Sales talent strategy and talent performance

Unit 3:

In terms of individual and company performance there is no more significant factor than role-fit – an individual’s suitability for the specific role they are being asked to perform. Indeed, the importance of role-fit cannot be overstated nor its ramifications underestimated for both the individual and the employer. It has far-reaching consequences across a number of areas including: hiring, retention and replacement costs; development strategy; the structure, efficiency and profitability of the sales organization; and, of course, revenue performance, growth and company profitability. However, role-fit is not the whole picture in terms of organizational performance: the right mix of roles within the sales organization is just as critical in terms of a company’s ability to respond to market expectations and drive revenue performance along with long-term, sustainable growth.

Optimizing the sales organization through the right mix of people, doing the most appropriate jobs, in the right combination for the marketplace, in order to drive revenue and growth within a particular market is what we refer to as Right Person, Right Role. This course emphasizes the importance of an effective sales talent management strategy – in which both role-fit and the right role are equally important – and how it combines with a number of other factors to create a holistic model capable of delivering sustained performance and success.

 

The three pillars for growth

Maximum revenue over the longer term can only be delivered when the three key pillars for growth combine to form a coherent and cohesive strategy for engaging the market.

These three pillars are:

  • process – the sales process needs to be appropriate and optimized for each market segment, and supportive of the way sales talent addresses the market and interacts with customers;
  • talent – employers should seek to hire, develop and retain high-performing sales talent matched to every specific role within the sales organization; and
  • structure – the structure of the sales organization must be aligned to the needs of customers and the market to deliver the right mix of talent to address each market segment effectively at the appropriate level of relationship.

From the mid-1980s onwards, much attention has been focused on sales process in order to drive performance; and

 

yet there are still improvements to be made. In this year’s ‘Key Trends Analysis’ from CSO Insights1, the authors emphasized the importance of ‘how a company’s level of sales process adoption can directly impact how they sell – positively or negatively’. But, of course, process is not the whole story. Equally, the structure of the organization – the way it is set up to interact with different customer market segments is critical. Thus, the authors also considered the importance of aligning the sales process to a structural element, the level of relationship that an organization enjoys with its various customers. They divided the sales process into four types, from ‘random’, through ‘informal’ and ‘formal’ up to ‘dynamic’ at its most The three pillars for growth Maximum revenue over the longer term can only be delivered when the three key pillars for growth combine to form a coherent and cohesive strategy for engaging the market.

 

McKinsey report 3 had this to say: ‘Companies like to promote the idea that employees are their biggest source of competitive advantage. Yet the astonishing reality is that most of them are as unprepared for the challenge of finding, motivating, and retaining capable workers as they were a decade ago.’ So what has gone wrong? For the typical organization, the day-to-day talent management tasks of identifying, hiring, developing and retaining the right people in order to maximize performance in each role is a complex, daunting task – particularly in sales – and, therefore, almost certainly a limiting factor given the fierce competition for high-performing sales talent, a finite talent pool, and the typically rapid turnover of talent within the sales world.

Why might this be? The answer lies in an organization’s ability to define exactly what good looks like. In sales – traditionally viewed as part science, part dark-art – our understanding has been hampered by poor or incomplete assessment methodologies on the one hand, and cost on the other. Many assessment tools and methodologies at the cheaper end of the scale have been found to be limited and unreliable, while in-depth assessments conducted by the large consultancies are invariably cumbersome, time-consuming exercises, and essentially only affordable by those organizations with the deepest pockets.

