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Research Report

Hiring Top Sales Management Talent

Research underwriter

March 2016

Copyright © 2016 by the Sales Management Association. All rights reserved.

Copyright © 2016 the Sales Management Association. All rights reserved.2

First published March 2016.

Sales Management Association 1440 Dutch Valley Place NE Suite 990 Atlanta, Georgia 30324 USA +1 (404) 963-7992 http://salesmanagement.org

Copyright © 2016 The Sales Management Association, Inc.

All rights reserved; no part of this publication may be reproduced, stored in a re-trieval system, or transmitted in any form or by any means, electronic, mechani-cal, photocopying, recording, or otherwise, without prior written permission of the publishers.

Research Report: Hiring Top Sales Management TalentThis document has been prepared by The Sales Management Association for use by its members. The Sales Management Association has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and The Sales Management Association is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Sales Management Association nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by The Sales Management Association or its sources, or b) reliance upon any recom-mendation made by The Sales Management Association.

Descriptions or viewpoints contained herein regarding organizations profiled in this material do not necessarily reflect the policies or viewpoints of those organi-zations.

About The Sales Management AssociationThe Sales Management Association is a global, cross-industry professional organization for sales operations, sales effectiveness, and sales leadership pro-fessions. We provide our members with tools, networking, research, training, and professional development.

Our research initiatives address topics relevant to practitioners across a broad spectrum of sales effectiveness issues. Our research is available to members on our site at www.salesmanagement.org.

In addition to research we publish best practice tools, archived webcasts, and expert content. Visit our website at http://salesmanagement.org to learn more.

Authors Robert J. KellyChairmanSales Management Association

Kathy LedfordSales Management Association

Copyright © 2016 the Sales Management Association. All rights reserved. 3

Research Report: Hiring Top Sales Management Talent

Contents1 Introduction 51.1 Research Objectives 51.2 Summary of Key Findings 6

2 Correlating Sales Manager Hiring Effectiveness and Firm Performance 8

3 Management Recruiting, Selection, and Development – A Process View 103.1 Sales Manager Hiring Process Characteristics 113.2 Identifying the Right Candidates 123.3 Attracting Candidates 13

4 Developing Hiring Profiles for New Sales Managers 144.1 Competencies for External Candidates 144.2 External Candidate Competency Measurement Improvement Priorities 174.3 Competencies for Internal Candidates 184.4 Measurement Improvement Priorities for Internal Manager Candidate Competencies 214.5 Comparing Competency Measurement Efforts Between Internal and External Candidates 22

5 Optimizing Availability of Promotion-Ready Internal Candidates 235.1 Identifying Internal Candidates 235.2 Firm Support of Graduate Management Education 26

6 Onboarding and Developing the Hired Candidates 276.1 Onboarding New Sales Managers 276.2 Developing Sales Managers 28

7 Respondent Demographic Information 307.1 Firm Size 307.2 Respondent Job Role 317.3 Firm Performance 317.4 Sales Force Size and Manager-to-Salesperson Span of Control 327.5 Sales Compensation 33

8 About the Study 348.1 About The Sales Management Association 348.2 Research Approach 348.3 Research Underwriting 34



Introduction

1.1 Research Objectives

Sales managers play a vital role in high-performing sales organizations; sourcing and developing effective managers is therefore critical to any firm fielding a sales force. It’s a challenge approached in two ways: sourcing talent from outside the firm, or developing internal talent – usually salespeople promoted into their first management role. Organizations with a sizable management corps almost always employ some combination of both approaches, rather than emphasizing one to the exclusion of the other.

In this research, we examine practices essential to effective sales management hiring. In doing so, we broadly define what constitutes “hiring” decisions to include deciding which internal candidates to promote, in addition to determining which outside candidates to hire as employees new to the firm.

Regardless their degree of emphasis on internal or external candidates, firms must address, namely: What makes a good sales manager in our firm? Where do we find the best manager candidates? What tactics are most effective in identifying, attracting, and developing manager talent? and How do we develop new managers, and further develop experienced managers?

This research offers insight into how firms are addressing these fundamental hiring questions.

1



1.2 Summary of Key Findings

Our study identifies substantial opportunities to improve sales manager hiring. Surprisingly few firms have optimized key hiring activities, and fewer still express satisfaction with their hiring results. Improving these outcomes is worth it, our research found. Significant performance advantages accrue to organizations successful in key sales manager hiring activities.

Specifically, firms most effective in hiring successful sales managers show a 47% greater sales objective achievement performance than firms least successful in hiring sales managers. These “most effective” firms were successful in recruiting outside managers, as well as promoting internal candidates into management; their low-performing peers were unsuccessful in staffing managers from either source. A third group, successful in either outside hiring or internal promotion (but not both), showed 18% firm sales performance improvement over the low-performing group.

