Assuming for a while that the value of the human resources (HR) function is clear in every other context, let us delve into the value HR brings to the sales function, specifically. The value HR brings in is assessed in many areas but in this article, we analyse it from three angles – compensation and benefits, performance management and capability building. To do that for the sales function, first, let us examine some of factors that make this team what it is. Being one of the few client-facing teams, market-driven pressures are often felt first and felt harder; the one key measure of revenue often overshadows other performance measures; high energy levels and high levels of physical strain are almost mandatory requirements.
It is no secret that in most organisations, sales staff march to the beat of a different drummer – even in the rare organisation where this is not true, the perception that exists is strong enough to warrant attention. This throws up a number of HR related challenges. Basically, for sales, performance measurement translates into revenue numbers and metrics derived from these numbers. This skewed emphasis on numbers makes it difficult for both assessment and development, for both the organisation and the individual.
HR’s most significant impact comes in ensuring that key result areas (KRAs) for sales roles are multi-dimensional and consider factors beyond just revenue numbers. This often means assigning weights to various responsibilities specific to the sales function and this could also mean tying performance assessment outcomes to initiatives more directly – for example, where an employee may not have achieved his targets on the revenue front, on-site training for other functions to increase familiarity with the customer – in the context of selling – may be in order. Thus, the linkage needs to be clear and specific if results are to be seen – just increasing number of training days is pointless. HR’s role in this does not end with designing the KRA process and linking ratings. A far more subtle and ongoing role in ensuring that every stakeholder participating in the process is attuned with the philosophy of holistic performance becomes crucial.
The structure of compensation for sales staff and the allocation of special benefits need to be defined clearly. Increasing the proportion of the variable component in ones pay is common practice now. A recent Watson Wyatt survey shows almost 50 per cent of the companies surveyed offer stock-based compensation to their sales force. Also, as the markets are very dynamic and easily influenced by global changes, sales force agility is enabled through incentive and performance reward programmes that are relevant to the marketplace, and are monitored frequently. This means that incentive programmes for sales staff need to be linked to the customer than the organisation. This change in focus needs HR to design programmes that are consistent in philosophy and mechanics, while fluid in customisation to specific market dynamics. Also, the same survey revealed that most sales compensation plans were managed globally with geographic or market specific customisation. This type of customisation requires HR to be on top of market forces themselves to be able to design or customise programmes to match the market.
Using only revenue as a measure to assess and reward sales performance is history. Today, there are many quantitative and qualitative measures in place. Even the qualitative measures are often linked to related quantitative measures. This means the evaluation processes now recognise the role of non-numeric factors in managing performance and capability. A significant statistic is that more than half the companies plan to pay greater attention to goal setting, coaching, development, morale and motivation – all of which are directly within HR’s ambit. So, HR’s role, when we arrive at it from a business perspective is to prepare processes for change and make processes more agile and more flexible. This, when done through all HR processes prepares the organisation for change and keeps the sales forces more responsive. This also means that these processes are more responsive to employee needs.
Considering a holistic sales force management approach also works to enable multiple career options for sales force members. The more traditional systems which focus on revenue related metrics only limit growth options for members and one of HR’s most commendable achievements in the recent past has been to expand measures for sales force success to include metrics which prepare members for growth beyond the sales force and maybe, even outside the sales function.
At small and mid-size firms, HR should keep in mind the following aspects of the sales function to manage its sales function better:
- Give equal focus to building a brand: This often means a disproportionate time is spent on customer problem solving.
- Build capability: because of a smaller organisation, the impact made by the individual representing the firm at a customer interaction is high. The capability of the sales person should go beyond just knowledge about the product or service he is selling.
- Invest in Knowledge: Market, competitor, client and product knowledge are crucial to win in sales.
- Target revenue and sales: Let us not forget the basics while building castles.
- Reward effort as much as results.