Improve Sales Performance

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1 Improve Performance by Investing In Talent Management Competitive compensation programs have their place in motivating sales teams, but not all sales force performance problems can be solved with money. Global mobility, nontraditional career paths, competition for critical skills. There s no shortage of forces impacting the talent supply-and-demand equation, making talent management one of the key business challenges of the 21st century. Talent management pressures start with the difficulty of attracting employees in key groups. Nearly two in three respondents to the Towers Watson 2014 Global Talent Management and Rewards Study reported problems attracting top performers, highpotential employees and critical-skill employees. Once top talent is in the door, talent management pressures continue as employers face the challenges of engaging and retaining employees. More than half of the respondents to the Global Talent Management and Rewards Study reported difficulty retaining high-potential employees, top performers and critical-skill employees. While talent management in general is challenging, the task of managing an organization s sales talent is particularly complex and critically important. After all, sales and service employees serve as the organization s face to the customer. These employees directly impact the top line unlike any other group, and influence bottomline results as well. How can organizations effectively enable and engage these frontline employees who often work outside the confines of traditional corporate offices? More broadly, what does it take to manage sales talent in order to drive sustainable engagement and strong financial performance? Darren Tse, Consulting Director, Effectiveness and Rewards practice Sustainable Engagement Mark Flavin, Global Leader, Effectiveness and Rewards practice Both our 2014 and 2012 Global Workforce Studies show that while base pay is the key driver of attraction and retention, it is not one of the top five drivers of sustainable engagement. There are three measurable elements essential to sustainable engagement: Traditional engagement employees willingness to expend discretionary effort on their job Enablement having the tools, resources and support (typically through direct-line supervisors) to do their job effectively Energy having a work environment that actively supports physical, emotional and interpersonal well-being Based on employee responses to questions pertaining to each element, we have identified four distinct engagement segments globally: Highly engaged: Employees who scored high on all three elements of sustainable engagement Unsupported: Employees who are traditionally engaged but lack the enablement and/or energy for sustainable engagement Detached: Employees who feel supported and/or energized but lack a sense of traditional engagement Disengaged: Employees with less favorable scores for all three aspects of sustainable engagement

2 Why It May Take More Than Darwin and Money For sales leaders who subscribe to the Darwinian, survival of the fittest school of thought, talent management is simple. Two beliefs underpin the Darwinian approach to sales talent management. First, if incentive programs are set up and managed properly, employees who are motivated primarily by money will thrive and stay with the organization, while low earners will find a way to make more or leave. Second, because of this self-selection process, sales leaders should focus on top performers, manage out the employees at the bottom and ignore everyone else. For Darwinian-oriented organizations, saleseffectiveness initiatives often involve tinkering with already-sophisticated compensation programs for example, tweaking performance metrics and sales compensation formulas. It is very easy to cite compensation issues as the root cause of many sales problems. For example, organizations experiencing difficulties attracting the right employees may claim that their compensation programs are not rich enough to attract desired talent. Or, if the sales team is not focused on the right opportunities, some may contend that their compensation program is not incentivizing the right behaviors. Unfortunately, organizations subscribing to a Darwinian approach to sales talent management are ignoring key drivers of engagement and performance. Our consulting work and research confirm that compensation is rarely the only solution to complex sales problems. To put the picture in perspective, it s helpful to understand the key drivers of sales force attraction retention and sustainable engagement. Both our 2014 and 2012 Global Workforce Studies show that while base pay is the key driver of attraction and retention, it is not one of the top five drivers of sustainable engagement. Our research reveals that 47% of highly engaged sales employees performed above expectations, versus 23% for the disengaged and 30% for the detached. Given the strong link between engagement and performance among sales professionals, it s critical for organizations to care about engagement. Because it takes more than financial rewards to promote the sustainable engagement necessary for strong performance, progressive organizations are taking a broader, more holistic approach to addressing sales talent challenges. A Framework for Optimizing Talent While it may sound relatively straightforward in theory to take a broader, more holistic approach to sales talent management, it can be difficult in practice to determine where to start and how to prioritize investment. We have a simple framework for thinking about sales talent management. talent management can be described as a collection of processes to ensure that the right people with the right skills are focused on the right opportunities while being highly engaged and motivated. organization performance is optimized by investing smartly in three gears (Figure 1). Taking stock of current capabilities in each of these gears paves the way for identifying and prioritizing potential areas for improvement. Figure 1. -effectiveness framework Business and Strategy Right People With the Right Skills Focused On the Right Opportunities Effectiveness Highly Engaged and Motivated Business Results and Force ROI Change Management Tools and Technology Governance Improve Performance by Investing In Talent Management 2