Unfortunately, too few firms are consistently successful in sourcing new sales managers. Just 10% consider themselves proficient at external recruiting and internal candidate promotion – and fewer than half are proficient at either.

Hiring is best considered as a continuum of activities, rather than a single, isolated decision; our research therefore examined these additional steps important to the hiring process, such as the development of candidate hiring profiles, attracting target candidates, selection criteria, new hire onboarding, and manager development efforts (which impact internal recruiting as well as new hires’ ongoing success).

We learned that the success or failure of firms’ efforts in initial activities – such as defining target hiring profiles – have compounding effects in subsequent steps. Aggregate respondent data illustrate these cascading effects. While 32% of firms are effective in identifying target manager candidate profiles, just 22% are effective in attracting the best candidates, and only 19% are effective in onboarding new-hire managers.

Haphazard hiring processes, poorly coordinated and under-optimized appear to be more of a general rule, rather than an exception. Most firms (59%) do not rely chiefly on objective data when hiring sales managers; nor do most employ a structured competency model (just 30% do). Only 33% report the application

Research Summary

1.2 The research aggregates responses from 152 firms. See section 7 for complete respondent demographic information.

Repondents

FirmsSales Mgrs.Salespeople

Total

15216,900168,000


of a “consistent approach for determining the right sales managers to hire”, and 40% acknowledge heavy reliance on subjective data for hiring decisions.

The vast majority of firms (96%) utilize (at least in part) internal promotion to staff sales manager positions, though only 31% report having a well-defined process for identifying promotable salespeople, and just 34% utilize internal candidate assessment tools. Instead, salesperson performance is most valued as a promotion criterion – an approach with obvious limitations that yields unsatisfactory results.

Candidate competencies considered most important for manager candidates (both internal and external) include communication skills, coaching ability, sales performance management, values and ethics, decision-making, leadership, and teamwork. Management’s ability to measure these competencies represents a substantial capability gap that contributes significantly to poor hiring outcomes. Competency measurement for internal candidates is judged significantly easier (an average of 9% easier across all competencies), and may account for an over reliance on internal candidates for management staffing needs.

Factors most important to candidates in considering a sales management position are confidence in leadership, compensation, firm performance, brand reputation, and workplace environment.

Given most firms’ challenges in hiring high-quality sales managers, onboarding represents an essential objective for new hires. Unfortunately for most firms, onboarding proves no less challenging than hiring and recruitment. Only 19% of respondent firms’ onboarding efforts are considered effective.

Though our research did not focus on ongoing manager development, we do consider it a contributing factor to hiring outcomes; development or training efforts (whether or not they are part of a formal onboarding effort) can greatly influence new manager success. In aggregate, participants rated their manager development efforts in a low-to-moderate range of effectiveness; many manager competencies considered most important are among those most difficult to develop for respondents.



Correlating Sales Manager Hiring Effectiveness and Firm Performance

Our research correlated sales manager hiring effectiveness and firm performance.

Firms that are least effective in sales manager hiring failed to achieve sales objectives in the prior 12-month performance period; as a group, these firms’ average sales objective achievement performance was 3.4 on a 7-point scale, where 1 is sales far below the firm objective, 4 is “met objective,” and 7 is performance far above firm objective. These “least effective” firms were ineffective in hiring outside manager candidates, and ineffective in promoting managers from within the organization.

Firms effective in one of either of these two – that is, either external hiring or promotion from within – fared 18% better, with a 4.0 sales objective achievement rating. This rating reflects a “met objective” performance level.

2

2.0.1 Sales manager hiring effectiveness correlates with firm sales objective achievement.

Sales Manager Hiring Effectiveness and Firm Performance

Firm Sales Objective Achievement, Prior 12 Months

Sales Manager Hiring Effectiveness

7 – Far Exceeded Goal

6

5

4 – Met Goal

3

2

1 – Far Below GoalEffective only in promoting

internal candidates

3.44.0

5.0

Effective in either

internal promotions or external hires

Effective in both internal

promotions and external

hires


Firms effective at both external hiring and internal promotion of sales manager candidates had collective sales objective achievement performance of 5.0, a 47% improvement over firms ineffective in both disciplines.

Unfortunately, too few firms find success in either source of new sales manager candidates. Fewer than half of all firms consistently hire effective sales managers from either inter-company promotions or external hiring efforts. Fewer than 10% of all firms consider themselves proficient in both.

2.0.2 Fewer than half of respondents are effective in hiring sales managers, either from internal candidates or outside recruits.

