Leverage sales managers. to create superior performance

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1 Leverage sales managers to create superior performance

2 Towers Watson has completed research into which factors differentiate high-performing and effective sales managers from all others. The research spans input from both sales managers and individual contributor sales roles to address a number of critical questions. Legal Copy: 6/7 White Photograph Attribution

3 Leverage sales managers to create superior performance Table of contents Executive summary 4 Successful sales managers start by managing their time 5 Figure 01. High-performing sales managers spend 100 extra hours per year on selling activities 5 Figure 02. Successful sales managers focus on the who 5 Sales managers versus sales representatives selling behaviours and competencies 6 Figure 03. Managerial behaviours and competencies with a signifi cant difference between high- and low-performing sales managers 6 Figure 04. Sales representatives who interact with their managers more frequently are more likely to consider them effective 6 Figure 05. Effective sales managers exhibit different behaviours and competencies 7 Creating an effective sales environment 8 Figure 06. Job performance and pay alignment for sales managers 8 Figure 07. Effective performance management is a key driver of success for sales managers 9 Figure 08. Organisations need to remove structural barriers in their selling environment 10 Figure 09. Quality products and services are key contributing factors to success for sales representatives but not for managers 11 Conclusion 12 About the study 13 Leverage sales managers to create superior performance 3

4 Frontline sales managers typically wear two hats, one of a salesperson expected to generate sales based on their relationships over time, the other of a manager, expected to lead a team of optimally performing sales people. Ultimately, sales managers succeed because they are leaders. They are externally focused rather than internally focused. They tend to look at the big picture and think strategically, rather than focus on the short term. Executive summary Frontline sales managers are expected to lead and develop a team of high-performing sales people. It is up to the managers to drive the organisation s strategic priorities through the behaviours of their sales team, to manage their team s overall productivity and sometimes to make their own numbers as well. Because their actions and behaviours impact their sales team, sales managers have a powerful multiplier effect, impacting the performance of their teams. Given their pivotal role, organisations are increasingly posing the question: What can we do to improve sales manager effectiveness? To bring additional insight to this question, Towers Watson conducted research into which factors differentiate high-performing, effective sales managers from others. The research includes input from both sales managers and individual contributor sales roles to address a number of critical questions: Sales managers: How do high-performing sales managers spend their time differently from lower-performing sales managers? Sales people: From employees perspectives, what differentiates effective sales managers from ineffective sales managers? Organisation: Which organisational factors (for example, products and services, operating environment, goal setting, performance and rewards) have a differentiating impact on sales manager performance? Implications for companies seeking greater effectiveness The study provides evidence-based, actionable insight into specific conditions and capabilities that organisations need to foster to promote sales manager effectiveness and equip sales managers to drive the sales performance of their people. Our research shows that high-performing sales managers use their time differently from other sales managers (and sales representatives): High-performing sales managers spend less time on management activities but more time on performance management of staff. High-performing sales managers avoid non-sales, non-management activities such as internal meetings or administrative tasks. Additionally, high-performing sales managers are hands on, dividing their time evenly across their entire sales team and modelling the behaviours necessary for individual sellers to succeed. High-performing sales managers are more longterm-focused than sales representatives. High-performing sales managers have personal written goals for themselves in addition to any goals the organisation may have given them. High-performing sales managers spend more time with current customer renewals and networking with nonqualified prospects laying the foundation for future success. Ultimately, sales managers succeed because they are leaders. They are externally focused rather than internally focused. They tend to look at the big picture and think strategically, rather than focus on the short term. The bottom line is that their leadership skills set them apart from other managers and sales representatives. 4 towerswatson.com

