With increasing frequency, companies are releasing or losing a key executive: the vice president/director of sales. The impact can fall somewhere between serious and devastating depending on the circumstances; regardless, it is pain that any company would love to avoid.
Why is this happening? What are the real consequences, and when it happens to you, how can you acquire and keep that new, amazing vice president?
The Turnover of Sales Vice Presidents
Research by Gong.io shows that between 2010 and 2017, the average tenure for the vice president of sales decreased from 26 months to 19 months – barely enough time to get up to speed, let alone contribute meaningfully to the organization. High turnover is a combination of underperforming vice presidents who are let go and valued vice presidents who depart for better opportunities.
According to a 2018 study by CSO Insights, the percentage of companies meeting their sales quotas dropped from 63% in 2011 to 53% in 2017. The primary challenge today is that buyers are changing faster and more substantially than the sales organizations. The personal service, transparency and click-of-a-button immediacy found in the B2C world is flowing over into B2B sales, putting vice presidents on a tough road.
Not all vice presidents can meet this challenge. Some are poor leaders and have neither the vision nor the inspiration to drive growth in their teams. Some lack the necessary coaching skills to build group performance. And some are unable to set sales goals that are effective in today’s buying environment. Vice presidents who cannot keep up are let go.
On the flip side, there are the vice presidents whom companies want to keep but cannot. They have the drive and talent to ensure sales success. The current job market is tight and favors employees who want to take bigger jobs and better pay. They quickly establish themselves in one job and are then off to the next.
Whether it’s an underperforming or high-performing vice president, turnover impacts on the company. The sales reps cannot be effective without good guidance and leadership, and the CEO and other executives suffer the distraction and burden of a limping sales force.
There is also the considerable cost of replacing a vice president, including both the hard costs such as advertising, interviews and onboarding and the soft costs associated with lost productivity and diminished morale. The combined effect is a financial hit I estimate to be easily equivalent 100% to 200% of the position salary.
Sales professionals work with existing customers to maintain a flow of ongoing purchases and with potential customers to generate new business. Considering that a successful sales team creates appreciably more revenue than the cost of its compensation, the loss of key personnel — especially the sales leader — can have sobering consequences on the company’s bottom line.
5 Steps to Acquiring and Keeping a Stellar Sales Vice President
When replacing the vice president of sales, the goal is not only to find the right candidate for the job but also to create a situation where that new person is happy to arrive and will thrive. These five steps will increase the odds of a favorable outcome.
1. Prepare to Do Battle in a Tight Market
Unfortunately for the employer, the candidates are currently in the driver’s seat. This market requires extra work and possibly some enticement. From first contact to the job application and through the interview, provide a great candidate experience. Make it easy; if your hiring process is difficult or cumbersome, the candidate may go elsewhere. Be friendly, informative and welcoming; ensure that the candidates feel that your focus is on them. Brace yourself for perks and higher compensation; the best people can demand it when the supply of good talent is limited.
2. Find the Key Skill Sets
The vice president of sales no longer sells; instead, he or she sets direction and then pursues goals through others. Sales leaders require good analytical skills to understand pricing, margins and discounts and to develop and execute data-driven plans. Even more, they must be capable communicators, relationship-builders and coaches.
3. Hire Passion
Steve Jobs said, “People with passion can change the world.” Employees who are passionate about their jobs work with enthusiasm. They strive for improvement and are persistent, viewing setbacks as something to be conquered. This type of sales vice president will gladly tackle the problems of a lagging sales team.
4. Look for People Who Believe What You Believe
Don’t look for “yes men” or robots to do the company’s bidding — instead, look for cultural alignment. If the company uses a one-team approach with strong cross-functional collaboration, and the vice president candidate has the attitude of, “My kingdom is sales; do not cross my moat,” you might have a problem. The candidate who is aligned (or could become aligned) with the company culture is much more likely to prosper and stay; hire a misaligned candidate, and he or she will soon be out the door.
5. Provide Strong Onboarding
Onboarding goes beyond telling people where to find the coffee and restrooms. A good onboarding program ensures clarity on the company’s mission, settles the new employee into a supportive atmosphere, and bridges gaps in his or her knowledge about the company and the job (providing training even at the executive level, if necessary). The goal is to accelerate the new vice president’s adjustment to a new organization and ability to perform and produce.
The tide will not soon turn on the competition for top talent or on the effort needed to keep pace in the evolving sales environment. However, with these tips, you can close the revolving door of sales vice presidents.