Firms Effective in Sourcing Productive Sales Manager Candidates

Percentage of Firms

43%

From Internal Company Promotions From External Hires

48%



Management Recruiting, Selection, and Development – A Process View

Hiring is best considered as a continuum of activities, rather than a single, isolated decision. Firms that consistently make “good hires” also do several other things consistently, namely: anticipate hiring decisions with pre-hire planning, follow purposeful recruiting processes, establish formal selection criteria, implement structured new hire onboarding, and invest in the ongoing development of managers after they’re hired. Each of these contributes significantly to new hires’ ability to become a productive contributor.

Our research therefore examined these additional steps important to the hiring process, such as the development of candidate hiring profiles, attracting target candidates, selection criteria, new hire onboarding, and manager development efforts (which impact internal recruiting as well as new hires’ ongoing success).

3

Firm Effectiveness in External Sales Manager Hiring

Percentage of Firms that are Successful

Identifying Best Candidates

Attracting Best Candidates

Effectively Onboarding New-

Hire Managers

32%

22%19%

3.0.1 Candidate identification is done effectively by 33% of firms. Twenty-two percent are effective at attracting candidates, while just 19% effectively onboard new hires.


3.1 Sales Manager Hiring Process Characteristics

Most firms (59%) do not rely chiefly on objective data when hiring sales managers. Nor do most employ a structured competency model (just 30% do). Only 33% report the application of a “consistent approach for determining the right sales managers to hire.” Forty percent acknowledge heavy reliance on subjective data for hiring decisions.

These findings suggest poorly optimized, haphazard processes rule the day when it comes to hiring sales managers.

3.0.2 Most firms staff new sales managers through both external hires and through internal promotion.

Source of Future Sales Manager Hires

Percentage of Firms

Preference for external

candidates15%

Only external candidates4%

Only internal candidates5%

Preference for internal candidates

18%

Both internal and external

58%

We learned that the success or failure of firms’ efforts in initial activities – such as defining target hiring profiles – have compounding effects in subsequent steps. For example, firms with a poorly defined target hiring profile are less likely to find success in attracting candidates, making sound selections, or effectively onboarding new hires. Similarly, firms effective in defining a target hiring profile are significantly more likely to be successful in downstream hiring activities.

Aggregate data from all respondents illustrate these cascading effects. While 32% of firms are effective in identifying target manager candidate profiles, just 22% are effective in attracting the best candidates, and only 19% are effective in onboarding new-hire managers.



3.2 Identifying the Right Candidates

“Sales management knowledge” represents the most important candidate trait for predicting future success, according to respondents. This trait scored 80 on a 100-point rating index,

3.1 Forty-one percent of firms rely heavily on objective data, while 40% rely heavily on subjective data.

Firm Approaches to Hiring Sales Managers

Percentage of Firms

Rely Heavily on Objective Data for Hiring Decisions

Rely Heavily on Subjective Data for Hiring Decisions

Applies a Consistent Hiring Process

Uses a Well-Defined Competency Model

Orchestrated Training and Development

41%

40

33

30

27

3.2 The candidate characteristics most important as predictors of sales manager success are sales management knowledge, cultural fit, a favorable response to a realistic job preview, and a track record of increasing responsibility. The factors rated least important are quality of university degree, and personal references.

Importance of Candidate Characteristics to Predicting Sales Manager Success

Indexed Importance Rating

Sales management knowledge

Cultural fit (subjective)

Providing a realistic job preview

Track record of increasing responsibility

Industry experience

Cognitive aptitude (subjective)

Cognitive aptitude testing

Cultural fit testing

Employee referral of candidates

Case-based assessment

Employment at a well-recognized firm

Personal references

Quality of University Degree

80

76

74

74

70

64

57

56

55

54

53

50

39

0Not at All

100Very High

50Somewhat

Management Recruiting, Selection, and Development – A Process View


where 0 is not at all important to predicting future success, 50 is somewhat important, and 100 is extremely important. Other responses scoring above 70 are (in descending order of predictive importance): cultural fit (a subjective judgment; 76), favorably responding to a realistic job preview (74), a track record of increasing responsibility (74), and industry experience (70). Lowest-rated characteristics are personal references (50) and the quality of the candidate’s university degree (39).

3.3 Attracting Candidates

Ninety-four percent of respondent firms prefer or consider external hires (fig. 3.0.2). However, just 22% of firms are consistently effective in attracting appropriate external candidates.