5 Successful sales managers start by managing their time Sales managers occupy a unique, hybrid position, with both the administrative and managerial responsibilities of managing a sales team, and responsibilities for own selling activities. Nevertheless, high-performing sales managers spend 14% more time on selling activities compared with their lower-performing colleagues. Most of this time comes from reducing the amount of time they spend on non-selling, non-management activities. Successful sales managers also spend more time with new, nonqualified business leads. This result provides a critical differentiating factor, since many companies struggle with creating new demand for their products and services. Sales managers appear to be key to building a wider network of new contacts that, in turn, generates the demand that drives future growth. To spend more time with current customers and new, nonqualified leads, successful sales managers must find ways to reduce time spent in management and other non-selling activities, while not doing so at the expense of their sales teams. And the time spent with their sales teams is more focused on performance management and coaching, rather than training. Our findings indicate that managers are able to manage their time by cutting back on administrative activities and routine internal meetings. As a result, they spend less of their non-selling time with internal employees who are not direct reports. Figure 01. High-performing sales managers spend 100 extra hours per year on selling activities Figure 02. Successful sales managers focus on the who Successful Other sales managers sales managers Difference New, nonqualified business leads % Qualified new business leads (leads qualified by someone else) High-performing Other sales managers sales managers Difference Selling activities % Management activities % Non-selling or other activities % *Numbers are the number of hours high-performing and other sales managers spend in a given 2,000-hour year on each task % Prospects you know personally % Current customers % Renewals % * Numbers are the number of hours high-performing and other sales managers spend in a given 2,000-hour year with each type of customer. Leverage sales managers to create superior performance 5

6 Sales managers versus sales representatives selling behaviours and competencies Sales representatives are expected to exhibit several sales competencies and behaviours. These competencies differentiate between high- and low-performing representatives (for example, flexible time usage, or the ability to quickly qualify an opportunity, identify a decision maker and get an appointment). However, none of these competencies or behaviours differentiate between highly successful sales managers and less successful ones. These behaviours and competencies are baseline expectations for sales managers. Figure 03. Managerial behaviours and competencies with a significant difference between high- and low-performing sales managers Percentage of sales managers who spend time with their sales team 0% 20% 40% 60% 80% Spread evenly across the entire team Focused primarily on a few key members of the team such as top performers or poor performers High-performing sales managers 46 Other sales managers Figure 04. Sales representatives who interact with their managers more frequently are more likely to consider them effective Percentage of employees who find their sales manager effective* 0% 20% 40% 60% 80% Frequency of interaction with immediate manager Several times a day About once a day 24 About once every few days 13 About once a week 9 About once every two weeks 2 About once a month or less often Sales managers management activities Although sales competencies are not a differentiator between high and low sales manager performance, people management competencies are. The way sales managers approach the management of their teams has a significant impact on both sales performance and manager effectiveness. Many sales professionals subscribe to the 80/20 rule meaning that it is wise to spend 80% of their selling time with their most valuable clients typically 20% of all their clients. Some sales managers take this same approach to managing their sales team devoting most of their time to a few team members, spending a disproportionate amount of their time at one end of the spectrum or the other, or both (that is, they spend more time with their top performers or bottom performers, or with both). Highly successful sales managers spread their attention relatively evenly across all members of the sales team. High-performing managers are more likely to spread their time evenly across their sales team than lower-performing managers. This does not mean that sales managers spend their time with each member of their team in the same way. Rather, managers will spend time with lower-performing sales representatives to provide extra coaching and guidance, while spending more time on other activities with better-performing sales representatives, such as performance reinforcement or co-selling. Sales employees who have more frequent interaction with their manager are much more likely to view their sales manager as effective. Half of all sales representatives who interact with their immediate manager several times a day report that their manager is effective. Only 24% of all sales professionals who interact with their manager once a day report that their manager is effective. *Employees were grouped into categories based on how frequently they interacted with their immediate managers. Percentages represent the percentage of sales employees who interact with their manager with that frequency who consider their manager effective. 6 towerswatson.com

