Are Your Superstar Sellers Disguising Bad Management?
Entrepreneur's New Year’s Guide
Pop quiz: You’ve got two sales managers, each with 10 reps on their team. Manager 1 achieves 100 percent of his goal every quarter while Manager 2 achieves just 75 percent. Which is the better manager?
The obvious answer is Manager 1, right? And because it seems so obvious, most companies will end the inquiry there. If a manager consistently makes his or her numbers, few leaders will take the time to dig any deeper. But our research suggests that companies need to do exactly that. To truly understand manager performance, you need to look behind the revenue curtain at individual rep performance.
This insight came to light as we were analyzing data from our ongoing Sales Management Practices Study -- an extensive examination of more than 500 business-to-business sales managers. As an exercise, we ranked the managers by percentage of their team’s revenue target achieved during the previous year, then grouped them into the top 25 percent, middle 50 percent and bottom 25 percent of performers.
On average, the group of top performers achieved 115 percent of their targets, the middle half reached 99 percent and the bottom group of managers achieved only 76 percent of their goals. The middle and bottom groups, in other words, were essentially Manager 1 and Manager 2 from the quiz above. Still looks like Manager 1 is the better manager, right? Not so fast.
We then turned our attention to a different measure of sales manager performance -- the percentage of their reps that achieved individual quotas. The results were shocking: the performance of the bottom and middle groups of managers was roughly equal. In the bottom quartile, 47 percent of the managers’ reps made quota versus 48 percent for the middle half of managers. Only one percentage point -- a statistical tie -- separated the effectiveness of average and low-performing managers. And both fall far short of the top quartile of managers, where 65 percent of reps were achieving their individual goals.
There are a couple of important revelations in this data. The first is that many mediocre managers are being propped up by a few superstar reps. Just do the math: if Manager 1’s team is making 99 percent of target and Manager 2’s team is making 74 percent of target but both teams have roughly the same percentage of reps making quota, this means Manager 1 has a few star performers who are hitting their numbers out of the park, boosting the team’s overall performance and creating the appearance of being well led. But it’s a mirage. Both Manager 1 and Manager 2 are equally ineffective at helping their individual salespeople succeed.
The second idea here is that sales managers should be measured not just by whether they achieve their overall team goals, but also on the percentage of their direct reports who achieve their goals. We think a sales manager’s job is to elevate the performance of each and every team member by coaching and developing sales capability. If half of a manager’s team consistently fails to hit their numbers, then that manager is consistently failing to do his or her job. If one or two rock stars on the team keep dragging a manager across the finish line, that’s great for the company -- but not for the other team members left behind.
Interestingly, we’ve begun to notice more and more of our clients measuring their managers on the percentage of reps who make their quotas and it’s providing great visibility into which managers are truly great and which are only so-so. This "no rep left behind" approach to performance measurement has many advantages over the more blunt measure of overall team performance, but the most important advantage is this: It puts a sharp focus on the critical management task of coaching and developing individual rep capability.
If you want your organization to perform at or below target, our research suggests you can get by with only half of your reps achieving quota. But if you want to blow away your organization’s revenue targets, you have to bring more reps along with you. Or stated more accurately, your frontline managers have to bring more reps along with them. It’s probably worth taking a look to see if a few rock star salespeople are disguising mediocre management in your own organization. If so, it’s time to shine the spotlight on the capabilities of their managers.