Sales performance and the impact on being a strong sales manager
The Peter Principle is not new. Dr. Laurence J. Peter defined it in 1969 when he commented that if organisations simply promote the best performing people in their current jobs, then organisations are just promoting people until they’re no longer good at their jobs!
As Alan Benson, Danielle Li and Kelly Shue point out in their recent article in HBR, the Peter Principle means that “organisations manage careers so that everyone ‘rises to the level of their incompetence’.”
They highlight the very real problem that the Peter Principle creates when an organisation doesn’t have a competency framework in place – or simply ignores it. If a business doesn’t know what competencies are needed for different job levels, or the competencies held by individuals, then it’s open to moving ill-fitting people into new roles.
But do organisations really pass over who would be the best potential managers, for the best performers in a different role? Benson, Li and Shue carried out a study exploring this, exploring the performance data of salespeople and their managers at over 200 companies.
Their findings suggest that:
- Sales performance is correlated highly with promotion to management. Indeed, for every increase in sales rating, there was an approximately 15% higher probability of that person being promoted into a sales management role.
- Sales performance per se is negatively correlated with performance as a sales manager. The team report that when a salesperson is promoted, each higher sales rating is correlated with a 7.5% downturn in the performance of each of the manager’s team members following the promotion. And this is regardless of whether or not it is a new or known team for the sales manager.
This data showed that, for those who had been promoted, better salespeople make for worse sales managers. But the researchers then looked at the managerial potential of all salespeople and correlated this with sales performance.
They also report finding that companies have a tendency to underplay other indicators that make a salesperson a good manager. They found that salespeople who share sales credit with others, become effective sales managers.
What does this mean in practice?
This study is a good showcase of the importance of defining competencies for a role, and then measuring the competency level in those being considered for the role.
Benson, Li and Shue also suggest that offering multiple career paths takes away the focus on the managerial promotion as being the only measure of career success. Becoming an ‘expert’ or taking a more ‘technical’ path has been adopted by many companies for this reason.
Either way, at the root of this is understanding what the role needs for success and finding the best person for that.
Read more about how we work with organisations to identify the specific competencies their people need.
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