7 Figure 05. Effective sales managers exhibit different behaviours and competencies 0% 20% 40% 60% 80% My immediate manager: Acts with honesty and fairness Provides clear goals for the work of the team Is a trusted source of information about what is going on in the organisation Explains how our work supports execution of team goals Helps remove obstacles to doing my job well 71 7 Provides me with opportunities to develop my skills There are striking and measurable actions and leadership competencies that differentiate between effective and ineffective managers. Sales professionals who believe their managers are effective are signifi cantly more likely to identify their managers as possessing key competencies and exhibiting appropriate behaviours. These study fi ndings are helpful from two perspectives. Firstly, they provide insight into how to optimally structure the role of a (frontline) sales manager, which is to ensure that managers are provided suffi cient time and organisational support to address the people management aspects of their job not just the selling/customer aspects. Secondly, they provide insight into the specifi c people management capabilities that should help inform key decisions such as recruiting and selection, promotion, sales manager assessment and development, performance measurement and rewards. Has enough time to handle the people aspects of the job Makes fair decisions about how my performance links to pay decisions Helps me with career planning and decisions 6 54 Agree that manager is effective Disagree that manager is effective *Employees are grouped based on whether or not they believe their manager is effective. Percentages represent the percentage of employees who believe their sales manager is effective and think their sales manager exhibits that behaviour or competency, or the percentage of employees who do not believe their manager is effective and think their manager exhibits that behaviour or competency. Source: Towers Watson Global Workforce Study Sales professionals who believe their managers are effective are significantly more likely to identify their managers as possessing key competencies and exhibiting appropriate behaviours. Leverage sales managers to create superior performance 7

8 Creating an effective sales environment Developing an effective sales force involves creating an environment that leverages the competencies and behaviours of sales managers and representatives to improve their performance (that is, increase sales). Key elements of creating an effective sales environment include: Job performance and pay programme alignment Performance management of staff Engagement of staff Support to enable more time on selling activities We will take a look at each of these as they relate to sales managers. Figure 06. Job performance and pay alignment for sales managers 0% 20% 40% 60% 80% Company provides information on the structure of pay programme and how pay will be determined Company provides information on how pay was determined at end of year Clear link between my job performance and my pay Paid fairly compared with other people in my company Paid fairly compared with other people in other companies Benefit programmes compare favorably with those companies Satisfied with total rewards programme High performing Others *Percentages represent the percentage of high-performing sales managers or other sales managers who agree with the statement Job performance and pay alignment For most employee groups, organisational pay practices evolve slowly over time. However, organisations tend to alter or restructure their sales strategies, plans and programmes more frequently to reflect changes in their business environment. The challenge for the sales organisation is to manage the continual change while effectively motivating and rewarding the right selling behaviours focused on the right activities with the right people. It is not uncommon for sales people to grow accustomed to a particular strategy or sales compensation plan only to see it shift again in a year or two. To achieve these objectives: Rewards need to be set at competitive levels relative to the market. Employees need to believe they are paid fairly relative to other employees within and outside the organisation. The reward programmes need to be transparent. Rewards need to be linked to job performance. Organisations drive greater performance among sales representatives when sales professionals understand the performance requirements prior to the start of a performance period and how rewards are determined at the end of the period. When the organisation communicates its pay programmes effectively and when pay levels are clearly linked to individual performance, sales professionals are more likely to perceive their rewards as fair and motivating. For sales managers, the perception of alignment is strongly related to their personal performance. High-performing sales managers are more likely to report that their organisation has effectively aligned pay with job performance. As we might expect, the reverse is true poorer-performing managers report that pay is noticeably less aligned with job performance. However, the most common challenge for rewarding sales managers is determining the right balance of aligning their pay plan with the sales people they manage (downward alignment) versus aligning their pay programme with management responsibilities (upward alignment) while also keeping true to the principle of using few, focused and impactful performance measures. 8 towerswatson.com

9 Performance management and delivery Many sales managers have quotas they are expected to achieve (team and sometimes individual quotas). Although the quota-setting process is a key element of overall performance management, less than half of sales managers surveyed feel they have significant input in setting their sales quotas. This absence of input contributes to a lack of accountability that, in turn, impacts a company s ability to improve and grow. However, despite their relatively low level of perceived input, most sales managers believe their quotas and performance goals are reasonable and achievable. This is an interesting dichotomy because the lack of input can easily undermine what might otherwise be reasonable goals for sales managers by giving them something outside their control to blame for failure that the goals were unreasonable. For performance management to be effective, individual goals must be linked to the company s goals, and people must be held accountable for achieving them. Sales professionals usually have a very clear link between their performance and the organisation s performance. This is a key differentiator between high- and low-performing sales representatives, regardless of roles. For sales managers, high performers are more likely than low performers to feel that their organisation holds managers accountable. Yet, regardless of their own role or performance level, approximately seven out of 10 sales managers believe that high performers in their organisation are rewarded for their performance. Figure 07. Effective performance management is a key driver of success for sales managers 0% 20% 40% 60% 80% I have significant input in quota setting My quota is achievable Clear link between my performance goals and company's strategy and goals Performance goals achievable Company holds people accountable for their performance Company rewards high-performing employees High performing Others *Percentages represent the percentage of high-performing sales managers or other sales managers who agree with the statement. For performance management to be effective, individual goals must be linked to the company s goals, and people must be held accountable for achieving them Leverage sales managers to create superior performance 9

