Most business leaders agree hiring the wrong VP of Sales can damage a company’s revenue, cash flow, market share, culture and employee morale. An organization can often recover from hiring a wrong executive in another role, but the mis-hire of a VP of Sales has the potential to severely damage the company.
I’m often asked by CEOs and board members of technology companies, “Why have we previously failed at hiring a good VP of Sales and how can we avoid making another expensive mis-hire?”
I usually reply to these questions by discussing the following two sensitive points:
- Companies frequently hire the wrong VP of Sales, because the CEO does not have a sales background. Often, the CEO has an engineering or finance background which is highly valuable in building a great company, but usually not helpful for recognizing great sales leadership. I often see CEOs without sales backgrounds hiring the classic “gregarious” sales leader. Although an outgoing personality is helpful, an effective sales leader also needs the ability to intuitively analyze sales opportunities, create strategies, accurately forecast, implement scalable processes, close deals, hire and train sales reps, etc. These attributes are necessary for a VP of Sales to consistently achieve monthly sales targets.
- A second reason why a technology company may hire the wrong sales leader is because they shortcut the steps to hiring a top VP of Sales. Haven’t we heard of the CEO who is referred a potential VP of Sales candidate from a colleague, has a call and dinner meeting with this candidate, instructs HR to check references, and then hires this individual? This shortcut approach sometimes has a happy ending.However, it more often leads to an expensive “mis-hire” of a VP of Sales whose tenure is comprised of missed forecasts, the hiring of ineffective sales people, wasted salaries and most painfully, the lost opportunity to build a high-quality sales funnel and sales team. Dr. Bradford Smart Ph.D, who wrote the hit management book “TopGrading”, estimates the financial loss associated with a mis-hire of a VP level executive is “approximately 15 x base salary”. For a VP of Sales, this financial loss can even be costlier because the opportunity to capture market share during an expanding economy is both cyclical and fleeting.
How to Successfully hire an A-Player for your next VP of Sales
If the CEO does not have a sales background, first choose a board member or an executive search consultant with a sales background to help lead the executive search process. Then follow these 10 steps to maximize your chance of hiring an A-Player for your next VP of Sales while minimizing the chance of making a mis-hire:
- Document the mission, responsibilities, required background for this VP of Sales role
- Make sure the CEO, executive team and Board are in agreement on this document
- Define the profile of employees which best thrive in your company’s culture
- “A company’s culture is like a living organism that will reject a foreign body”
- Define 5-10 specific reasons why an A-Player would be better off joining your executive team
- Attracting A-Players is like pursuing trophy fish as it requires “effective lures”
- Contact at least 50-100 potential candidates for this VP of Sales role
- A-Players are like snow leopards – “rare and difficult to find”
- Have candidates complete a questionnaire which requires them to explain how their background aligns to this sales leadership role
- These written answers will provide you a much deeper layer of information
- Have promising candidates complete a “sales-oriented” behavioral profile test
- This testing will provide deep insight into this sales leader’s drive, management style, teamwork, motivations, etc.
- Have the leading candidate develop a “Draft Sales Plan” which outlines how they would achieve the sales targets during their first-year leading sales at your company
- Explain their draft plan will help reveal whether they have the sales leadership experience and vision to succeed in this VP of Sales role
- Conduct “Formal” Reference Calls. Many companies see reference calls as a clerical step rather than a unique opportunity to discover valuable information from someone who has managed this sales leader
- A great opportunity to avoid a costly mis-hire
- Conduct “Informal” Reference Checks. Have your executive team look within their LinkedIn, Facebook and Alumni networks to see if they have any common connections with this candidate who you could approach for unbiased reference information
- Just avoid contacting anyone working at the candidate’s “current” employer
- Process a Background Check
- At senior levels background checks rarely unearth problems; however, occasionally candidates intentionally misrepresent their college degrees or employment history
Following these proven 10 steps can greatly minimize the chance of making a costly mis-hire by helping you find a great VP of Sales who can effectively build effective sales teams and scale revenues. As the renowned management guru Peter Druker said – “The toughest decisions in organizations are people decisions—hiring, firing, and promoting people. These are the decisions that receive the least attention and are the ones that are the hardest to “unmake.”
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