Candidates’ confidence in firm leadership is considered the most important factor for attracting appropriate sales manager candidates. This trait scored 75 on a 100-point rating index, where 0 is not at all important to candidates, 50 is somewhat important, and 100 is extremely important. Other characteristics with

3.3 Confidence in firm leadership is the most important factor for attracting high-quality sales manager candidates.

Importance Ratings for Factors Attracting Top Sales Manager Talent

Respondents’ Perspective of What Candidates Find Important


Confidence in leadership

Compensation

Financial Performance

Brand reputation

Workplace environment

Clear and promising job

Visionary leadership

Benefits

Development opportunities

Employee recommendations

Values and social responsibility

Career advancemenet opportunities

75

73

72

72

72

70

67

66

66

65

64

64

0Not at All

100Very High

50Somewhat



importance ratings of 70 or higher are (in descending order of importance): compensation (73), firm financial performance (72), brand reputation (72), workplace environment (72), and the job’s clear and promising potential (70).

Factors considered least important (though rated well above the median value of 50, “somewhat important”), are (in ascending order of importance): career advancement opportunities (64), firm values and social responsibility, (64) and employee recommendations (65).

Developing Hiring Profiles for New Sales Managers

We asked respondents to rate a set of 20 managerial competencies, once for external candidates and once for internal candidates. They rated each competency on its “importance” and the organization’s “ability to assess” or ability to measure it.

4.1 Competencies for External Candidates

Hiring firms most value external sales manager candidates’ competencies in communication and coaching. These competencies were rated highest (88 and 85, respectively), out

4


of 22 competencies researched. Competencies were rated on an indexed importance scale, where 0 is not at all important, 50 is somewhat important, and 100 is extremely important.

4.1.1 Communication and coaching skills are most important for external sales manager candidates.

Sales Manager Competencies Important for External Hires


Communication skills

Coaching ability

Sales performance management

Values & Ethics

Teamwork

Decision making

Sales forecasting & goal setting

Selling skills

Sales process management

Sales recruitment & selection

Learning orientation

Industry knowledge

Financial acumen

Entrepreneurial spirit

Sales strategy alignment

Customer analytics

Customer process management

Cross-functional management

Process orientation

Sales structure design

Technology proficiency

Sales compensation design

88

85

84

84

82

81

78

76

75

75

72

72

69

69

68

67

67

66

64

64

61

56

0Not at all

100Extremely

50Somewhat

Other competencies deemed most important (in descending order of importance) are: sales performance management (84), values and ethics (84), teamwork (82), and decision-making ability (81).



Factors considered least important (though rated well above the median value of 50, “somewhat important”), are (in ascending order of importance): sales compensation design knowledge (56), technology proficiency (61), knowledge of sales structure design (64), and process orientation (64).

Indexed Rating of Importance and Effectiveness


Coaching ability


Values & Ethics

Teamwork

Decision making


Selling skills




Industry knowledge

Financial acumen



Customer analytics



Process orientation




88

85

84

84

82

81

78

76

75

75

72

72

69

69

68

67

67

66

64

64

61

56

0Not at all

100Very High

50Somewhat


Firm Importance Firm Ability to Measure

68

47

49

46

47

51

51

56

41

41

46

65

53

46

45

49

45

47

47

47

59

47

4.1.2 Most competencies are difficult to measure for hiring firms. Hardest of all are candidate skills in managing sales process and recruiting.



Respondents have low-to-moderate success in measuring manager candidates’ competencies in these areas. Considered easiest to measure are communication skills and industry knowledge. These were rated 68 and 65, respectively, using a 100-point indexed “ability to measure” scale, where 0 is impossible to measure, 50 is somewhat easy to measure, and 100 is very easy to measure.

Other competencies’ ability-to-measure ratings are, in order of easiest to hardest to measure: technology proficiency (59), selling skills (56), financial acumen (53), decision-making ability (51), and sales forecasting and goal setting (51). All other competencies – 15 in total – received ability-to-measure ratings at or below the scale midpoint of 50, a clear indication that most firms find measuring most competencies to be a significant challenge. Considered most difficult to measure, in order of hardest to easiest to measure, are: sales process management skills (41), salesperson recruiting and selection expertise (41), ability to align sales strategy with the sales force (45), and customer process management skills (45).

For all competencies, rated importance exceeds the rated ability to measure. The largest average gaps between the two ratings are for leadership (a 38-point gap), values and ethics (38), decision making (35), industry knowledge (34), and selling skills (34).

4.2 External Candidate Competency Measurement Improvement Priorities

For external candidates, the highest priority measurement improvement opportunities are in the competencies of coaching ability, teamwork, leadership, values and ethics, decision making, and sales forecasting and goal setting. These competencies were rated in the top half of all competencies’ rated importance, and in the bottom half of all competencies’ rated ability to measure. They appear in the bottom-right quadrant of the “Importance-Measurement Ability” matrix in figure 4.2.