Aberdeen Group has recently highlighted the use of assessments, as organizations seek to improve their talent management strategies. According to a May 2011 paper4, ‘organizational growth goals requiring better talent’ along with ‘business change demanding new skills’ are the two major imperatives driving the use of assessments. Companies are seeking to improve business results through better quality candidates, deliver leaders to drive innovation and growth, and improve organizational fit among new hires. In the paper, author Mollie Lombardi supports the use of assessments but urges organizations to be selective about their choice: ‘Assessments are an incredibly valuable tool in the hiring, development and future planning process in an organization. These tools can help uncover individuals with the right skills, behaviors and attitudes to move an organization forward. The case to use assessments or not has been made. But uncovering the right types of assessments to be used for specific decision points, and understanding what to do with the output of those assessments is the next piece of the puzzle.’ Uncovering the right type of assessment to deploy in the sales function has indeed been extremely problematic until now: most approaches lack certain key elements which, if present, would dramatically improve their functionality and shelf-life. Aberdeen cites the most prevalent assessment activity amongst the firms surveyed as building a competency framework to serve as a basis for assessments. However, herein lies a problem, in that such projects take time to complete and may easily become redundant before they are finished. What’s more, unless competency frameworks are dynamic and frequently updated to the needs of an evolving market, they struggle to be forward-looking. Finally, the typical competency framework tends to be inward-looking or confined to a specific industry sector rather than globally benchmarked.

How much better then to choose a tool that is built around a wide range of sales roles with pre-defined but frequently updated competency frameworks? An effective assessment tool – one that is accurate and highly predictive, while also being forward-looking, affordable, globally benchmarked and quick to implement – is the key that unlocks the door to an organization’s understanding of role-fit. It answers various questions in a consistent and objective way:

  • which talent is suitable;
  • which talent to hire;
  • which needs to be redeployed;
  • where you’re headed in terms of development;
  • whether there’s room for personal growth;
  • which talent you want to retain; and
  • what will motivate an individual to perform and feel comfortable in a role. Answering these questions goes a long way towards addressing an organization’s talent management problems.

This is for a number of reasons:

  • the right assessment technique which probes an individual’s skills, behaviors and underlying competencies enables an organization to recruit from beyond its traditional talent pool;
  • assessing an employee for role-fit to a specific sales role (rather than a more generic one) means that, once appointed, that individual is likely to perform better and remain longer in a position to which they are well-suited compared with the average;
  • a company’s sales organization can typically run leaner with fewer, high-performing individuals once they are matched to roles and the roles aligned to customer and market expectations; and
  • it helps identify and position talent with the potential to develop and grow in step with their employer and evolving customer requirements. What then is the right assessment approach for organizations wishing to identify the most suitable talent for any specific sales role?

It will inevitably involve a forward-looking tool that can accurately assess an individual’s fit with a specific sales role (not just a generalized sales role) and compare them with the best-in-class – what we term a global High-Performer. It should look in detail at the underlying competencies (behavioral, motivational, intellectual and skills-based) that drive performance in that specific role. Finally, the tool must accurately highlight any gaps that will limit performance while also assessing growth potential for the current and future roles.

 

The High Five – the five key factors that determine high-performance in a sales role

 

With that in mind, there are essentially five key factors that determine an individual’s suitability for and performance in any specific sales role. Some of these factors are intrinsic to the individual – i.e. they are part of the ‘make-up’ of that person, in contrast to extrinsic factors – such as cash incentives or recognition awards – which are often applied by an organization to boost the performance of the individuals it employs.

These five factors are:

  1. Behavior – an individual’s behavioral preference determines their comfort in performing a specific sales role.
  2. Skills – functional skills determine how well an individual can perform a role.
  3. Critical reasoning – an individual’s intelligence and ability to analyze data, evaluate evidence, question methods and reach meaningful conclusions.
  4. Motivators – motivation drives an individual’s desire to perform in a role; in turn, desire drives results.
  5. Cultural fit – the extent to which an individual identifies with the style, values and culture of the employing organization and its customers. Cultural fit – Of these five factors which determine an individual’s suitability for a specific sales role, four can be assessed using a variety of techniques including questionnaires and tests. Elements of the fifth factor – cultural fit between an individual and the hiring organization – can be assessed through the use of ‘personality tests’ but this is best done in conjunction with an effective interview process.

 

Motivators – Identifying a person’s motivators enables an organization to motivate them to perform to the best of their ability. However, motivators are not only pertinent to their performance level but are also highly specific to the individual: applying the right sort of motivation can raise performance; conversely, the wrong sort of motivation tends to be extremely counter-productive. It is up to the employing organization to assess which motivators are relevant to any particular individual and then apply appropriate interventions.

