BUSINESS KILLING MISTAKE #8 – HIRING YOUR FIRST OR MORE SALES MANAGERS

Now that you have a certain number of salespeople, it must be time to hire a sales manager, right? Wrong! When is the right time? You will be shocked that the perfect time to hire a sales manager is – never. 

SALES MANAGER BUSINESS-KILLING DECISION MISTAKE

One of the most frequent questions I hear while helping CEOs, entrepreneurs, and start-ups all over the world build out their sales organizations is this: “Is it time to hire a sales manager now?” What is so interesting is that the question always pops up right around the hiring of the fifth or sixth salesperson. 

Too many leaders have been bludgeoned with the idea that there is a magic number of salespeople, which determines the time to add a sales manager. This article will help you understand when, or if, you should ever bring in a sales manager. In addition, I will share the damages if you make this wrong decision. 

Read this article to the end and share it with your sales organization and other people in your company, so they understand one of the biggest business-killing mistakes that small to large companies make – hiring a sales manager. 

WHAT IS THE BACKGROUND OF WHEN TO HIRE A SALES MANAGER

For decades after the turn of the 20th century, yes, a hundred and twenty years ago, there was no position known as “sales manager.” However, several changes in sales emerged. First, in large cities where a company might have many salespeople, someone needed to “manage” the territories for good coverage and minimize overlap. 

As companies started to expand their offerings, someone needed to help the growing sales team “manage” the depth of features, functions, and benefits of the new offerings. Then, as the economy and companies started to shift from products to services, someone needed to manage the combinations of tangible and intangible offerings being sold. 

However, the most significant change in all sales was when traditional, simple, or sometimes called “transaction selling” bifurcated into complex selling, based on phases of buying processes, number of buyers, and range of solution requirements. This meant a single sales cycle could take twelve months so leaders would hire more salespeople to keep sales coming in the door each quarter. 

Note: Make sure to read Chapter 10 – Sales Conversion System in my book Entrepreneur To Millionaire as too few CEOs, sales managers, or even salespeople understand simple versus complex sales environments.

Now the gasoline on the fire. Around the 1980s, Harvard did a study and determined that most effective organizations, including sales, should have somewhere between five to seven direct reports to each manager. If there were less than five, a management layer wasn’t cost-effective; if more than seven, a manager would be stretched too thin. And with companies believing you had to hire more salespeople to achieve growth – then you must hire more sales managers to manage them. Please don’t! 

WHY DO CEOs AND ENTREPRENEURS HIRE SALES MANAGERS WHEN THEY SHOULDN’T?

But what about today – when should you hire a sales manager? Let me share a little background first… 

I don’t know how many sales organizations those researchers or Harvard folks have designed, built, or turbo-charged, but at last count, I have personally helped start, build, and transform over one thousand organizations in close to 40 countries. That includes the first hire for start-ups to clients who have a headcount of several thousand in sales. I have also held every title in the sales job family up to CRO (Chief Revenue Officer) in large corporations. I only share that extensive background information so you know what I am about to tell you is so game-changing. 

Today, to become embarrassingly rich with your offerings, this is when you should hire a sales manager – NEVER! 

That’s because the sales manager role and model is almost always misaligned or redundant. This means that 99% of sales managers are either “glorified salespeople” working sales pursuits and deals, or they are office workers moving paper and managing meetings – adding little value. 

WHAT is the impact of hiring sales management when you shouldn’t? 

When you read the chapter on sales in the Go to Market Phase of Entrepreneur To Millionaire, you will learn that you add eight categories of additional profit-eating costs for every salesperson you add to your company. It’s the same with sales managers, too, but adding them can be even worse. If they are a glorified salesperson, then where is the management? If they are redundant, adding little value, then the role of sales manager is a profit shredder. 

Please reread Chapter 15 – Talent Optimization in my book as that will help answer the question of why you should never hire a sales manager or a manager for most departments. If you buy into my philosophy of never hiring another employee but only hiring talent – at every level and every role – then you will realize the flaw with managers and talent trying to coexist. Think cows and tigers… Real talent, proven outperformers, the “game changers” you must hire (not the prima donnas) will not work for, under, or around “managers.” True talent will find people playing the manager role get in their way, slow things down, and drive them nuts. 

Ask any high-performing salesperson you have or know – who aren’t turkeys or think they are “sales gods” (sick) – how they feel about management or being managed. It’s the number one reason that most top performers quit. And it’s the number one reason your company can’t attract top sales talent. 

HOW HAVE COMPANIES TRIED TO SOLVE “SALES MANAGEMENT” NO VALUE ADD PROBLEM

The biggest “fix” for sales managers is to spend more money on “sales management training.” Companies overspend on sales process, coaching, and sales skills. What happens is most sales managers are actually suffocating in reports, pipeline forecasts, and more internal sales beatings (Ha! I meant meetings!), etc. Basically, sales management is how companies are choking their salespeople to death. 

WHAT SHOULD YOU DO INSTEAD OF HIRING SALES MANAGERS

The greatest and rarely used strategy in how to build and lead large sales organizations with skeletal-to-no sales management is to make sure your enterprise runs as a “holistic revenue growth system.” This is not the system where you execute marketing, selling, delivery, and support as you do today, but an integrated, enterprise approach where every part of your company plays a specific role in creating new client demand and quickly converting that prospect demand into contracts and cash.

Okay, let me answer the “When to add sales management?” question… Even with remote or work-from-home environments, sales leaders (not sales managers) can have 15 to 25 direct reports. Does that sales-leadership-to-employee ratio sound mind-boggling? For several years as a VP of sales, I had 18 direct reports, several of whom worked remotely. We had fun, shattered numbers, and not a single salesperson ever cried about not getting enough help, support, or leadership. And where our industry had on average 40% annual sales turnover, we had less than 5%.  You can do the same. 

BENEFITS OF NOT HIRING MORE SALES MANAGEMENT BUT USING A SYSTEM APPROACH

Here is how I summarize decades of experience transforming sales managers and management to help companies achieve explosive and highly profitable growth: 

• The weaker your system, the more management you need. 

• The stronger your system, the more fun everyone has and the more money everyone makes. 

KEY LEARNING POINT

Today, almost all the philosophies, models, paradigms, and beliefs of sales management are stale and will work against a company. Stop hiring managers! Instead, build a stronger revenue growth system that doesn’t require layers of management. 

WHAT TO DO RIGHT NOW

1. Make sure to read Chapter 10 – Sales Conversion System in my book. Discuss with your team, whether it’s a few people or hundreds, the model, role, and value of sales management. Is it a strategic, tactical, or redundant role? Don’t get this wrong! 
2. Contact us about transforming your enterprise into a system that doesn’t require management.  And if you have sales managers contact us about how to transform them into a high value add leadership role.  

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AUTHOR BACKGROUND

Kent Billingsley is the founder and president of the Revenue Growth® Company, LLC (TRGC). He is a published author, international keynote speaker, and business transformation expert. He has become America’s Revenue Growth® Architect by helping thousands of entrepreneurs and CEOs (representing over a million employees) generate several billion in new sales, as well as tens of billions in new revenue and profits for large corporations. He has personally designed, built, transformed, and turbocharged several thousand organizations in 36 countries. Over the last 20 years, his proprietary content and trademarked programs have helped thousands of entrepreneurs and employees become millionaires and multimillionaires by “creating wealth” inside their companies. He can be reached at [email protected].