4.2 This matrix helps visualize relationships between external-hire management candidate competencies’ importance and measurability ratings. It organizes ratings for each competency on an x-y scatterplot. Ability to measure ratings are assigned to the vertical y-axis, and importance ratings to the horizontal x-axis. The two axes intersect at the respective mean value for each scale (73 for importance; 51 for ability to measure; both 100-point scales). Highest-priority measurement improvement opportunities are shown in the bottom right quadrant. They are: sales forecasting and goal setting, decision making, sales performance management, teamwork, coaching ability, values and ethics, sales process management, and sales force recruiting.


36

69

56x = 73

y = 51

90

Ability to Measure

Importance


Values & Ethics

Decision making

Coaching ability

TeamworkLearning orientation

Industry knowledge

Selling skills


Customer analytics

Financial acumen

Process orientation







Customer process

management


Sales structure

design


4.3 Competencies for Internal Candidates

Internal sales manager candidates are most often promoted from the ranks of the sales force. Respondents have slightly different importance and ability-to-measure ratings for internal salesperson manager candidates.

As with external candidates, the competency considered most important for internal candidates is communication skills. It was rated 91 on a 100-point rating index, where 0 is not at all important, 50 is somewhat important, and 100 is extremely important.



Other competencies deemed important (in descending order of importance) are: leadership (89), value and ethics (87), decision-making ability (86), coaching ability (85), and teamwork (82). Factors considered least important (though rated well above the median value of 50, “somewhat important”), are (in ascending order of importance): project management (58), technology proficiency (60), and process orientation (66).

4.3.1 Communication skills, leadership, and values and ethics are considered most important in considering internal promotion candidates.

Salesperson Competencies Important for Management Promotion



Leadership

Values & Ethics

Decision making

Coaching ability

Teamwork


Industry Knowledge

Selling skills

Change catalyst


Customer analytics

Financial acumen

Process orientation


Project management

91

89

87

86

85

82

76

76

75

73

73

71

68

66

60

58

0Not at all

100Very High

50Somewhat



4.3.2 The internal candidate competencies of leadership and coaching ability have the largest gaps between respondents’ ratings for importance and ability-to-measure.

Salesperson Competencies Relevant for Management Promotion

Importance and Ability to Measure

Indexed Rating of Importance and Ability to Measure


Leadership

Values & Ethics

Decision making

Coaching ability

Teamwork


Industry Knowledge

Selling skills

Change catalyst


Customer analytics

Financial acumen

Process orientation


Project management

91

89

87

86

85

82

76

76

75

73

73

71

68

66

60

58

0Not at all

100Very High

50Somewhat

Importance Ability to Measure

69

51

53

56

50

58

52

73

66

44

48

50

56

52

64

48

Respondents have somewhat better success in measuring internal candidates’ competencies, compared to those of external candidates. These differences are treated in detail in the following report section.

For internal candidates, industry knowledge and communication skills are considered easiest to measure. These were rated 73 and 69, respectively, using a 100-point indexed “ability to measure” scale, where 0 is impossible to measure, 50 is somewhat easy to measure, and 100 is very easy to measure.

Other competencies’ ability-to-measure ratings are, in order of easiest to hardest to measure: selling skills (66), technology proficiency (64), teamwork (58), financial acumen (56), and decision-making ability (56). Considered most difficult to measure, in order of hardest to easiest to measure, are: change catalyst skills, (44), project management skills (45), and entrepreneurial spirit (48).



For all but one competency, rated importance exceeds the ability-to-measure rating (technology proficiency is the lone exception). The largest average gaps between the two ratings are for leadership (a 38-point gap), coaching ability (35-point gap), values and ethics (34-point gap), and decision-making ability (30-point gap).

4.4 Measurement Improvement Priorities for Internal Manager Candidate Competencies

For internal candidates, the highest-priority measurement improvement opportunities are in the competencies of coaching ability, decision making, leadership, learning orientation, and values and ethics. These competencies were rated in the top half of all competencies’ rated importance, and in the bottom half of all competencies’ rated ability to measure. They appear in the bottom-right quadrant of the “Importance-Measurement Ability” matrix in figure 4.4.

4.4 This matrix helps visualize relationships between internal-hire management candidate competencies’ importance and measurability ratings. It organizes ratings for each competency on an x-y scatterplot. Ability to measure ratings are assigned to the vertical y-axis, and importance ratings to the horizontal x-axis. The two axes intersect at the respective mean value for each scale (76 for importance; 56 for ability to measure; both 100-point scales). Highest-priority measurement improvement opportunities are shown in the bottom right quadrant. They are: coaching ability, decision making, leadership, learning orientation, and values and ethics.