Identifying High-Performers – Measuring a combination of the remaining three factors – critical reasoning, behaviour and skills – attuned to a specific sales role, allows us to assess how an individual is likely to perform in that role. How then do these three factors map onto a typical organization’s talent management program?

Critical reasoning – There’s no doubt that critical reasoning is fundamental to an individual’s ability to perform successfully in any number of sales roles in today’s complex business environment. However, this intrinsic performance factor is ‘not trainable’ in the real world – individuals either have the necessary critical reasoning ability for a specific role… or they don’t. Candidates who are assessed not to have the level of critical reasoning ability required for a specific role are best not employed for that particular job, as they are unlikely to be a High-Performer in that role.

The ‘trainable’ intrinsic factors – So, this leaves us with the two factors over which an employing organization can exert some influence: behavior and skills. Both are eminently assessable and both respond to development, albeit in slightly different ways; certainly both are key to the way a person will perform in any particular role. By identifying, hiring, developing and retaining High-Performers, an organization has most opportunity to maximize the performance of its employees and its own returns.

About ‘High-Performers’

As part of McKinsey’s 2001 research into the influence of talent on performance, the team conducted a survey of 410 corporate officers at 35 large US companies. They asked the question:

‘How much more does a High-Performer generate annually than an average performer?’

The answer varied according to the particular discipline involved, but was always substantial: operations High-Performers delivered 40% more, management 49% more, while sales High-Performers generated an impressive 67% increased revenue compared with the average. (Our own research amongst clients indicates that even greater sales performance differentials between average and High-Performers may be possible.) Given the massive differential between a High-Performer and the average, this is where the organization’s performance improvements are likely to come from. For the purposes of the exercise, McKinsey defined High-Performers as being amongst the top 20% of performers in the organization. That said, looking at the High-Performers within an organization is only part of the picture, because such an exercise is, by definition, introspective: you may be looking at the best you’ve got but are they the best there is?

An effective assessment tool not only compares sales talent with their peers in an organization or even across an industry, but against an objective global benchmark. What is the best there could be? This is the path to identifying the true High-Performers.

Essentially, a global High-Performer will be placed around the 80th percentile on a scale which measures the three factors highlighted previously – critical reasoning, behavior and skills– at a level optimized for a specific sales role. For instance, the critical reasoning ability required for a retail role is entirely different from that needed by someone engaging in high-level solution selling. What’s more, this methodology means the assessment becomes entirely independent of geography and industry sector.

The importance of role definition

We have already alluded to the importance of assessments being role-specific. This is because it is important to understand the complexity and breadth of this word ‘sales’, and to recognize that not all sales roles are the same: a High-Performer in one role is by no means certain to be as successful in another.

For instance, it has long been acknowledged that top-performing sales people do not necessarily make the best sales managers – the roles are quite different. As discussed earlier, it is hard to envisage a call center operative at the start of their sales career having the necessary skills, experience and gravitas to discuss strategic business issues in any meaningful way with the C-suite of a major corporate entity. Therefore, it is essential to define the exact mix of skills, behaviors and competencies appropriate to any specific sales role for an assessment tool to operate at anything more than a broad-brush level: top performance depends on role fit, ie right person, right role. The better the role definitions and the more selective and highly tuned the assessment criteria, the more accurate any tool will be.

What’s more, it’s vital that these role definitions are regularly and frequently updated to keep them in tune with the evolving requirements of customers and the market. Ideally, each definition will sit slightly ahead of the market curve to enable it to be forward-looking, and it will be validated in a number of ways – by customers, practitioners and analysts. Once you have the ability to identify a truly global High-Performer for any defined sales role, the route opens up to a comprehensive, objective and genuinely performance-oriented sales talent management strategy. It’s a tremendously powerful tool. How then can we best use effective assessment tools to drive our hiring, development and sales talent management strategies to maximize the performance and efficiency of the sales organization?

 
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