Creating a Successful Sales Culture
A sales force is built on the capabilities of its managers. Front-line supervisors play a key role in influencing the performance of the salespeople they manage and motivate. In fact, these managers are more important in driving sales results than anyone else in the company.
But what about the CEO, or the vice president of sales? Don't they drive sales performance? Not necessarily, according to The Gallup Organization's research. Our studies suggest that 80 percent of a sales representative's perception of company leaders was influenced by that salesperson's relationship with his or her direct supervisor. No matter how good the CEO was, or the vice president of sales was, the sales reps' view of these individuals was strongly colored by their opinion of their direct supervisor.
We saw this very situation play out at a recent sales meeting at a client organization. We were impressed by the talk the new CEO gave to the company sales force. In his address, the CEO candidly spelled out the problems facing the company, but also unequivocally committed the resources necessary to fix those problems. He described the kind of company they were working to build and what the future could and should be for the employees, the company, and their customers. It was an inspiring talk.
Afterwards, we went up to one of the sales representatives and asked his opinion of the speech. "It was wonderful," he told us. "I would really like to work for that company." We were surprised by his answer, since his nametag clearly indicated he was an employee of the company. "Don't you already?" we asked, puzzled by his response. "No," he told us, pointing to an individual across the room, "I work for that S.O.B. over there!"
This brief exchange helped us understand what Gallup's data so dramatically demonstrates: We may join a company, but we work for a manager. Gallup has found that when top producers leave companies, 70 percent of the time it is because of a breakdown in their relationship with their direct supervisor. And conversely, when we find sales stars, we almost always find a great manager in the shadows.
A CEO's speech, no matter how motivating, does not create a company culture. Contests, glamour trips, and commission plans do not create cultures. Front-line managers create cultures within their individual sales teams. This realization became crystal clear as we began to study cultures within organizations.
What is culture, exactly?
Let's define "culture." At Gallup, our researchers define it as the attitudes that employees have about the environment in which they work. We calibrate or measure the strength of that culture based on employee responses to 12 question items, such as "I know what is expected of me at work," "There is someone at work who encourages my development," and "At work, my opinions seem to count." These items, in turn, link to significant business outcomes, such as productivity, retention, profitability, and customer loyalty.
When employees -- in this case, sales representatives -- feel positive about their work environment as measured by their responses to those 12 key issues, we describe those employees as "engaged." As a group, engaged sales representatives sell significantly more than their less engaged counterparts. They are more likely to stay with the company and they are better at generating customer loyalty.
Sales representatives who are not engaged generate transactions, but they may not generate much customer loyalty in the process. As a group, they are considerably less productive than engaged sales reps. Actively disengaged sales representatives -- reps who are fundamentally disconnected from their work -- are not only at the low end of the productivity index, they actually erode customer loyalty.
We can measure the strength of the cultures in different sales teams by comparing the percentages of engaged, not engaged, and actively disengaged employees within that workgroup. We can also compare these results against our extensive database of responses collected from hundreds of thousands of workgroups across a broad spectrum of industries.
When we compared the cultures of individual sales units within organizations, we found wide variances. The chart below illustrates this point. The bar at the far left represents the overall engagement levels for the entire sales force. The remaining bars represent seven sales districts; each district includes 10 to 12 representatives that report to a district sales manager.
Measuring engagement levels: This chart compares the overall engagement levels for one organization with the engagement levels for seven of its sales units.
This sales force, as a whole, is one that can substantially improve. Only 19% of the sales force members are engaged in their work, and 30% are actively disengaged. These engagement levels are somewhat below average (26% engaged and 19% actively disengaged), and they are well below what we would see in a world-class sales organization (about 42% engaged and less than 10% actively disengaged).
But note the wide variance in engagement levels between the sales units. Clearly, the culture in Sales Unit E is completely different from the culture in Sales Unit C, but both workgroups are part of the same company. Each sales unit faces approximately the same competitors, the same market conditions, and the same opportunities.
What is driving the difference in workgroup culture within those sales units? After reviewing hundreds of similar charts, Gallup came to this conclusion: The difference is the manager. The manager sets the culture for his or her sales team, and the strength or weakness of that culture directly links to engagement levels -- and to business outcomes.
Good intentions, bad results
No manager gets up every day and goes to work determined to create the worst possible culture for his employees. But some managers unfailingly achieve this result -- for two reasons. First, some companies just put the wrong people in management roles. In too many organizations, star salespeople can only improve their income, status, or value to the company by moving into management. This frequently encourages the wrong people to seek supervisory roles.
Second, individuals with the talent to be good sales managers can create bad results if they lack management training and awareness. This year alone, we talked to nearly 1,000 sales managers who began their career in sales. We asked them to describe the amount of training they received as new sales representatives. In general, their training lasted a few weeks to several months and was relatively thorough. Yet when we asked the same group of managers to describe the training they received when they moved into their first sales management role, the typical answer was "none."
As a result, many sales managers have little understanding of what they must do to ensure a positive environment for their sales reps -- a culture that contributes to the improved performance of their most productive employees.
How can companies find the right people to be sales managers -- the individuals who have good intentions and can produce outstanding results? First, companies can stop moving the wrong people into sales management roles. Companies need to pay more attention to selecting the right candidate for every sales management position. Sometimes this involves building a talent pool, by recruiting people with the talent to become outstanding sales managers into the sales force. Companies can also provide ample rewards and recognition to their sales stars, which might temper their desire to seek a management role simply for its perceived prestige.
We have also seen considerable improvement in workgroup engagement scores when managers are trained to focus on the 12 key issues that link to employee engagement and to business outcomes. Routinely measuring engagement scores also helps managers focus on these crucial areas.
Interestingly, but perhaps not surprisingly, managers who attain the highest initial engagement scores later show the biggest improvement in engagement scores. In the chart above, for example, we would typically see the biggest improvement in engagement scores from the managers of sales units B, E, and G. These managers already have the best engagement levels in the company. Any improvement in the level of engagement among their employees will tend to drive up the business outcomes for the whole organization.
In contrast, although the manager of Sales Unit G seems to have the most room for improvement, our experience shows that he is the manager who is least likely to show any substantial changes in his workgroup's engagement levels, even after training. He may well be a candidate for replacement.
The bottom line is clear: Front-line managers are instrumental in creating the right workgroup culture. Selecting and training front-line sales supervisors is one of the best and surest ways to improve the quality of your sales organization.
Benson Smith is a consultant, speaker and author for The Gallup Organization and an expert in the area of sales force effectiveness. Smith consults with sales executives on ways to improve the performance of their organization and increase the productivity and retention of their sales force. He joined Gallup after a 25-year career with a Fortune 500 corporation specializing in medical devices, where he served as President and Chief Operating Officer. You can reach Smith at Benson_Smith@Gallup.com.
Tony Rutigliano is a Senior Managing Consultant, speaker and author for The Gallup Organization. He is an expert in the areas of sales force effectiveness, organizational effectiveness, and talent assessment. Before joining Gallup, Rutigliano was Publisher and Editor in Chief of Sales & Marketing Management magazine and an executive at the American Management Association. You can reach Rutigliano at Tony_Rutigliano@Gallup.com. Visit The Gallup Management Journal at www.gallupjournal.com.