Salesperson Competencies Relevant to Promotion to Sales Management

40

74

56x = 76

y = 56

96

Ability to Measure

Importance


Leadership

Values & Ethics

Decision making

Coaching ability

Team work


Industry knowledge

Selling skills

Change catalyst


Customer analytics

Financial acumen

Process orientation


Project management



4.5 Comparing Competency Measurement Efforts Between Internal and External Candidates

As might be expected, respondents have an easier time assessing internal candidates’ competencies, compared with those of external candidates. Among all competencies rated for both internal and external candidates, those for internal candidates were 9% easier to measure on average (external candidates’ competencies’ aggregate ability-to-measure score is 52 on the 100-point scale, compared with an average rating of 57 for internal candidates). All competencies in the common set were judged easier to manage for internal candidates.

Competencies with the greatest difference in ease-of-measurement rating: teamwork (25% easier to measure for internal candidates compared with external candidates), selling skills (17% easier), values and ethics (13% easier), and learning orientation (13% easier).

4.5.2 Competencies are easier to measure for internal candidates, compared to those of external candidates.


Ability to Measure (0 = impossible, 100 = very easy)

Competency

TeamworkSelling skillsValues & EthicsLearning orientationIndustry knowledgeProcess orientationDecision makingTechnology proficiencyCoaching abilityFinancial acumenEntrepreneurial spiritCustomer analyticsCommunication skillsAverage

4756464665475159475346496852

5866535273525664505648506957

25%17%13%13%12%11%8%8%8%5%3%2%2%9%

External Candidates

Internal Candidates Variance


Optimizing Availability of Promotion-Ready Internal Candidates

5.1 Identifying Internal Candidates

5

5.1.1 Thirty-one percent of firms have a well-defined process for identifying salespeople with manager potential; 34% use assessment tools for identification.

How Firms Identify Sales Manager Candidates

By Candidate Source

Percentage of Firms Utilizing

500 100

Well-Defined Process for Identifying Salespeople with Manager Potential

Assessment Tools That Identify High Potential Manager Candidates

31%

34%

While 96% of firms promote internal candidates into sales management roles, only 31% report having a well-defined process for identifying promotable salespeople, and only 34% have internal candidate assessment tools. Many firms instead rely on observed performance and management judgment in identifying potential candidates.

Respondents appear most reliant on salesperson performance as an indicator of management potential. Salesperson performance is rated highest in effectiveness among five approaches rated; its average rating of 59 represents a moderate effectiveness rating on a 100-point rating scale, where 0 is not at all effective and 100 is extremely effective.

Other ratings, in descending order of effectiveness, are executive endorsement (53), competency ratings (52), committee review (50), and surveys (40). Respondents’ ratings indicate that none of these approaches offer management high value in assessing candidates.


Twenty-four percent of respondents have a formal sales manager candidate assessment program used to evaluate salespeople for promotion. Those firms with a formal program rate coaching and mentoring as the most effective activities for assessing candidate potential. These were rated 79 and 77, respectively, on a 100-point indexed effectiveness scale, where 0 is not at all effective and 100 is extremely effective. Other candidate assessment approaches, in descending order of effectiveness, are stretch job assignments (73), 360-degree feedback (72), project-based action learning (71), internal classroom training (69), external classroom training (67), and networking within the firm (64).

5.1.2 Respondents rate salesperson performance as the most effective indicator of sales management potential, but no approach rated rose above the level of only “somewhat effective.”

5.1.3 Most firms (74%) do not have a formal approach for evaluating salespeople for management promotion.

Firms With Management Training Programs For Assessing Sales Manager Candidates

Percentage of Firms

Formal Program

24%

No Program76%

Approaches to Sales Manager Candidate Identification

Indexed Effectiveness Score


Salesperson performance

Executive endorsement or sponsorship

Competency coding system

Committee review

Survey tool

59

53

52

50

40

0Not at All Effective

100Extremely Effective

50Somewhat Effective



Most firms – 76% of respondents – don’t make use of formal internal candidate assessment programs. For these firms, the single most important reason cited for not having a program is a lack of resources, cited by 35%. Twenty-five percent of respondents say that a formal program is “not a leadership priority,” and 11% indicate that they do not need a formal program. Six other reason categories are cited by the remaining 30% of respondents, as shown in figure 5.2.3).

5.1.4 Coaching, mentoring, and stretch job assignments are most effective for assessing management potential among internal salesperson candidates.

