The Strategic Way To Hire a Sales Team

The equivalent of an entire sales force is replaced at many firms every four years, so it's critical that go-to-market initiatives remain tied to strategic goals. Frank Cespedes explains how in his book, Aligning Strategy and Sales.
by Carmen Nobel

Too often, there's a huge gap between a company's overall business strategy and the way its salesforce operates in the field. In fact, says Frank V. Cespedes, articles and books about strategy rarely take sales into consideration at all.

"Everybody talks about the importance of talent management," says Cespedes, a senior lecturer in the Entrepreneurial Management unit at Harvard Business School. "But far fewer confront a basic fact: Companies typically spend much more money and hire many more people, annually, in their sales function than they do anywhere else in the firm. At Google and Groupon, for instance, a higher percentage of employees work in sales than engineering or data mining. And at Facebook the salesforce's ability to translate 'likes' into advertisers will make or break that company's valuation and fortunes going forward."

 Be clear about what you mean by relevant "experience," which is the most frequently used criterion by sales managers.

In his new book, Aligning Strategy and Sales, Cespedes discusses why the gap is so common—and outlines effective steps to bridge it. This excerpt is drawn from the chapter "People," in which Cespedes explains a strategic process for hiring and managing an effective salesforce:

Aligning Strategy and Salesbook excerpt

Build your Team: Recruitment And Selection

From Aligning Strategy and Sales

By Frank Cespedes

Putting the right team on the field is crucial. As the saying goes, "You hire your problems." Recruitment and selection are now more important for various reasons. Due to the data and analytical tasks facing many sales forces, productivity ramp-up times have increased. Each hire then represents a bigger sunk cost for a longer time. As baby boomers retire, they must be replaced. In addition, there were layoffs in sales (and other functions) throughout the recession starting in 2008. As firms seek to grow, putting more "feet on the street" (or in inside sales positions) increases hiring. And the math, as Jim Dickie and Barry Trailer document, is daunting. In surveys, their data has been consistent for years: involuntary turnover in sales organizations has remained at 13 percent, since peaking at 14.6 percent in 2009, and total turnover (involuntary and voluntary—i.e., retirements, moves, etc.) in both good and bad times runs between 25 and 30 percent.9 This means that the equivalent of the entire sales force must be replaced at many firms every four years or so. And the time frame shrinks if and when companies increase revenue targets.

So while strategy should drive search and selection, the exigencies of time and labor markets make this, as Roberge discovered, an ad hoc process at many firms. Most adopt a simple decision rule: look at the best reps, and try to hire more like them. But you'll never have enough stars for all sales positions and, in fact, don't want stars in all jobs. In any organization, some activities exhibit high performance variability but have little strategic impact.10 Think, in many selling situations, about the design of PowerPoint presentations: some folks are much better than others in doing this, but how much impact do the slides have versus other sales tasks? Other activities may be important strategically but exhibit relatively little performance variability—because the tasks are standard, because the firm or industry has reduced variability, or because the business model limits the bandwidth of performance variance. Think about the difference between sales personnel at Nordstrom, where personalized service and advice are integral to strategy execution, and Costco, where low price and product availability make selling activities less complex and variable. Or, more generally, think again about transaction versus solution customers in your pipeline, discussed in chapter 6, and how those sales activities vary.

You want your stars in activities that exhibit both high impact and high variability. That may be prospecting or account management; it may be transaction selling or solution selling; it may be call frequency or managing key channel partners. In activities with low impact or little variability, you don't need stars and should not overpay, either in money or in time. In other words, effective hiring and selection in sales is about building the right portfolio of talent. This has actionable implications.

Focus on how the salesperson makes a difference. Continually ask, "Where are we spending too much—and too little—time, money, and talent across our sales tasks?" The strategic choices discussed in chapter 5 cascade to selection criteria. Also, the key activities will be affected by sales structure (see following) and the necessity—or not—of team selling (see chapter 10) and will change as your markets change. In subscription-based businesses like software and many consumer web services, sales activities with high variance and impact early on are about customer acquisition. But as the market matures, key activities tend to shift toward account management, reducing churn, working with engineering on custom applications, and up-selling or cross-selling additional services. Allocation of sales talent should change.

Focus on behaviors in selection. In many firms, this means upgrading assessment skills. Managers are excessively confident about their ability to evaluate candidates via one or two interviews. But studies across job categories indicate there is only about a 14 percent correlation between interview predictions and job success. This is especially true in sales. A job where individual performance can make a big difference inevitably leads to a cloning bias—many sales managers hire in their own image because how each manager achieved that performance is what got him or her promoted and in a position to hire. But the best results, by far, occur when recruiters can observe the relevant job behaviors.

There are many ways to observe potential hires' behaviors, including simulations, the kinds of tests used at HubSpot, or interviewing techniques. Many sales organizations could emulate the practice used by investment banks and consulting firms when hiring MBAs: the summer job is, in effect, an extended observation—by multiple people at the firm—of the candidate's task behaviors before a full-time offer is extended. After immersion in the job's requirements, the firm and candidate are in a better position to select. Procter & Gamble and Met-Life provide sales candidates, days before an interview, with a case study of fifteen to thirty pages. It describes a selling situation, and the assignment is to plan a day, select target customers, and develop a sales pitch. The required work helps to check for motivation and preparation skills. At the interview, the candidate must explain his or her plan and then role-play the situation with a sales manager or trainer. Technology is increasing these possibilities via game-like simulations, virtual video environments, and online media that allow more behavioral assessments by more people with less travel and time. The real constraint in many firms, however, is the lack of assessment skills by sales managers. This underscores a point discussed in chapter 10: the importance of links between sales and HR. Sales managers know (or should know) the key sales tasks. But HR managers typically know a lot more about the tools, techniques, and options for assessing behaviors relevant to those tasks.