10 72% of high performers say their work processes are efficient, versus only 46% of low performers. Enablement and engagement Research has found a significant link between employee engagement and performance. At the aggregate level, organisations (or divisions or teams) with higher engagement scores tend to outperform those with lower engagement scores. At the individual level, employees with high engagement are more likely to be top performers as well. Sales professionals often have very high engagement levels relative to other employee groups. Even if sales professionals are highly engaged, they still require support to remove barriers (impediments to productivity) and enable them to be successful. This enablement and local performance support falls into two broad categories: 1) having high-quality products and providing the best customer service, and 2) removing barriers to efficient work processes in the organisation. Our research shows that while these factors are important, they have different importance levels for different types of sales professionals. High-performing sales professionals are much more likely to say they are able to be creative in doing their job because of effective support from other work groups. About one-third of all sales professionals say that the rules and procedures at their organisation interfere with providing the best customer service possible. Different factors are cited as reasons across the different sales roles. For sales managers, the biggest differences between high-performing and other sales managers are found in their attitudes regarding efficient work processes (with 72% of high performers saying their work processes are efficient versus only 46% of low performers), quick access to information (76% versus 60%), access to training (72% versus 62%) and resources (76% versus 65%) necessary to work effectively. Product availability and the availability of marketing materials are also key factors in the success of sales managers. Figure 08. Organisations need to remove structural barriers in their selling environment Role NBDs AMs Sales managers Performance level High Low High Low High Others I have access to the training I need Company provides resources I need to work effectively I can quickly access needed information Good teamwork among departments I have enough say in how my job gets done Work processes are efficient Organisation s structure slowed decision process 67% 70% 64% 63% 72% 62% 57% 57% 73% 71% 76% 65% 68% 61% 66% 75% 76% 60% 47% 45% 66% 60% 72% 63% 59% 49% 68% 64% 84% 65% 52% 57% 61% 56% 72% 46% 31% 46% 35% 33% 43% 41% Product is always available 65% 51% 56% 53% 64% 51% Marketing materials are always available I can be creative when doing my job Rules and procedures prevent us from providing better customer service Company has a shorter sales cycle time Company has a shorter sales fulfilment time 64% 50% 55% 57% 67% 55% 76% 63% 79% 67% 80% 66% 35% 45% 33% 32% 29% 37% 41% 22% 26% 29% 32% 30% 46% 15% 41% 26% 28% 29% *Percentages represent the percentage of high-performing or other sales professionals in a role who agree with the statement. 10 towerswatson.com