5.1.5 The most frequently cited reason for not having an internal candidate assessment program is a lack of resources.

Approaches to Sales Manager Candidate Development


Coaching

Mentoring

Stretch job assignment(s)

360-degree feedback

Project-based action learning

Internal classroom training

External classroom training

Network within the firm

79

77

73

72

71

69

67

64

0Not at All Effective

100Extremely Effective

50Somewhat Effective

Reasons for Not Training Sales Managers To Identify Sales Manager Candidates

Percentage of Firms

Lack of resources

Not a leadership Priority

Don’t need one

Don’t have effective approach

Other

Company too small

Insufficient ROI

Too difficult

Working on it

35%

25

11

9

7

5

3

3

3



5.2 Firm Support of Graduate Management Education

Twenty-three percent of firms actively encourage high-potential candidates to pursue graduate management education, while just 3% actively discourage it (75% neither encourage or discourage). Only 2% of respondents provide full financial assistance to candidates pursuing graduate education, while another 18% offer partial financial assistance. An additional 14% provide time off, but no financial assistance, and 70% provide no financial support or time off in support of graduate management education.

5.2 Most firms neither encourage nor discourage graduate management education for their high-potential sales people, 20% provide financial assistance, and 14% provide time off only.

Supporting Graduate Management Education for High Potential Salespeople

Percentage of Firms

Neither Encourage nor Discourage

75%

Actively Encourage

23%

Full financial

assistance2%

Firm Encouragement Firm Financial and Scheduling Support

Actively discourage 3%

Partial financial

assistance18%

Time off provided

14%

No financial support or

time off given70%



Onboarding and Developing the Hired Candidates

6.1 Onboarding New Sales Managers

Given most firms’ challenges in hiring high-quality sales managers, onboarding represents an essential objective for new hires. Onboarding insures a short path to productivity for new hires, while establishing a foundation for long-term success and retention. Unfortunately for most firms, onboarding proves no less challenging than hiring and recruitment. Only 19% of respondent firms’ onboarding efforts are considered effective.

During onboarding, 56% of firms provide new sales managers with a playbook, and 52% provide them with an individual personal development plan.

6

6.1 Fifty-six percent of firms provide new sales managers with a playbook; 52% provide an individualized development plan.

Plans and Playbooks for New Sales Manager Success

Percentage of Firms That Provide New Sales Managers With...

“Playbook” defining activities, process,

outcomes

56%

Individualized Personal

Development Plan

52%


6.2 Developing Sales Managers

Development of new-hire sales managers often begins with onboarding, and continues to varying degrees throughout a manager’s term of employment. On average, firms rate their

6.2 On average, firms rate their manager competency development efforts in a low-to-moderate range of effectiveness. Firms are most effective in developing managers’ industry knowledge, values, and selling skills.

Firm Effectiveness at Developing Sales Manager Competencies

Indexed Effectiveness Rating

Industry knowledge

Values & Ethics

Selling skills


Teamwork




Process orientation

Coaching ability

Leadership potential



Customer analytics


Decision making





Financial acumen

Project management


Change catalyst


60

56

56

53

52

51

51

51

51

50

49

49

49

48

47

47

46

46

46

45

44

43

42

41

41

0Poor

100Very high

50Moderate

Onboarding and Developing the Hired Candidates


manager competency development efforts in a low-to-moderate range of effectiveness. Firms are most effective in developing managers’ industry knowledge, values, and selling skills. These were rated 60, 56, and 56, respectively, on a 100-point effectiveness rating scale, where 0 is not at all effective, and 100 is extremely effective. Competencies least effectively developed are sales compensation design, catalyzing change, and entrepreneurialism. These were rated 41, 41, and 42, respectively.



Respondent Demographic Information

7.1 Firm size

Participating firms ranged in size from small to very large. Forty-five percent of respondents’ firms had annual revenue in excess of US$100 million; 6% were firms with annual revenues in excess of US$10 billion.

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Respondents’ Firm Revenue (USD)

Percentage of Respondents

$1 billion to $10 billion

14%

$100 million to $1 billion

25% $10 million to $100 million

31%

More than $10 billion

6%

Less than $10 million

24%

7.1 Forty-five percent of firms had revenue over US$100 million.

Respondents’ Job Role

Percentage of Respondents

Sales Manager (SM)

20%

Sales Leader (Manages SMs)

42%

Manager (Other than

Sales)23%

Sales Operations

15%

7.2 Forty-two percent of respondents are senior sales leaders, 20% are sales managers, and 15% are in sales operations. The remaining 23% are managers in functions other than sales.


7.2 Respondent job role

Respondents are predominately sales leaders in their firms. Twenty percent of respondents are first-line sales managers (i.e., they directly manage salespeople). An additional 15% are in sales operations. Twenty-three percent are in non–sales-related management positions.