Be clear about what you mean by relevant "experience," which is the most frequently used criterion by sales managers. In one survey, over 50 percent cited "selling experience within the industry" as their key selection criterion, and another 33 percent cited "selling experience in [an]other industry." Driving this view is a belief that there's a trade-off between hiring for experience and the amount of time and money that you don't need to spend on training and development. But these are very different things, and experience at another company—within or outside the same industry—is not easily portable. In a sales context, "experience" is an inherently multidimensional attribute. It may refer to experience with any (or any combination) of the following elements:

  • A customer group (e.g., a banker, a broker, or another financial-services manager hired by a software firm to call on financial-services prospects; or, in health-care businesses, different companies sell very different products, but many sell to hospitals)

  • A technology (e.g., an engineer or field-service tech hired to sell a category of equipment)

  • A company or division of the selling organization (e.g., a customer service rep moved to a sales position because internal cross-functional coordination is an important sales task and the rep "knows the people and how to get things done here")

  • A geography or territory or culture (e.g., a member of a given nationality or ethnic group who knows, and has credibility within, the norms of the relevant customer's culture)

  • Selling (e.g., an insurance agent or a retail associate with experience in another sales context)

The relevance of each type of experience varies with your sales tasks. In appraising talent, some sales managers "know it when they see it," and many don't. So consider what kind(s) of prior experience is truly relevant, and then require the people doing the selection to clarify what they mean when they see it.

About the Author

Carmen Nobel is the senior editor of Harvard Business School Working Knowledge.
    • subramanian gopalan
    • director, team porogress
    one of the major issues i see with the top managment, especially in many small to medium companies is this:
    They all start without a specific sales team, some of them perform the sales function, they get some wins, they think they can manage without focussed sales effort, then they fall, then they go out and hire good sales personnel, but they start expecting results overnight, then they fail and start changing the personnel and the beat continues. It will be great to know the art of making senior management understand the complexities of sales function so that they play a guiding and supporting role.
    • Bob Gately
    • Owner, Gately Consulting
    Talent means different things to different people.
    Before we can...
    * manage talent we need to hire talent.
    * hire talent we need to find talent.
    * find talent we need to know what talent looks like.
    * know what talent looks like we need to know how to measure talent.
    * know how to measure talent we need to know how to identify talent.
    * identify talent we need to define talent.
    * define talent
    we need to ask, "How do I define talent?"

    There are many factors to consider when hiring and managing sales talent but first we need to define sales talent unless "hiring sales talent" means "hiring employees." Everyone wants to hire for and manage sales talent but if we can't answer the five questions below with specificity, we can't hire or manage sales talent effectively.
    1. How do we define sales talent?
    2. How do we measure sales talent?
    3. How do we know a candidate's sales talent?
    4. How do we know what sales talent is required for each job?
    5. How do we match a candidate's sales talent to the sales talent demanded by the job?

    Most managers cannot answer the five questions with specificity but the answers provide the framework for hiring successful sales employees and creating an engaged salesforce.

    Sales talent is not found in resumes or interviews or background checks or college transcripts. Sales talent must be hired since it cannot be acquired or imparted after the hire.

    See the correlation coefficients listed below for how well each step in a selection process identifies future successful employees. Most all employers do not use all available steps.
    0.00 for a Flip of a Coin
    0.14 for an Interview Only
    0.26 after adding Background Checks
    0.38 after adding Personality Testing
    0.54 after adding Abilities Testing
    0.66 after adding Interest Testing
    0.75 after adding Job Match Testing
    1.00 with Divine Intervention

    Here are others I have seen since 1992
    0.00 for a flip of a coin
    0.18 for Job Experience (years)
    0.38 for Unstructured Interviews
    0.41 for Integrity Tests
    0.51 for General Mental Ability Tests
    0.51 for Structured Interviews
    0.54 for Work Sample Tests

    Successful employees have all three of the following success predictors while unsuccessful employee lack one or two and usually it is Job Talent that they lack.
    1. Competence
    2. Cultural Fit
    3. Job Talent

    Employers do a...
    A. GREAT job of hiring competent employees.
    B. good job of hiring competent employees who fit the culture.
    C. POOR job of hiring competent employees who fit the culture and who have a talent for the job.

    Identifying the talent required for each job seems to be missing from talent and management discussions. If we ignore any of the three criteria, our workforce will be less successful with higher turnover than if we do not ignore any of the three criteria.
    1. Competence
    2. Cultural Fit
    3. Job Talent

    80% of employees self report that they are not engaged.
    80% of managers are not suited to managing employees.
    The two eighty percents are closely related.

    Employers keep hiring the wrong people to be their sales managers and then they wonder why they have so few success and engaged sales people.
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited
    A company may be composed of very capable people at the top, frame well meaning policies, have manuals containing indepth directions for conducting the business, acquiring and dealing with human and other resources, managing finances, etc., but if they don't have proper work force at the field (sales) level, their business development is bound to suffer. We have umpteen examples of casual approach while hiring those who are supposed to have less experience and are paid nominal wages. Many of these are sent to the field to sell and when they fail are eased out. Such an approach is proving fatal for many companies.
    It means nothing if you can manufacture great products if sales cannot match the level of the production. We do not produce for fattening our inventory - rapid turnover of the products is absolutely necessary.Hence the imperative need to carefully hire, groom, nurture and guide/mentor the sales staff constantly.