11 Products and customer service Ultimately, no matter how skilled a sales manager or representative is, buyers will not purchase bad products, nor will they buy from vendors with poor customer service. Sales people depend in part on the reputation of their organisation s products and services to generate demand from new customers as well as repeat business. In addition, their attitudes about their company s products or services can impact their performance. Almost 80% of sales managers agree that their company s products or services are among the best in their industry. Almost an equal percentage think their products and services are innovative and that the company s reputation leads to a significant lead stream. These findings are similar regardless of their performance level. Our prior research also found that high-performing sales representatives hold similar views on the quality of their company s products and services; thus, it is important for sales managers to continually remind their sales people of the quality of the company s products and services rather than allow sales people to complain about the lack of new products or the absence of post-sales service, a perception more likely to be held by lower-performing sales people. Even when the product or service itself is good, poor customer service and support can undermine the sales effort. Sales managers believe they receive better support from other work groups, and they also have a stronger perception that the company makes customer satisfaction a top priority. This outcome is universal across all sales managers. Comparatively, sales representatives are much less likely to believe they get the support they need from other work groups. As such, it is incumbent upon sales managers to focus their efforts on removing barriers or impediments to sales representative productivity. Figure 09. Quality products and services are key contributing factors to success for sales representatives but not for managers Role NBDs AMs Sales managers Performance level High Low High Low High Others My company s products/ services are among the best My company uses customer service metrics to evaluate my performance My company s products or services are considered innovative I receive the customer service support I need from other work groups I have decision-making authority to meet customer needs Company makes customer satisfaction top priority Company s brand name generates leads 81% 51% 78% 80% 79% 86% 45% 46% 41% 36% 52% 44% 73% 49% 67% 61% 68% 74% 49% 42% 59% 58% 74% 66% 63% 52% 70% 60% 78% 65% 64% 47% 78% 70% 81% 69% 68% 52% 83% 78% 81% 82% *Percentages represent the percentage of high-performing or other sales professionals in a role who agree with the statement. Almost 80% of sales managers agree that their company s products or services are among the best in their industry. Leverage sales managers to create superior performance 11

12 More effective sales managers: Invest more time selling and use all their time wisely Devote time to engage with and manage the performance of all of their employees (not just the high or low performers) Conclusion In the end, great sales managers do not just happen. Rather, organisations need to be proactive in creating an environment that fosters the capability, focus and behaviour needed for sales manager effectiveness. Our study provides signifi cant, evidence-based insight to guide diagnostic assessment and high-impact actions. Organisations can foster these outcomes by: Stressing the need for new business from unknown prospects. Creating an environment where additional invested effort is expected to yield a return through achieving higher levels of existing business renewal. Reducing the administrative burden by leveraging technology in a fashion that frees up sales people for selling activities. Structuring the design of the role with suffi cient time to address people management and development responsibilities. Incorporating people management expectations into job performance metrics and sales compensation. Reinforcing the importance of customised coaching and professional development of sales staff. Clearly communicating the leadership behaviours that distinguish effective from ineffective managers (Figure 05, page 7). Most companies have begun to focus on strategies and tactics to drive profi table growth. A key to achieving this objective is increasing sales force productivity by growing top-line revenue without increasing the number of sales employees. The research fi ndings outlined here provide a useful road map for highlighting those elements that business leadership can focus and improve upon quickly. Though each sales role has its own drivers of effectiveness, companies can gain signifi cant leverage by focusing effort on ensuring that they have high-performing incumbents in the sales manager role. Our research identifi ed the following key differentiators: Spending more time with current customer renewals and nonqualifi ed prospect networking. Borrowing time from internal meetings and nonsales activities to spend time with sales team members, concentrating on topics unique to that representative (particularly performance management/coaching). Paying attention to long-term issues to complement the short-term focus of the sales team. Establishing pay-for-performance environments where managers are rewarded for both results and management effectiveness. It is clear that the sales manager role is at the intersection of sales effectiveness: It is the linchpin that translates and communicates the company s sales strategy into expectations for specifi c sales representative behaviour. It is the role that most effectively engages and motivates sales representatives to perform. It is the role that can best focus on any barriers that impede sales productivity. Sales managers can essentially make or break the sales force because they are the intermediaries between your senior leadership and frontline sales people who interact with your customers on a daily basis. Their impact cannot and should not be underestimated. 12 towerswatson.com

