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The Cost of Failed Sales Managers: $4 Million

By Rich Wellins, Ph.D.

Richard S. Wellins, Ph.D.

A member of the Sales Leadership Roundtable recently calculated costs of a failed sales manager to hover around four million dollars. While this number may vary from organization to organization, it is not hard to believe. The salary, benefits, recruiting costs, and time for a new person to ramp up are only a fraction of the costs. What is potentially lost is the engagement and performance of the sales teams that reported to poor leaders.

The Cost of Failed Sales Managers: $4 MillionWe continue to make the age-old mistake of confusing what it takes to perform as a sales person versus a sales leader. The majority of high performing sales people do not make good leadership material. In fact, you could argue that the motivation to be the best salesperson is even the direct opposite of what good sales leadership is about. It is not a small problem. Our own Global Leadership Forecast says the failure rate of sales leaders is 30%. Fixing the problem is neither complex nor costly. Reducing sales leadership turnover is a 3-step process.

  • Step 1:
    Determine the success profile for sales leaders in your organization. Be sure to look at an “entire” profile: required skills, experiences, knowledge and, especially, motivation.
  • Step 2:
    Use a validated sales assessment process, coupled with solid behavior-based interviews. There are multiple assessment options on the market ranging from 60-minute tests to more comprehensive assessments. We lean more towards a more comprehensive process for the simple reason that most sales people have not had an opportunity to demonstrate actual leadership skills. For example, a sales coaching simulation would be well worthwhile. Make sure whatever process you use is validated in your own companies.
  • Step 3:
    Use the assessment data as the basis of a developmental plan and on-boarding. Don’t leave first-time, first-line sales people hanging without giving them the time and tools to develop basic leadership skills. The investment versus the cost is a no-brainer. A solid sales assessment can range from $150 to $1,200. Not bad, against a potential four million dollar loss.

Rich Wellins, Ph.D. is senior vice president at DDI.

With over 5 million sales representatives worldwide, leading beauty company, Avon, takes hiring sales leaders seriously. Find out how Avon hires better sales leaders and saves money in the process.

Posted: 15 Aug, 2013,

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