I Need A New Sales Manager: Do I Promote My Superstar Or Hire From The Outside?
Updated: Jan 3, 2020
Your company is thriving and it’s largely due to your Superstar Salesperson. If you could find 10 more people just like her, the business would surpass every sales goal for 2015. While cloning her is obviously not a viable option, promoting this superstar into a Management position is a very real possibility! It will allow her to build a sales team comprised of men and women who reflect the skills that have made her so successful. However, promoting this key player would take her away from her customer-centric role in the field, largely relegating her to the dugout as a “player/coach”. Is there another MVP ready to take her place and continue driving the company’s incredible growth? And most importantly, while she can obviously knock it out of the park when it comes to closing deals, how confident are you that she can coach her team to do the same? Would it be wiser to hire an experienced “manager/coach” from another team?
Companies are often faced with this very challenge: Internal Promotion or External Hire? While there are pros and cons of each option, recent studies show that in many cases, internal mobility (promotion) is the wisest choice. According to recent research conducted by Wharton Professor Matthew Bidwell, the “cost” of external hiring outweighs the benefits. In his study, “Paying More to Get Less: The Effects of External Hiring vs Internal Mobility,” Bidwell discovers that these external hires typically have less tenure in the role for which they are hired and receive vastly lower performance ratings than their internal counterparts, resulting in a termination rate that is 16% higher. Additionally, external hires are paid 18-20% more than an internal employee for the same position.
However, while this research indicates that internal promotion is the better option, it is not better in every situation. Hiring from the outside provides a new perspective and fresh ideas. As companies grow in sales and complexity, sometimes the business outgrows the existing team and a new set of skills and business acumen is required. These external hires can offer a boost to the internal culture, allowing companies to break out of the risky “groupthink” dynamic plaguing many mature businesses. Internal promotions, however, offer one very unique benefit: demonstrating the company’s commitment to rewarding hard work and consistent revenue generation by promoting from within!
Here is a list of steps every company should take to ensure these internal promotions are a success.
4 Tips to Ensure a Better Internal Promotion:
Build a strong bench. Although having an All-Star player on your team is important, he cannot be your only power player. Companies that build strong teams, rather than one or two strong players, are able to create a longer term succession plan, providing many options for cross training and eventual promotion, while keeping the strength of the team intact and reducing turnover.
Pre-Season Training is key. Every successful team requires many hours of training prior to the first game AND throughout the season. Companies are no different. If you are considering a promotion, speak with your employee 9-18 months prior to the promotion target date. Not only does this force the company to clearly define the expectations of the job and establish a formal job shadow/training program, but it also allows the salesperson to focus on the skills he or she will need in the new position.
Begin Cross-training sooner rather than later. While your salesperson might be an MVP when it comes to giving a pitch, prospecting and making the sale, he or she may have no experience with operational or other aspects of sales and the overall business. Their exposure to mentoring, managing, hiring, interviewing, reviewing and remediating a team is in many cases, minimal at best. Test the waters by putting him or her in charge of smaller projects that are outside their normal scope, and be sure to gauge their progress and provide ongoing feedback. Remember, the time you spend training today, will save you 10x the hours once the person is in the new role!
Give him a chance to be Team Captain. Being a team member is very different from being a team manager. Give your potential manager a project lead role to test her leadership abilities. Doing so during this 9-18 month cross training period not only gives her the opportunity to show what skills she already possesses, and encourage – no, expect – her to voice any challenges and concerns along the way.
Whether hiring from the outside or promoting from within, it is imperative that leaders understand the significant difference between a successful salesperson and a successful sales leader. Not all Sales MVPs have the demeanor, credibility, selfless mindset or ability to effectively mentor a team – all necessary skills when stepping into a management role. Successful salespeople are, to a certain degree, selfish by nature- in a good way, of course. They are all about earning more commission by solving their customers’ problems. For them the order of priority is Me-Customer-Company. Successful sales leaders, on the other hand, are selfless, focusing on mentoring, leading & motivating others. The order of priority for the true leader is Team-Customer-Company-Me. While internal promotion appears to be the most cost effective option in some cases, it’s up to the company to make sure it is the wisest decision for each unique situation.