13 About the study This study uses data on attitudes and behaviours of a representative cross section of over 1,500 sales professionals in the United States. The data were collected by administering a survey of over 30 questions, many with multiple parts, to a panel of respondents provided by Harris Interactive. Respondents were eligible to participate if they indicated they were in a sales position at an organisation with at least 500 employees. These sales professionals were asked to indicate the role they perform at their company and were grouped into three groups new business developers, account managers and sales managers. In total, there were over 700 sales managers and an additional 800 sales professionals who were individual contributors. The typical sales manager manages a team of at least six to eight professionals. The data presented in this report are based on sales professionals in the general industry, limiting our sample to approximately 500 sales managers and almost 600 individual contributors. Sales professionals in the retail industry were excluded since the sales roles in retail are signifi cantly different from the roles for sales professionals in other industries. Definitions of key terms High performing Sales professionals were divided into two groups based on their performance relative to their quota. Sales professionals who performed above average relative to their quota were included in the high-performing group. All other sales professionals were included in the low-performing or other category. Account manager (AM) A sales professional who maintains and nurtures existing accounts and builds customer relationships. This person generally achieves sales growth through building deeper relationships and increasing market share at existing clients. New business developer (NBD) A sales professional who identifi es opportunities, follows the sales process to conclusion and makes the sale. This person may be expected to cold-call, follow up on opportunities, develop new customers and turn opportunities into sales. Successful new business developers generate most of their sales growth by bringing in new accounts. Sales manager A sales professional who is responsible for managing other sales people. Sales managers include those in sales management who manage sales professionals but do not sell and selling managers who manage sales professionals and also sell. Selling managers may perform any combination of the sales roles discussed above in addition to their managerial activities. Leverage sales managers to create superior performance 13

14 Why Towers Watson? Our Sales Effectiveness and Rewards consultants are skilled at translating the unique growth needs of your business into effective sales reward strategies. Deployed across the globe, we provide deep, hands-on expertise in developing and implementing programmes that drive sales effectiveness. We are supported by innovative research, as well as our broader Towers Watson consulting resources in areas such as communication, change management and implementation. Proven results Towers Watson has a proven track record in designing and implementing sales force programmes across diverse industries and global geographies. By aligning sales-force behaviour with your organisation s business strategy and compensation philosophy, we help you maximise the return on your sales and marketing investment. With motivated and focused salespeople, you can increase performance, better execute go-to-market strategies and further improve the return on your total rewards. Deep expertise Our experienced team collaborates with you to solve your toughest challenges, such as increasing productivity and identifying the traits of top performers. We provide tailored consulting services to the world s leading companies across various industries, including financial services, high tech, telecommunications, pharmaceuticals, life sciences, manufacturing, consumer products, retail and media/entertainment. Unparalleled research We combine innovative thinking with proven business analytics and research to look at the performance and efficiency of your sales force in new ways. And as public scrutiny of risk management intensifies, Towers Watson has the robust framework and tools to evaluate your incentive programmes for excessive risk. Our research has guided the development of practical, fact-based recommendations that foster higher sales performance. For example, our most recent study of sales effectiveness analyses the human capital factors that drive the results of high-performing sales organisations. We also host industry-specific roundtables with sales and HR professionals to facilitate conversations about key sales management and compensation topics and trends. Global focus We help clients around the world solve today s most difficult issues. Towers Watson deploys the largest group of dedicated Sales Effectiveness and Rewards consultants in 38 countries. This enables us to work with global organisations to develop programmes and solutions uniquely suited to the culture of both the company and the country. Full implementation capability A solution is only as effective as its implementation. Our experienced, knowledgeable associates throughout the world work closely with all functions of an organisation to deliver results across its global operations. When needed, our Sales Effectiveness and Rewards practice draws on expertise from our multiple business lines to address the unique issues of our clients. An holistic approach We understand the importance of an effective sales organisation to both your top and bottom lines, and our work is guided by our well-established business acumen. Our senior team brings a rich and healthy blend of consulting and practical industry experience to help drive improved sales results for your company. Further information For further information, please contact Ron Burke ron.burke@towerswatson.com Deployed across the globe, we provide deep, hands-on expertise in developing and implementing programmes that drive sales effectiveness. 14 towerswatson.com

15 Leverage sales managers to create superior performance 15

16 About Towers Watson Towers Watson is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With more than 14,000 associates around the world, we offer consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson 71 High Holborn London WC1V 6TP Towers Watson is represented in the UK by Towers Watson Limited. The information in this publication is of general interest and guidance. Action should not be taken on the basis of any article without seeking specific advice. To unsubscribe, eu.unsubscribe@towerswatson.com with the publication name as the subject and include your name, title and company address. Copyright 2014 Towers Watson. All rights reserved. TW-EU March towerswatson.com

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