Research Brief Developing Sales Managers 0430_0 Developing … · challenges in developing sales...

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SalesManagement.org © 2008-2013 The Sales Management Association. All rights reserved. Version 2.0 Research Brief Developing Sales Managers May 2013 This report summarizes findings from 43 participating business-to- business sales organizations. This research was conducted in the first quarter of 2013.

Transcript of Research Brief Developing Sales Managers 0430_0 Developing … · challenges in developing sales...

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SalesManagement.org

© 2008-2013 The Sales Management Association. All rights reserved. Version 2.0

Research Brief

Developing Sales Managers

May 2013This report summarizes findings from 43 participating business-to-

business sales organizations. This research was conducted in the first

quarter of 2013.

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Abstract:This study assesses participating firms’ current practices, emerging priorities, and foremost challenges in developing sales managers. Insights from this study will assist organizations’ training resource allocation decisions, and offer insight into how best to align management-training investments with organizational objectives. This report summarizes research findings from 43 participating business-to-business (B2B) sales organizations. The research was conducted in the first quarter of 2013 through the use of a survey questionnaire. Research objectives include:

• Determining how B2B firms manage sales manager learning and development investments, through training and other programmatic initiatives;

• Understanding how the sales manager learning and development objectives compare to those for salespeople within the organization.

• Gauging organizational bench strength in preparing promotion-ready sales manager candidates;

• Identifying best practices in developing new-hire sales managers.

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MethodParticipants We surveyed employees from 43 global business-to-business sales organizations. Participant firms’ annual revenue ranged from less than US$1 Million (5%) to more than US$1 Billion (28%). Survey respondents held various roles, including Senior Sales Leader (29%), Sales Manager (22%), Sales Operations (41%) and other management roles (7%). The businesses surveyed had a median number of 9.0 sales managers and an average of 54.5. This discrepancy is largely due to the variance in size of organizations surveyed. The median and average ratios of salespeople to sales managers were much more closely aligned, with proportions of 7.3:1 and 8.0:1 respectively.

Participant Firm Size, Annual Revenue ($US)

Participant Job Role

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Participants’ Sales Organization Size

Procedures/Measures Our questionnaire asked respondents to describe their sales organization’s size (number of salespeople and sales managers), and expected future growth in sales and sales management positions. We also asked questions to illicit descriptive data on respondents’ scope, scale, and duration of training activities; these questions provided data on the number of training days received by respondents’ sales and sales management personnel according to training modality (classroom, web-based, in-field/manager-led).

Next, to obtain quantifiable data pertaining to developmental priorities, we asked participants to rank the importance of 16 different training goals on a scale from 1-7 (1=least important, 7=most important). Similarly, we also asked them to rank the training effectiveness for these same goals from 1-7 (1=least effective, 7=most effective). We arithmetically measured differences in importance vs. effectiveness scores to calculate gaps between them. Plotting these “importance” and “effectiveness” ratings produces a scatterplot which illustrates alignment between respondents’ assessments of importance and what their organizations are actually achieving. Respondents rated both salesperson and sales manager initiatives. Moreover, we instructed participants to rate whether each area was receiving too little, enough, or too much investment on a scale of -3 to 3 (-3=too little investment, 3= too much investment). Lastly, we asked them to rate their agreement with a number of positive statements related to their organization’s training/development initiatives from 1-7 (1=totally disagree, 7=totally agree) to assess efforts in promoting sales manager bench strength.

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FindingsKey Findings

• Firms invest significantly less in sales manager training on a per–person basis than in salesperson training.

• Sales manager effectiveness in core sales management competencies – including coaching, leadership, and evaluating salesperson performance – received low ratings. Developing these skills represents a key investment challenge for respondent firms.

• Sales Manager “bench strength”– the availability of promotable sales manager candidates – is quite poor as rated by most responding firms. This despite the fact that average sales manager hiring increases are projected at 14%.

• The unhappy convergence of low sales manager training investments, aggressive hiring goals, and poor internal candidate preparation will result in an important obstacle for many firms’ efforts at sustaining sales productivity

We found that both newly hired and existing salespeople received most of their training in the classroom; what limited training managers receive is more likely to come from other managers. Findings also showthat virtual training (e-learning) is widely used by new hire salespeople, significantly more so than other roles.

