by Frank V. Cespedes and David Mattson DECEMBER 04, 2017
It’s common for leaders of sales teams to focus almost exclusively on short-term tactics and current operations while failing to think and act in a way that supports the longer-term needs of their businesses — and it’s hard to fault them. Sales teams must meet the immediate needs of their customers, respond issue by issue and account by account, and meet quarterly goals. As one sales manager noted, “In this job, if you don’t survive the short term, you don’t need to worry about the long term.”
The biggest problem with a short-term approach is that managers develop blind spots around crucial processes such as recruiting, hiring, and training and development.
These blind spots are especially prevalent in growing firms where a common rationalization —“I know those issues are important, and I’ll get to them when the quarter closes and things settle down” — often shapes management’s attention. But ignoring talent processes and strategies can have unintended consequences and stall one’s scaling efforts. There are ways to avoid these blind spots, however.
Splunk, a San Francisco-based B2B software firm, is a case in point. Founded in 2003 with $40 million in venture capital funding, Splunk was among the first companies to target the “big data” space. It had no track record to point to when targeting and interacting with top talent during its early years, and indeed no recognized industry to point to. This situation soon necessitated a creative approach to recruiting, hiring, and training. During the critical early years, moreover, there was a big internal debate at Splunk about allocating time and resources to these activities. Many felt that money and time were best devoted to other activities, ranging from R&D to trade shows.
Here are some insights on how Splunk avoided the blind spots as it scaled.
Any business process is only as good as the people involved. Recruiting — an uncertain and expensive process — is no exception, especially in sales where differences in individual performance are stark. The best salespeople generate orders-of-magnitude more than their average peers: from three to ten times more, depending upon the sales context. Talent matters.
“For recruitment…” says Bart Fanelli, Splunk’s Vice President of Global Field Success, “[w]e set our sights on talent from companies already operating at the level we want to operate at.” That’s a process which requires leadership time and resources, not just a speech about talent at an off-site. So if you’re a $50 million company and your goal is to grow to $250 million, consider targeting hires from firms operating at that level or higher. And to do that, you must make recruitment and hiring an ongoing part of the management culture, not only an HR responsibility.
Interviewing and Hiring
Managers are excessively confident about their ability to evaluate candidates based on personal interviews. Across job categories, there is almost no correlation between interview performance and on-the-job performance. In fact, some studies indicate that interviews can hurt in selection decisions: the firm would have been better off selecting at random! This danger is prevalent in sales. Choosing for an activity where talent varies widely often leads to a cloning bias: many sales managers hire in their own image and assume sole personal control of the interviews.
Better results occur when companies complement a manager’s assessment with multiple interviews with diverse people (to off-set the cloning bias), establish a structured process (so comparisons can be made across common factors), and emphasize behavioral criteria (because gut-feel does not scale). This approach is best supported by simulations, assessments, onboarding programs, and other means that technology is making less costly. But the real constraint remains management’s commitment to establishing, communicating, and keeping up-to-date a clear hiring process.
Splunk developed profiles that specified skills and capabilities relevant to each role. They also established certain behavioral elements, which, in management’s view, were important across roles. For a field sales position, for example, Splunk specified skills that managers could look for and discuss in the applicant’s work history during interviews—e.g., forecast accuracy, messages to relevant market segments, and other categories.
Behavioral elements refer to the on-the-job choices that people make. For instance, is the candidate coachable? Does he or she interact with others without giving a sense of being entitled to special treatment? Do they work hard without being offensive or disruptive in a negative way with others?
Fanelli notes, “We believe both types of screening criteria—skills are applicable to the specific job and culturally-compatible behaviors that we seek in all of our people—are equally important. We all own the culture and I don’t believe that any company can make a habit of hiring brilliant jerks.”
As Splunk grew, these profiles were updated, refined, and became the focus of quarterly reviews. After hiring, sales managers were accountable for coaching and developing their people based on the elements specified in the profile. “Our assumption,” Fannelli explains, “is that if we understand our business, if we get and keep the profiles right, and if we execute the process consistently, we will succeed. The quarterly reviews help to prevent the common scenario where down the road management is sweeping up broken glass due to performance or interpersonal behaviors.”
Processes like this create a healthy mindset. You’ll soon realize that there is only a finite universe of great people out there, and that, in order to land them, you’ll need to improve upon and fine-tune your approach to interviews and hiring. And, hopefully, you’ll learn that great recruitment practices create a multiplier effect: creating a network of good hires generates referrals to more good hires.
Training and Development
Blindness can be a degenerative organizational malady. Many companies, as Fanelli puts it, “reduce their field of vision by following a hire-and-forget approach.”
In a given year across industries, over a third of firms do not train salespeople at all, and common practice has training budgets increase when sales are good and decrease when sales are tough. This approach is not only (in a time-honored phrase) bass-ackwards; it also makes it hard to determine cause and effect. Effective sales training, like most useful development, cannot be a single event. People need reinforcement, periodic upgrading, advice on adapting their skills to new circumstances, and motivational help.
A key is to focus training and development on an analysis of current sales tasks and put in place a process that gives reps, their managers, and leadership timely feedback as they move forward on performance goals.
To scale, you must control what you can control. In Splunk’s case, as Fanelli notes, “we kept a certain leader-to-contributor ratio in mind to make sure the first-line sales leader can train contributors on the desired skills. We track this quarterly, looking at training and coaching with the same attention that we use to review ‘the numbers’ because the effectiveness of our first-line leaders is the gateway to the performance we want to see in sales outcomes.”
Any sales force is composed of people with different temperaments, capabilities, and learning styles. To be effective, coaching and development must adapt to the individual and be updated. A regular review cadence in the sales organization drives the process up the chain and makes it an ongoing developmental tool. “The first-line review process,” says Fanelli, “connects quarterly to every manager in the field. The second-line review (a review of those who manage and review the first-line managers) focuses on a broader set of skills, happens annually, and goes into more depth than the quarterly process.”
Splunk uses a variety of good practices that have helped it avoid common blind spots in sales as it’s grown. But our intent is not to suggest that all companies should do what Splunk does. Markets are different, strategies vary, and so specific practices will and should vary. The lesson is that, once you get beyond lip-service about talent, any company must be worthy of talent by making core processes like recruiting, interviewing, and development a real priority in daily practice. As Aristotle emphasized a long time ago, “Excellence is a habit.”