If a business needs a new sales manager or executive, it has a choice: hire an external candidate or develop talent from within the company.
A growing organization is bound to face this decision sooner or later, due to the following factors:
- Team growth: A sales team becomes large enough to require a manager.
- Expansion: A company plans a move into new markets, audiences, and products and needs a new leader to spearhead the efforts or manage a new sales team.
- Replacement: A previous manager is not a fit or moves to a different company, and someone else must take over.
- Retirement: A manager or leader exits the workforce due to retirement.
- Succession planning: A forward-looking company wants to prepare a roster of people who are ready to take over key roles that are vacated for any reason.
Promoting managers internally and hiring externally are both valid approaches.
Hiring internally can be cost-effective. It also provides a career trajectory for current employees and it extends the longevity of company culture and key sales relationships.
But there are risks. Companies are more likely to promote their top salespeople than promote their lower-performing counterparts, but when they do, they often find that they’ve lost a good salesperson and gained a bad manager. A study found that teams led by their (newly promoted) top salesperson see sales drop by 7.5% on average.
For these reasons, hiring externally can be helpful when a seasoned manager is needed, when it is important to avoid promotion politics, in an emergency situation that requires accelerated placement, or simply if the pool of internal talent has been tapped. After all, LinkedIn found that AEs are the #2 most-recruited role in business across all industries—and they are #1 in the tech industry. This doesn’t make finding great potential managers any easier.
An external hire can bring in new perspectives and help a company level up during moments of strategic change, such as when it expands into new markets, launches new products, shifts sales strategy, or doubles its staff. The talent available in the company at the time may not have exposure to the information and experiences needed to succeed during these shifts. And, in a mature business, internal talent may be stuck in a traditional or “groupthink” mentality that prevents them from innovating.
Whether a company decides to promote internally or hire from the outside, it’s important that they take a step back to make the right hire. Great managers directly impact a company’s revenue, while mediocre managers can artificially cap the performance of even the best sales teams.
So when it comes to finding the next great sales leader, preparation can make all the difference.
Promoting internally: how to lead a successful transition
Create formal succession plans
Companies with formal succession plans that include metrics, processes, and official stakeholders are far more likely to see success than companies who take a lighter, informal approach, according to research from the Society for Human Resource Management.
However, many companies fail to develop a formal process. Poor succession planning can result in lost revenue, organizational confusion, and an underperforming sales team. Peak’s Guide To Sales Succession Planning is a thorough guide covering methods for evaluating internal candidates and how to pull off successful transitions.
Do not simply promote the best salespeople on a team into management
One reason this transition doesn’t always yield positive results is that a salesperson is primarily focused on individual performance, while a leader is focused on performance through others. The skills, characteristics, and viewpoints needed for success are different.
When companies promote from within, they must look for sales leaders who can deliver on:
- hiring initiatives
- salesperson development
- metrics-based performance reviews
- compensation package design
- team morale and culture
- relationships with leadership counterparts in marketing, product, finance, and other departments
- sales strategy for the company’s current position in the marketplace
- the management of infrastructure that powers all sales operations, from support personnel to technology, systems, and documentation
In some cases, lower-performing salespeople may actually be more suited for a management role. Companies should orient their search toward screening for these leadership characteristics rather than simply evaluating sales performance.
Mentorship and self-development resources can also be very useful for cultivating internal talent.
Create a sales mentorship program
We encourage companies to design a mentorship program specifically for sales. HubSpot shares 7 Steps to Establish a Successful Sales Mentorship Program, which details how a sales manager can pair two employees with mutually beneficial skill sets and roles.
This type of mentorship program not only develops more junior reps, but it also helps cross-train reps on different sales areas and allows mentors to test their leadership skills. Setting up a mentorship program requires some structure, such as defining roles in advance, tracking performance metrics, creating an incentive structure, and agreeing on an “exit strategy” for the relationship.
Provide reps with resources to develop themselves
Motivated salespeople can also prepare for a potential promotion to a leadership role. Ideally, they will begin to demonstrate their ability to deliver on a manager’s responsibilities while still in an individual contributor role. We collected advice from 20 sales coaches, executives, and authors to help reps make the shift. Suggestions included:
- Develop and demonstrate your leadership abilities on the job
- Understand the skills, traits and behaviors required for success
- Establish yourself as a lifelong learner
- Demonstrate your ability to assist and coach team members
Identify motivated sales staff that show an aptitude for these leadership qualities to guard against a failed internal hire.
Hiring externally: how to attract and identify quality candidates
Develop a formal hiring plan and start early
Just like internal succession planning requires a formal structure to work well, so does external hiring.
It begins with a process for sourcing and systematically building familiarity with candidates. Whenever possible, companies should start their hiring search early by reaching out to their ideal candidates and then building a relationship with them over the long term.
This approach is called “candidate nurture,” and it’s designed to attract top performers who are in high demand, gainfully employed, and will only move to a new company if trust is in place. This can take time—organizations should use candidate trackers and regular check-in milestones.
Once a candidate is ready for an interview, they should go through a quantitative screening process that tests for the traits needed in the leadership position, as well as an interview process with a structured rubric. This formality protects hiring managers from unsuccessful “gut feel” decisions.
For help with developing a hiring plan for a sales leader, Your Next VP Sales: The Complete Interview Question Guide covers key responsibilities, traits to screen for, and interview questions for an in-depth assessment.
Prepare to be evaluated by candidates
Leadership should work on their employer brand to become an attractive option for quality managers. Great candidates will scrutinize a company, its sales organization, and its leadership team. What Every Great VP Sales Wants in a Job covers 10 characteristics that outside talent will likely screen for.
This includes opportunities for growth, the autonomy to tackle challenges and provide real value, a proven leadership team with colleagues who share their vision, and competitive compensation. Companies should use benchmarks such as Peak’s Sales Compensation Report to ensure that they don’t disqualify themselves by offering too little, too late.
Partner with a recruitment firm
When the talent pool is low or a company needs outside expertise, they can turn to a talent firm. It’s important that a recruiting firm specializes in sales and also provides a holistic service where success is measured by a candidate’s fit and performance in a role, not just the quantity of candidates they source.
A sales recruiting firm can help a company:
- Determine which qualities to screen for to match their unique sales environment
- Administer quantitative psychometric tests to assist in screening
- Develop behavioral interview rubrics
- Scalably source candidates from within and without the company’s industry
- Verify track records, including proof of selling performance, reasons for leaving, and reference quality
- Formalize a sustainable hiring process for the future
Companies can work with a firm like Peak Sales Recruiting to accelerate and de-risk the hiring process. At Peak Sales, we leverage our proprietary P95 Assessment Process to design a recruiting framework that sources the best management talent for companies and their specific sales needs.
The right hire is key to sales success
Companies in need of a new sales manager have plenty of work to do, whether they choose to develop leadership talent from within or attract new faces from the outside world. They must start their search or development efforts as early as possible, create an enticing employer brand, and put formal evaluation processes in place so that they are not misguided by gut feel.
A powerful engine for systematically attracting and evaluating sales managers can help companies successfully install the leadership they need to meet sales objectives and beat competitors.
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