A reader writes, "I'm considering promoting my current sales manager to VP of sales. In the past, you've written newsletters about the risks of promoting a top salesperson to sales manager. Are there risks in offering the VP job to a top performing sales manager? If so, what are they?"
Kudos to you for giving this potential promotion serious thought. So many times business leaders neglect to think it through.
The two jobs differ. Just like transitioning from salesperson to sales manager alters what an individual does on a daily basis, the promotion requires the new VP to leave some aspects of their old job behind. They assume many new responsibilities.
To get his perspective, I spoke to Stan Davis of Standish Executive Search, who has placed many senior executives over his 11 years in the executive search business, and who previously served as a corporate resources executive and in-house organizational development leader for over 30 years.
Function versus Leadership
"A sales manager has direct supervisory responsibilities - problem solving, running meetings, disciplinary issues," Stan says. "But a VP of Sales takes part in the leadership of the company - influencing people, enacting change, developing and deploying talent."
Sales managers manage to the sales plan by accompanying reps on calls, tracking the rep's progress and holding them accountable for achieving quota.
Stan adds, "Vice Presidents of Sales no longer plan just for themselves and the sales team. The sales plan is a component of the company plan. They participate in planning for the whole organization now, and monitor the progress of sales through the sales managers."
Sales VP's, along with others on the executive team, work 12 - 18 months into the future on company-wide initiatives. They don't sell the product directly to customers anymore. When considering someone for a VP role, Stan asks himself, "Can they build relationships with others to make sure the product works for the company financially, technically, and operationally?"
Salespeople typically receive a base salary and commission or bonus based on their individual performance. Sales managers most often get paid with base salary and commission or bonus commensurate with their group's performance. Sales VPs usually get compensated on overall company performance.
Who Does Each Role Serve?
Sales reps call on customers. Sales managers serve the salespeople. Stan says, "Vice Presidents of Sales align themselves more directly with the shareholders, concerning themselves with earnings."
Think Before You Begin
Many companies have a VP of Sales by title but not by actions. Sometimes this occurs because they think they should have one. On occasion companies fear looking small or unsophisticated if they lack someone carrying that title on their website. What does your organization really need?
||VP of Sales
|Develop and implement company's sales plan
|Responsible for quota attainment for a region or segment
||Responsible for revenue production for the company
|Hire and train new salespeople
||Deploy sales force and sales managers as needed to achieve company plan
|Check and manage daily / weekly sales activity and results by each rep
||Monitor regional or segment activity and results by teams or sales units
|Monitor CRM reporting / accuracy in support of VP and others
||C- and Board- level reporting on revenue production
|Coach / motivate reps
||Coach managers / motivate managers and reps
|Strategize with reps
||Strategize on key accounts with managers and reps
|Reassign / outplace underperforming reps
||Reassign / outplace underperforming managers
|Visit customers frequently
||Visit customers occasionally
Hiring from within has its benefits. The candidate knows the company culture, customers, products and services. Other employees see promotions as real possibilities. Take the time needed to ensure you make the right decision for the employee and the company.
This article outlines the process a leader goes through when thinking about promoting a candidate from within. Next month I will write the questions leaders should ask before hiring for this position.