7.3 Firm Performance

Sixty-eight percent of respondent firms met or exceeded firm sales objectives in the preceding 12 months, and 72% met or exceeded profit objective in the same period. Respondents rated their firm’s achievement of profit and sales objective based on a 7-point scale (“1” for far underachieved objective; “4” for met objective; “7” for far exceeded objective). We use this performance rating approach in order to normalize company performance across large and small firms, and high and moderate growth sectors. Twenty-five percent of respondents rated profit objective achievement in the highest two categories (“6” or “7”); 25% of firms rated sales objective achievement in the highest two performing categories.

Respondents’ Sales Objective Achievement

Percentage Distribution of Firms

Firm Performance

1 2 3 5 64 7

40

30

20

10

0

Far Above GoalMet GoalFar Below Goal

7.3.1 Sixty-eight percent of respondent firms met or exceeded firm sales objectives in the preceding 12 months



Respondents’ Profit Objective Achievement


Firm Performance

1 2 3 5 64 7

40

30

20

10

0

Far Above GoalMet GoalFar Below Goal

Respondents’ Year-over-Year Sales Growth


Firm Performance

1 2 3 5 64 7

40

30

20

10

0

Far Above Prior YearNo ChangeFar Below Prior Year

7.3.2 Seventy-two percent of respondent firms met or exceeded firm sales objectives in the preceding 12 months

7.3.3 Sixty-five percent of respondent firms grew firm revenue in the preceding 12 months.

7.4 Sales Force Size and Manager-to-Salesperson Span of Control

Respondent firms have an average of 113 sales managers and 1,121 salespeople; sales managers have 9.9 direct-report salespeople on average. Corresponding median values are 30 and 5 for number of salespeople and number of sales managers, respectively.

Respondent Demographic Information


Salesforce size(Number of salespeople)

Min10th percentile25th percentileMedian75th percentile90th percentileMaxAverage

Total

148

30200

1000100,000

1,122

168,244

Sales Force Size (Number of managers)


Total

1125

25100

10,000113

16,899

Expected Number of Sales Manager Hires


Total

00128

25550

18

2,605

7.4.1 On average, respondent firms employ 1,122 salespeople; median firm salesforce size is 30.

7.4.2 On average, respondent firms employ 113 sales managers; median sales managers employed is 5.

7.4.2 On average, respondent firms expect to hire 18 new sales managers in the next 12 months.

7.5 Sales Compensation

Firm Competitiveness in Sales Manager Compensation

Firms’ Ratings of Sales Manager Compensation Compared to Overall Market


40

30

60

50

20

10

0Far below Below Meets Above Far above

Firm Competitiveness in Sales Manager Benefits

Firms’ Ratings of Sales Manager Benefits Compared to Overall Market


40

30

60

50

20

10

0Far below Below Meets Above Far above

7.5.1 Most respondents rate their firms’ sales manager compensation as competitive or favorable to competitions.’

7.5.2 Most respondents rate their firms’ sales manager benefits as competitive or favorable to competitions.’



About the Study

8.1 About the Sales Management Association

The Sales Management Association is a global, cross-industry professional organization for sales operations, sales effectiveness, and sales leadership professions. We provide our members with tools, networking, research, training, and professional development.

Our research initiatives address topics relevant to practitioners across a broad spectrum of sales effectiveness issues. Our research is available to members on our site at www.salesmanagement.org.

8.2 Research Approach

This study aggregates participating firms’ responses to a web-based survey. Before reporting results, we eliminate invalid or ineligible responses, and sometimes contact respondents to clarify their responses. Survey results are only reported in aggregate, and never in a way that would compromise the identity of any single respondent. All individual respondent data are treated with strict confidentiality.

This research represents summarized data from 152 participating firms, employing more than 184,000 sales professionals. Data were collected between Q4 2015 and Q1 2016. Respondent demographics and descriptive information are summarized in a separate report section below.

8.3 Research Underwriting

This study was made possible in part through the underwriting support of Sales Performance International, a global sales

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performance improvement firm. The Sales Management Association underwriters provide annual financial support to The Sales Management Association. Underwriters may suggest research topics, participate in ongoing research projects, and encourage participation or otherwise promote research initiatives.

Underwriters are not involved with research administration, data collection, analysis, interpretation, or report development, unless explicitly noted in the report. Also, unless noted, underwriters do not pay a research-specific fee or directly commission research initiatives.

The Sales Management Association is grateful for the support underwriters provide to our research efforts.

Documents

Research Report Hiring Top Sales Management Talentsalesmanagement.org/web/uploads/pdf/d988a28447e0e5723bd9f0239… · 5.2 Firm Support of Graduate Management Education 26 ... rather