Sales Longevity; the science behind predicting and preventing sales staff turnover.

Transcription

1 Sales Longevity; the science behind predicting and preventing sales staff turnover. We live in an era where employees no longer remain with a company for most of their lives. it is not unusual for a younger employee to work for several companies before they turn 30. today, turnover is inevitable and when you consider the unique dynamic of the odds of a salesperson succeeding, the risk of expensive turnover increases dramatically. Sales staff turnover and more specific the question how you can prevent too high staff turnover is increasingly getting more important. One of the key drivers is the economic upturn whereby loyalty of personnel is reducing and many experienced and successful sales people are either approached by headhunters or are voluntarily grasping the opportunity to look elsewhere. So what is it you can do to prevent your best performing sales to leave and your worst to stay? This is where the concept of longevity provides you the tools and metrics to predict and prevent (too) high retention rates. According OMG s Dave Kurlan 1 his research shows that in an ideal sales organization the retention rate should be between 5-10% per annum. At first glance the 10% ratio might seem high, but it s not: on the contrary. As in all top sports, creating winning teams is a huge challenge, however by the words of Koen Gonnissen 2 if you want to consecutively maintain the Nr 1 position you need to constantly work to improve your dream team; year after year. Same applies to Sales champions, in order to become or to keep your nr 1 position you have to make sure you create and maintain a competitive sales dream-team. Therefore, this relatively high retention rate means that sales organizations and management should constantly spend a significant of amount of their time recruiting for the best sales talent in the market (talent scouting). In addition, you should also consider that the majority of Sales Managers have a reactive approach towards recruitment. Only when a team-member has announced his resignation, HR is contacted 1 Dave Kurlan, 2016, OMG: Sales Longevity whitepaper 2 Koen Gonnissen 2014, Corporate Althlete: Ingredients of a dream team

2 and the search for replacement commences. On average this headcount driven constraint is the cause that the majority of sales organisations constantly have vacancies. Therefore, headcount restrictions limit sales management s agility regarding a more proactive recruitment policy. Research on the recruitment competences of sales management 3 tell us that Best in Class sales managers should at least spend 5% of their time on recruitment to keep track with retention rates of approx. 10%. Is your retention rate higher, the means that exponentially more time needs to be dedicated to recruitment of new sales winners? However here at Xsell we sometimes also come across sales organizations with substantially lower retention rates. This might sound like an ideal situation when your retention is below 5%, however this metric usually tells us that non-performers are retained in the organization year after year. That is the reason why our recommendation regarding sales staff retention is between5-10%. 1. Let us first have a look at our data regarding sales management competencies that significantly impact Longevity: Longevity; prevention-of-employee-turnover Data-analysis-and-findings-of-sales-management-competencies* 20%$of$sales$managers$have$need$for$approval$ 30%$of$sales$managers$accept$mediocrity,$and$tolerate$poor$ performance.$ 61%$of$sales$managers$aren t$inclined$to$upgrade$their$sales$force.$ 60%$of$sales$managers$managers$do$not$have$the$right$attributes$ of$accountability.$ *OMG$research$on$33.000$sales$manager$2005D2015 As presented in the slide above, our data tell us that there are several sales management related reasons that impact Longevity. Firstly, sales managers typically struggle since many of them have a belief that they need to be liked and struggle to hold their sales people accountable when the results lack behind or to remove non-performing team members 4. Secondly is the acceptance of mediocrity and tolerance of poor performance. Our research shows that especially when Commitment is high in combination with a lack of Desire 5, Sales Management struggle to raise the bar for themselves and their teams. An example of that is pictured below. 3 OMG research , Sales managers recruitment study Sales managers 4 See Sales Management DNA Need for approval 5 Sales Mindset; Crucial elements Desire & Commitment Managers Dashboards

3 Even more concerning though are our findings that 61% of sales managers aren t included to upgrade their sales force and 60% of them lack the right attributes to hold their people accountable. That is why one of the key advantages is that with the help of the metrics and analytics provided by the assessments, these key attributes from the sales management DNA ( Need for approval & accountability) are also measured and reported in the sales manager s assessment. I.e. something we can quite easily retrieve from the sales managers report as highlighted below: So now we understand the issues with sales management for a (lack of) involuntary turnover staff turnover, we can address this by for example coaching on the managerial limiting belief Need for approval or need to be liked or by holding sales management more accountable for their sales peoples results. In that case it never hurts to check the exact reasons and findings on the Accountability Competency of the sales manager. The example below shows a clear lack of Management on Behavior that might cause issues with accountability.

4 Once we understand the sales management issues that impact Longevity, you should now set your annual retention goal at 5-10%. In order to ensure that goal is reached every year, here is what you can do to manage your longevity more adequately: 1) Spend significantly more time on recruitment and enhance your recruitment competencies 2) Measure and improve the new sales person s ROI Although this might sound like to pretty hard to accomplish, let us show you how you can easily retrieve these metrics from our assessment tools and immediately start acting upon them. 1) During the sales management assessment, we analyse and report on Recruiting as a key Sales Management competency. (see the dashboard above: Recruiting) Behind this metric the following recruitment specific competences and sales managers score against that is listed: With that knowledge we now know what it takes to beef up recruitment as key attribute to lower retention rates and to improve the performance of your sales organization. 2) In addition, we have taken a closer look at the determining factors of the return on new sales people. I.e. what are the key recruitment factors that contribute and determine a high ROI on new sales people (NSROI) Longevity*predictive*analysis* 5*determining*factors*for*the*ROI*on*new*sales*people* 1. Figure)it)out)factor)) 2. Sales)Quotient)(overall)score)on)all)sales) competencies) 3. Sales)Management)Supervision)&) Coaching)(time)& attention) 4. Candidate)experience 5. Motivation)&)Compensation)(intrinsic)vs) extrinsic)&)variable)vs)fixed)) OMG s)assessments)measure)and) report)these)5)determining)factors *OMG)research)on) )sales)people)2005I2015

5 Our research shows us that there are 5 determining factors that contribute to NSROI. 4 of which are measured and reported by OMG s recruitment assessment: 1) FIOF, figure it out factor, i.e. how quickly the candidate is able to familiarize himself with new learnings. 2) Sales Quotient: The overall score on all 21 sales competencies whereby the ideal SQ is between ) Candidate experience (in years) 4) Motivation& Compensation: how well the candidate is motivated and compensated The one other determining factor (5) is provided by the sales managers assessment being supervision & coaching time or the amount of time the hiring manager spends on coaching and supervision. This should be around 50% of his time 6.. but it rarely is unfortunately. Predictive validity: Now we understand how to retrieve the key variables that impact the NSROI, what is it we can say regarding prediction and prevention of Longevity? For that we have used OMG s extensive data to analyze our recommendations from the recruitment assessments vs. actual performance of newly hired sales. As you can see here below, our latest findings from our research in on that are quite astonishing: 6 OMG research over sales managers shows that best performing sales managers dedicate on average 50% of their time on coaching their sales people.

6 Conclusion: With the data provided by the recruitment assessment and sales management assessment we can uncover the reasons for high or too low retention rates for staff turnover. And thus more importantly we are able to predict, prevent and provide you the insights and metrics that allow you to better manage the Longevity off your sales organization. Success with the development and improvement of your sales organization. Kind regards, Xsell Group BV drs.ing. Douglas Huissen, Amsterdam Dec 16, 2016.