The vice president of sales role in your company is the key to growing revenue, but focusing your selection process on their salesmanship will lead to hiring the wrong candidate.
Years ago, I was interviewing for a vice president of sales position with a mid-sized services firm. Everything was going well with my interview with the CEO of the company and then the question came: "So, how much revenue can you drive for us this year?"
I thought it was a joke, but he wasn't joking. Maybe it was a trick question…It wasn't. So, I said, "Before I answer, may I ask you a few questions?" He acquiesced…
How many salespeople can I hire?
What is the marketing budget?
What is the travel budget?
What is the budget for cost of sales?
To all of these fundamental business questions, the answer was, "I haven't decided yet." Very quickly what I initially thought was a joke became an interview nightmare. Red flags were waving in front of my face telling me to run from this opportunity as fast as I could.
After hearing his responses to my questions, I responded, "Revenue is a function of the investment made in both sales and marketing. How can someone give you a number that you can believe in without having answers to those questions?"
He leaned back in his chair and said, "Well, the other candidate gave me a number." I told him that I could certainly provide him with a revenue number, but not to come looking for it. I attempted to explain further, but the CEO's thought process was one-dimensional. He was interviewing a candidate for a VP position as if the opening were for a sales representative. (Mind you, I don't recommend that question for that role either.)
Following my instincts, I told him that it would be best if he proceed with hiring the other candidate and I wrapped up the interview. He was dumbfounded to say the least.
If you are hiring a vice president of sales, there are five critical areas to explore of your candidate, but a revenue growth commitment is not one of them.
1. Salesforce Recruitment. If you have decided to hire a sales VP, you are expecting them to build a sales team. Hiring salespeople is both risky and costly. The ideal candidate for this role should have a methodology that mitigates the risk and quickly gets the new hire up to speed. Bad hires kill the bottomline, but so do unproductive salespeople. Every day that a new sales person is on the bench, not yet ready to generate sales, they sit on your books as a liability. Thus, a key skill that the ideal candidate will possess is development of a process to screen and onboard new sales team members.
2. Sales Process Development. One of the goals of having a sales organization is to establish consistent performance. This can only happen if a defined process has been established for the salespeople to follow. Many companies hang their hat on the performance of a single rainmaker. One person generating 75 percent of the revenue means that you have one highly profitable team member and a bunch of unprofitable salespeople on the team. What happens if the rainmaker leaves for greener pastures? Having a well-defined sales process in place reduces the amount of time for new hires to get up to speed as well as provides continued direction and focus for the tenured sales people. This translates into another key benefit which is scalability. Your company's ability to experience significant growth resides on this leader's acumen at building a process that leads the entire team to perform.
3. Compensation Plan Formulation. In many companies, one of the responsibilities of the vice president of sales is the formulation of a sales compensation plan. Sales compensation plans should be designed to reinforce the sales process that has been developed. One thing about salespeople is that they do not need a job description to tell them their job. The compensation plan tells them where to focus their time. The wrong plan can tank the company, while the right plan can lead to explosive results. Thus, this becomes a critical skill that your ideal candidate must possess. To learn more about developing the right compensation plan, read my article titled, "The Equilateral Triangle Model for Developing Sales Compensation Plans."
4. Metric Management. In many sales environments, today's sale is not necessarily an indication of a salesperson doing the right things now. Thus, you are paying commissions for what they did right a month, three months, or maybe a year ago. This makes it critical that other metrics are measured beyond revenue achievement. There is an old expression: what gets measured, gets done. In essence, the process that they create has multiple measurement points that allows for the creation for a dashboard. The metrics on this dashboard show the performance of the sales team and allow for intervention when performance is not meeting expectations. Thus the key is to understand how the candidate uses metrics to develop, manage, and grow their sales team.
5. Performance Management. The world would be a wonderful place if every salesperson hired performed like a rock star, but that doesn't happen. You will have both over-achievers and subpar performers—and each requires a different management approach. Top performers need nurturing, appreciation, and growth opportunities while subpar performers need and support, guidance, and intervention. Handle the top performers wrong and they leave. Handle the subpar performers incorrectly and they can suck the profits from the company. Thus, in the interview process, it is important to understand the candidate's management approach for different situations.
The vice president of sales is a key member at the executive table. As a business owner, when screening these candidates, focus on the skills that lead to the creation of your sales architecture® which means you are selecting a candidate that creates a sales organization based that delivers consistency, stability, and profitability.
(Not sure what questions to ask of your vice president of sales candidate? Send me an e-mail and I'll send you my favorite 24 questions when interviewing these candidates.)
Oh, and just to tie back to the earlier story, that company did hire the other candidate—and subsequently fired him six months later after he did not deliver on the expectation he set in the interview for growing the business.
SMM columnist Lee B. Salz is a sales management guru who helps companies hire the right sales people, o-board them, and focus their sales activity using his sales architecture® methodology. He is the president of Sales Architects, the C.E.O. of Business Expert Webinars and author of "Soar Despite Your Dodo Sales Manager." Lee is the host of the Internet radio show, "Secrets of Business Gurus." Look for Lee's new book in June 2009 titled, "Conversion!" where he shares the secrets to driving registrations in "for-fee" Webinars. He is a passionate, dynamic speaker and a business consultant. Lee can be reached at lsalz@SalesArchitecture.com or 763.416.4321.