Sales manager hiring is projected to increase 14% in the next 18 months. Excluding replacement hires, organizations plan to hire a median number of new sales managers that is 10% of their total sales manager staff; the average increase in sales manager hiring is projected to be 14%.

Salespeople are performing well in the skill areas deemed most important to train. Sales managers, on the other hand, are performing relatively poorly in the skills area respondents consider the most important sales management training priorities. For organizations’ salespeople, the competencies considered most important to train for are also considered to have the most effective training. For example, “customer and industry knowledge” was rated as the highest training priority, among all knowledge/skill areas; it was also the competency for which current salesperson training effectiveness was rated highest.

Projected Sales Manager Hiring

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Conversely, training priorities rated as less important for salespeople (e.g., “leveraging support technology,” “planning,” and “analytical skills”) received lower relative ratings of training effectiveness. Training topics rated as the lowest priority for salespeople, including coaching and leadership, are those more relevant to sales managers, and were therefore deemed less relevant for individual contributor salespeople.

For sales managers, on the other hand, “evaluating salesperson performance,” “leadership skills,” and “delivering effective coaching” were rated as high priority training area for sales managers, yet these competencies garnered low training effectiveness ratings. “Evaluating salesperson performance” and “leadership skills” show the largest gaps in ratings of training importance and effectiveness. Other high-gap

Sales Manager Training

Effectiveness Gaps

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Respondents rate sales manager bench strength as poor. Respondents rated their sales manager bench strength programs low in effectiveness. Responses to survey questions indicate that few companies have clearly defined bench strength programs. Only 54% in fact maintain a list of promotable internal candidates; far fewer attempt to proactively anticipate and prepare potential candidates. Our results indicate that no more than 15% of firms take such proactive action. We find a concerning disparity between these findings and the expected rate of sales manager turnover – a disparity that suggests substantial risks of lost productivity in the effort to replace or add to the sales manager corps within firms.

training competencies include “salesperson hiring effectiveness,” “delivering effective coaching,” and “sales process optimization.” These represent core sales manager training competencies for which respondent firms are significantly challenged to address.“ Leadership development”was also rated as the competency for which there was the largest deficit in training investment.

Respondents rated “analytical skills” and “leveraging sales technology” among the least important training priorities, and among the least effectively trained within their organizations. We found this finding surprising, given the lauded importance of these skills areas for many firms. We believe these results indicate that for firms as a whole, technology and analytical competencies remain important, but are simply subordinate priorities to more pressing training needs.

Training Investments

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Plotting Importance vs. Effectiveness

Plotting Importance vs. Effectiveness

Overall training priorities for sales managers and salespeople. Plotted results displayed below suggest greater alignment between “importance” and “effectiveness” in developing salespeople, compared to a similar plot of sales manager training objectives. It should be noted however, that neither set of respondent values demonstrates strict statistical correlation between “importance” and “effectiveness.” Nevertheless, we find relative differences between ratings of importance and effectiveness instructive for understanding organizational challenges and likely future focus areas. By forcing the two axes to intersect at their arithmetic mean, we can display plotted ratings across four quadrants, each corresponding to an investment priority: maintain, ignore, invest, and reallocate.

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Implications• While more is invested in training salespeople than sales managers, the major

effectiveness gaps in key managerial competencies and the poor manager bench strength both suggest a need for shifted investment towards developing managers

• Quadrant placement in the above manager training scatterplot suggest that resources should be shifted from well-developed but low priority areas like “product knowledge” to high-priority but poorly developed ones like “leadership skills” and “coaching”. Areas in the bottom left quadrant are low in importance and performance and should be least prioritized for training investments

• Salespersons’ training priorities and performance were well aligned, indicating that they should hold resource allocation in highly effective skills steady. Potential areas to shift resources from lie in the upper-left quadrant and include “sales methodology” and “evaluating salesperson performance”

Study LimitationsIn applying the insights derived from our research to your organization sales training and development programs, it is important to consider the study’s limitations. First, our surveyed sample consisted wholly of B2B sales organizations, and as such interpretations cannot be extended to all types of businesses. Moreover, our sample size for this study was relatively small (n=43) and thus is not as representative of the general population of B2B organization as would be ideal. Even so, the findings from this study point to some key insights that potentially could be quite valuable in informing optimization strategies for sales training and development initiatives.

Sales Manager Bench Strength