3 The right people with the right skills. It is important to consider this gear in the context of the typical employee life cycle, starting with the recruiting and selection of the right talent (Figure 2). Figure 2. Right people with the right skills Recruiting and Selection Performance Management Talent Assessment and Management Development Research shows that high-growth companies are meaningfully better at acquiring the best talent. What differentiates these organizations is that they tend to look for demonstration of key competencies during the recruiting and selection process. For example, they use behavioral event interview guides that help managers consistently evaluate candidates on the knowledge, skills and behaviors critical to prospecting for new business. Once the right talent is in the door, top-performing sales organizations make ongoing talent assessment a priority in order to develop both individual sellers and sales managers. They use competency-based assessment to identify skill gaps and appropriately target learning and development. And performance management is explicitly linked to competency models and results. Four out of five (80%) high-performing employers believe their organization s performance management process is effective at incorporating competencies (versus 55% of all employers). As part of an organization s sales and management development, it is essential to provide regular coaching and feedback. Prioritizing ongoing coaching pays off. Highly engaged sales people are six times more likely to believe their company provides effective coaching, mentoring and feedback. Recognizing that development is not a one-time event, high-performing sales organizations create a curriculum that provides a road map for individual seller and manager development. For instance, the curriculum for potential sales managers should include a focus on coaching. Focused on the right opportunities. This gear focuses on how individuals are deployed, which involves consideration of the overall organization structure, coverage model, sales process, role design and accompanying decision support tools (Figure 3). Figure 3. Focused on the right opportunities Organization Design and Coverage Role Design Processes Decision Support Tools To ensure that individual sales reps and teams are focused on the right opportunities, begin by clarifying the sales task. Simple actions can help bring greater transparency to sales opportunities: Publish a clear sales process modeled after high performers. opportunities should be carefully managed through each stage to ensure a higher percentage of wins. Regularly scheduled win/ loss reviews can help identify required process improvements. Improve Performance by Investing In Talent Management 3

4 The elements of the framework that an organization decides to implement will depend on its strategy. Assess whether there is sufficient sales role specialization for example, by product, customer type or selling method. reps should focus on high-value customer-facing activities while lowervalue-added sales activities can be assigned to support staff. Ensure that there is adequate pre- and post-sales support. Leverage decision support tools and reports throughout the sales cycle to ensure that customer potential and call priority are clearly communicated. Determine if customers are being driven to appropriate channels. Channels should be managed strategically to reach the greatest number of highvalue customers. And sales resources should be deployed based on the opportunity. It is essential to develop a sales coverage model to ensure that all customer segments and sales process steps are covered by the most effective and efficient sales resources. These actions will be well worth the effort, as wellestablished research shows that sales-task clarity increases motivation by as much as 40%. * Highly engaged and motivated. There are several key levers that organizations can pull to promote high sales force engagement and motivation (Figure 4): Career development. Career development is the number two driver of sales talent retention and number seven driver of sales talent engagement. While less than 50% of sales people want to be managers, they do want promotion opportunities, added responsibility and recognition, as well as the chance to earn more money. Therefore, it is important for companies to implement documented career paths that include both a manager and individual contributor path. people should be able to see career path options inside and outside their business unit, and understand the requirements to qualify for different roles. compensation. While not the silver bullet that some companies assume it to be, compensation that is market-competitive and aligned with strategic priorities and roles has been shown to help attract desired talent, reinforce desired selling behaviors and drive productivity increases. In addition, goals based on an explicit and auditable algorithm will help engage and motivate sales employees. The goal-allocation process should be transparent and easy to understand. Finally, to ensure that all sales objectives and policies are properly communicated and understood, organizations should actively manage field communications, prioritizing the proper sequence and timing of messages. In summary, our sales-effectiveness framework enables organizations to assess their sales talent management capabilities and identify areas for improvement. The framework provides an actionable checklist and also lends itself to quantitative assessment. Companies can evaluate the framework elements or capabilities quantitatively to determine the extent to which each is aligned with best practice, requires close monitoring or necessitates further investigation. The capabilities are not equally important. For example, an organization focused on providing an outstanding customer experience may prioritize talent retention and information sharing to improve the customer experience, while a company focused on efficiency would be more likely to prioritize training in basic work processes and data-driven assessment of work processes. Figure 4. Highly engaged and motivated Compensation and Recognition Career Path Communications Goal Allocation *Harvard Business Review, What Counts Most in Motivating the Force, Stephen Doyle, Benson Shapiro Improve Performance by Investing In Talent Management 4

