For decades sales leaders have been discussing how to get the highest levels of performance of their teams. Some would make the case that the answer lies in a company’s sales culture and how the team is built and developed within that culture. In many cases, culture is managed and measured by intuition, leaving scaling a sales organization a very daunting task.
A while back I was introduced to RoundPegg. They look at just that – how to better engage salespeople leading to increased productivity and, most importantly, profits. They told me that it all lies in the need to understand the salespeople. A simple 5-10 minute survey does it. It measures the personal core values of people working within a sales organization. They told me that our personal core values tend to be very stable. Even if we try, they’re hard to change. Those are the best predictor of day-to-day behavior. Therefore the robust data points resulting from the survey serves as the basis of understanding and then leveraging an organization’s sales culture.
RoundPegg utilizes technology and psychology to help establish teamwork best practices. For example, Vitamin T utilized RoundPegg’s software to decipher company culture and identify how well individuals fit at multiple layers of culture – company, team and management. As a result of a culture analysis of the company and job candidates, newly hired employees who were considered to fit best with the organization, generated profit 15% faster than those who were a lesser match. Over a 16-month period, those same “best-fit” agents produced 35% more profit.
I had the opportunity to interview David Lyon, VP Sales & Customer Success at RoundPegg. If you’ve ever wondered about the real role of culture in a sales organization, this interview is for you:
Dave Stein: What is culture? Can you really measure it and why should anyone in sales care?
David Lyon: Culture is how work gets done. That includes how decisions are made, how people are expected to communicate, what gets rewarded, and what rewards are given.
Measurement is not as difficult as it seems. By identifying how everyone is hard wired to work (e.g. do they work alone or with others? Do they want more money or more opportunities?), you can understand what the culture is like within the sales department and within each team.
It all matters because people are wired differently. Without motivated workers, results will be dreadful. As a sales leader your job is to keep everyone pulling hard. To do that, you need to know what strings to pull. Having a strong culture allows you to scale your efforts to provide more people with what they want out of the job. In turn, they will be more motivated to contribute their best.
Strong, well-aligned sales teams generate significantly more revenue, have dramatically less turnover, and are more committed to the company.
DS: I certainly agree with that. Why are we so bad at hiring sales reps and sales leaders?
DL: Beyond the obvious of salespeople being very good at selling themselves comes the issue of how our sales candidates will function within our structure. Too often we are assessing a candidate’s ability to sell rather than their ability to get things done on behalf of their prospects.
Sales is a team sport, but we hire each position as though they play alone.
Hiring requires looking beyond the W2 and understanding how the candidate meshes with the environment. Those who are better fits can get answers quicker, learn the product suite quicker, and are more apt to apply organizational knowledge to overcome objections quicker.
DS: Break down all of the costs associated with a bad hire.
DL: There are many, but they fall into three buckets. At a minimum, a bad hire will cost you 75% of their annual compensation. For the more senior sales leaders, that number will rise to 3-4x annual compensation.
Soft costs
- [Includes: time you and your team spends dealing with HR to document the lack of performance, time to interview new candidates, etc.]
- Time is the most expensive resource you have. Continually working with the bad hire to ‘fix’ them provides a horrendous ROI. Not to mention the brain damage inflicted by documenting their performance in order to replace them.
- Conservatively, the soft costs of a bad hire will be 25% of the position’s annual compensation.
Hard costs
- [Includes: severance, cost to advertise job, relocation bonuses, signing bonuses, new training, etc.]
- These are easy enough to measure, and even if these are the only ones in which you believe, the costs are far higher than many realize – particularly for enterprise sales people.
- Rule of thumb is that hard costs account for at least 50% of a sales reps annual compensation.
Opportunity costs
- [Includes: lost sales and drops in productivity caused by decreased team morale, undesirable turnover, lost expertise, etc.]
- RoundPegg has done longitudinal studies over the course of a new hire’s first 18-months and found that those who fit the team produce 35% more gross profit (sales minus costs) and on-board 15% faster.
- Strong performers don’t want to carry the water for those who aren’t performing. When bad hires stick around it affects everyone around them. The loss of a strong performer is far more expensive than the cost of a new hire.
DS: What impact does all of this have on recruiting, hiring, training and keeping Millennials?
DL: In order to make great hires, retain your best talent, and coach your team, you first have to understand how your unit operates.
Everyone is wired a little differently. As a sales leader you must keep four things in mind:
- What does this individual want and need from the job?
- How is this individual different than our culture and how can I bridge those gaps?
- Are their others who are more like this individual that would be better to support their efforts?
- How do I better align our processes and systems to provide more people what they desire from the job?
A lot of ink has been spilled about Millenials, but the questions above hold just as true (if not more so) for them than for everyone else. When you understand the individual, you can understand the team.
RoundPegg
RoundPegg is culture management software. They provide easy to use web-based tools that allow companies to measure, manage and monitor their unique company culture. They help businesses to understand their actual working culture and equip them with the tools to ensure that everything that they do… hiring, managing, developing, and engaging their workforce is in alignment with that culture. Eighty-nine percent of an employee’s success is due to “fit” while the other 11% is based on their skills, experience, roles, and responsibilities. In today’s world of work culture is no longer a nice to have it’s a strategic imperative and nowhere is that more true than in sales. Recruiting, hiring, onboarding, training, motivating, maximizing performance and retaining your top talent is what we’re all about.
David Lyon
David has spent the last ten years as a start-up catalyst playing key roles on the sales, marketing and account management continuum with industry defining organizations. Whether ushering small businesses into the world of digital or establishing and growing relationships with some of the most recognizable logos around, he’s the conduit between decision makers and game changing technology.
