions To Ask Yourself
- Do you have internal talent capable of leading sales?
The key to this question is to ensure that you have a strong pulse on your sales talent. This is not just about quota attainment and pipeline growth. Critical to this conversation is understanding not only their performance, but leadership qualities and necessary intangibles. If you are unsure then it is likely that the key areas of talent management and succession planning have lapsed.
It will be necessary to step in and gain a greater understanding of what your sales team looks like in order to truly access whether an internal candidate is a possible successor. If you do think you have an internal candidate that can achieve your growth objectives, additional factors need to be diagnosed.
- Does the team need a cultural overhaul?
Growth outcomes are 50% talent and 50% performance conditions. If you have the right people clarifying the conditions creates improved opportunities for success. If soup to nuts changes aren’t required then the right internal selection can invigorate the rest of the team. However, if stagnation has led to talent issues then an external hire will be required to change the conditions and the talent.
- Do you need a builder or an operator?
To drive performance conditions and maximize talent, the CEO and board must carefully consider the skillset of their next sales leader.
Broadly, there are two types of sales leader, the builder and the operator. The builder is the person you need to create something new. This executive enjoys building sales organizations and capabilities. He or she will put the ideal performance conditions into place. They are the strategists and want autonomy and limited oversight. Hire the builder when you need a transformation.
The operator excels at stepping right into the sales organization and executing with precision. Hire the operator when you need execution. When the strategy and conditions are in place, the operator excels at maximizing performance. The operator is a masterful tactician.
Builders or operators can be found internally or externally, but operators are found in more abundance than builders. Our research shows that for every builder profile there are 3 operator profiles. As a result, if you need an operator there is a better chance that you can find that person internally. So, if you need someone to carry the flag forward quickly and execute on a well-defined strategy the internal operator offers a clear and immediate path. Read here for more on the builder and operator profile.
- Do your change management efforts require outside experience?
First is the ability to absorb the change. Too much change on all fronts can create fatigue, impeding growth targets. Having an internal candidate that can step into the role and manage the change while providing for stability can be an important driver to ensure the team buys in. The stability is found in the change being driven by a leader that has established trust with the sales organization. More often than not, if a major change has been undertaken and an internal candidate is being evaluated that person can and has tapped into both the voice of the team and the C-suite.
Another key characteristics here is whether an internal member has experience with the changes taking place. In a scenario where the rest of the team may be inexperienced with the changes being instituted, a leader experienced with the changes taken place can provide a calming influence that creates cohesion. An internal candidate is ideal in this scenario.
- Are you at a growth inflection point?
Often a change in sales leadership is brought on when the company needs to get to the next level in their maturation and growth objectives. This is particularly the case for private companies recently acquired. To do so they need a sales leader who has experience in navigating an organization through the scaling challenges of next level growth. In this case, the ideal candidate would be an external hire. It is unusual that you have an internal sales executive who has driven scaled revenue growth not already in the leadership role. Some team members may have experienced this scenario before and can add useful support, but the leader would be an external hire.
A corollary to this scenario is the need for cross industry experience. To reach growth objectives at scale you may need to reach beyond your industry to identify best practices in sales force effectiveness. It is in this scenario that you start to “stack” the key questions together to examine the interrelationships. For example, if you are at a growth inflection point then you will likely make strategic changes that push changes in the cultural profile of the sales team and require a builder profile to enact. Understanding these interrelationships makes it easier to be confident in determining the correct hiring path. Further, understanding these strategic concepts will allow for a better assessment of your internal options and better articulate the profile you are looking for on the market.
- What is your timeline imperative?
The final question in assessing the internal vs. external sales leader hire is about timing.
Do you need to make a change sooner or can you wait for a little while? How does this timing align to roll-out of any changes or change management? Will a prolonged search impact revenue growth in the near term? Is there an exit or financial event on the horizon? What is the board’s sense of urgency?
Understanding these answers will help you determine the sense of urgency around your transition timeline. If time is of the essence, then an internal candidate may make sense. External searches can be cumbersome, expensive, and time consuming. The opportunity costs are high for the outside search. If you have the right talent to fit the circumstances and needs of sales leadership’s mandate then you could be well served to promote internally for the role.
Scoring Your Circumstances
Taking the time to explore the answers to these questions will get you started. From there a deeper review of talent and profile specific drivers should be developed and assessed to home in on the right profile. Leverage our Internal vs. External Hire Sales Leader Assessment Tool for these key questions to help assess the value of the internal vs. external decision criteria. Finally, your goal should be to break the cycle of high turnover and low tenure. Identifying the right profile is the first step.
If you would like to participate in a custom workshop focused on the digital customer experience, bring your team to engage in Dallas at The Studio, SBI’s executive briefing center.
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