5 The Role of the Employee Value Proposition To strengthen their sales talent management efforts, organizations can consider clarifying the employee value proposition (EVP) for the sales force. The EVP is the employment deal that defines what an employer expects from its employees and what it provides in return. The best companies articulate a deal that isn t just about compensation and benefits; it is also about offering programs that help employees meet their own needs. These organizations go beyond simply highlighting extrinsic reward elements such as base pay and bonuses. They take a more holistic view of the employment deal, focusing on how they also meet their employees expectations in terms of intrinsic elements such as company reputation, work environment and team work and, in return, what behaviors they expect from employees to help them succeed. In this context, a compelling EVP for sales employees would include providing meaningful work with clear expectations, the tools and resources to win in the market, opportunities to learn new skills, and ongoing feedback from managers and coworkers, as well as rewards based on performance. Such an EVP would help employees feel empowered and enabled to make a difference, and confident that success is within their control. In return, employers would benefit from a high-performing sales force motivated to invest considerable discretionary effort, a strong alignment between employee effort and business results, and an environment that fosters continuous improvement of capabilities and performance, as well as the opportunity to build a talent pipeline for the future. Realizing a Better Return The return on investment in sales talent management and the EVP is quantifiable. Organizations that have differentiated offerings for key employee segments, such as the sales force, have seen better engagement and performance results. In fact, they are one and a half times more likely to be performing significantly better financially than their peers. In addition, these organizations are 12% less likely to report having difficulty attracting employees with critical skills and 12% less likely to report having difficulty retaining employees with critical skills. The following actions can help organizations get started on the journey to improved sales talent management: Think holistically about sales force talent management your objective is to attract and retain the right people with the right skills, and to ensure these employees are focused on the right opportunities and highly engaged and motivated. Consider research and market-leading practices in the context of your organization s strategy be selective in where you invest to develop capabilities. Consider clarifying the EVP for the sales force to strengthen your sales talent management efforts. These actions will help your organization realize a better return on its sales talent investments in the form of sustainable engagement and improved business performance. Case Example Fortune 100 Company Benefits From Broader Talent Management Investments A Fortune 100 company was looking to improve sales force motivation and performance during a particularly challenging period when the market was contracting. This organization had been focused historically on driving engagement and performance through a strong brand, challenging work and market-leading compensation. The company offered extremely high pay at risk for customerfacing populations with correspondingly low base salaries. Instead of focusing on changing compensation in isolation, the organization conducted a sales talent management assessment and benchmarking exercise to identify improvement opportunities. This assessment resulted in broader investments in sales talent management that went beyond pay and compensation programs. For example, role profiles were created with explicit knowledge, skill and behavior requirements. These profiles served as a platform that the organization used to assess job candidates, develop employees for new jobs and manage ongoing performance. As a result of taking a broader, more holistic view of sales talent management, this organization was able to reduce its reliance on having to be the highest payer in the market. Improve Performance by Investing In Talent Management 5

6 About Towers Watson Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With 15,000 associates around the world, we offer consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Learn more at. Copyright 2014 Towers Watson. All rights reserved. TW-NA /towerswatson