VP of sales: exalted or extinct, you tell us. With time spent in this top sales spot steadily shrinking for the last 10 years, estimates now put the average tenure of a sales VP somewhere between 24 and 32 months. So if you recently moved into a VP of sales office, don’t unpack your bags. Even more alarming than the length of time sales VPs are spending in this position, however, is the recent acceleration of the trend. Experts say that while tenure has been contracting for about a decade, the rate at which it is contracting has accelerated in the last two to three years.
“The situation has reached epidemic proportions,” warns Dave Stein, CEO of ES Research Group, an independent authority on sales-training programs and sales methodologies and tools. Stein says he’s seen tenure as low as 19 months – barely more than six quarters. “That’s three quarters trying to ramp up, two more of waiting until things get better, and one last quarter for executing the exit strategy,” he says.
It’s not just the sales department that’s dealing with a revolving door at the top. An ExecuNet study published in mid-2009 of more than 5,000 executives, search consultants, and HR professionals showed the average tenure of business executives in a single job declined 15 percent between 2005 and 2008 to 2.3 years. The figure nudged up to 2.6 years last year – and was 2.7 years for sales executives in particular – but ExecuNet president Mark Anderson cautions that the upward blip isn’t anything to get too excited about.
“The difference is only a month or two; it’s probably just noise rather than anything significant,” says Anderson. “What’s important is that it’s not four or five years, which is surprising to many people.” When ExecuNet, a private network for senior-level sales and other executives, first began in 1988, Anderson says the number was around the seven- or eight-year mark.
The HR Chally Group, a talent-management, leadership-development, and sales-improvement corporation, puts sales VP tenure at somewhere between 24 and 27 months, but CEO Howard Stevens says it’s tough to narrow it down much further than that. “Part of the vagueness is that you can be fired in two to three steps,” says Stevens. “You might first be given a different assignment or a different role before you’re fully let go. The lines of demarcation are fuzzy.”
What’s not fuzzy is the fact that tenure is shorter now than ever before, and it’s impacting everything from culture and morale to revenues.
A big part of the problem lies in the way many sales VPs are hired. In a May 2009 article in Harvard Business Review, “The Definitive Guide to Recruiting in Good Times and Bad,” authors Claudio Fernández-Aráoz, Boris Groysberg, and Nitin Nohria note that the problem of finding talented managers to replace Baby Boomer retirees is exacerbated by poor hiring tactics at the executive level. “Current hiring practices,” they write, “are haphazard at best and ineffective at worst.”
Their research focuses on recruiting at three levels: the C-levels, their direct reports, and those below the direct reports. Two of the most stunning findings were that only half of those recruited into these top three tiers were interviewed by anyone in the C-suite, and half were hired based on the hiring manager’s “gut feel” that the candidate “had what it took” to succeed in the job.
“Gut feel doesn’t work. One more time: Gut feel doesn’t work,” said Stein in a May 2009 blog post on this issue. To illustrate, Stein tells the story of a CEO looking to replace a VP of sales he had just fired. One of the CEO’s colleagues recommended “a terrific candidate” with whom he had worked “awhile back.” The CEO interviewed the candidate, liked him, and offered him the job.
The VP, lacking many of the essential skills necessary to succeed in his new position, made one error after another. He brought on two reps with whom he’d worked at a previous organization, unaware the reps weren’t well suited to the new company. Next, he adjusted existing sales territories to favor the new reps, which alienated two of the company’s star performers.
“Those two existing reps decided to leave to join other companies,” recalls Stein. “The VP quickly hired two more reps who were equally as unqualified as the two brought in earlier. Twenty-one months later, the VP was fired.”
The example is not unique; many sales experts tell similar horror stories. But even when a new VP implements positive change, two years is barely long enough for the results to begin showing. So even in cases in which VPs may be doing things right, impatient CEOs under intense pressure to turn things around in this challenging economy are hustling those VPs out the door to show they’re doing something to change results. It’s change for the sake of change – and it’s a recipe for disaster.
Tom Weisenbach, a veteran sales executive who has beaten the tenure odds, says he’s concerned by these trends. “If someone comes in new to a capacity, it probably takes six to twelve months just to get the lay of the land,” observes Weisenbach, who retired in late 2009 from xpedx, a division of International Paper.
In all, he spent 27 years in VP-level positions with that organization; his last three years were as executive vice president of marketing and sales. But even with almost a quarter century of experience with xpedx, it still took nearly two years to effect a major sales initiative in his last position. As executive VP of marketing and sales, Weisenbach drove a program that resegmented customers – and, subsequently, his sales force – based on how, rather than what, customers bought. In all, it took 18 to 24 months to carry out the entire project from conception to implementation. When Weisenbach retired nearly three years after conceiving the project, the positive impact of that work was just starting to flourish throughout the organization.
Do the math on tenure, then, and things just don’t add up. Even considering the low end of Weisenbach’s estimates, if it takes six months to grasp a culture and 18 months to implement changes, you’ve already reached 24 months, the low end of average tenure estimates. Which means the VP is out the door before the results of any major change initiative have time to blossom, which in turn means the initiative will likely fizzle and the cycle will start again with another VP.
As you might expect, a revolving door in the senior sales leader’s office is not good for business. When there’s high turnover in that position, the corporate culture isn’t sustained, the kinds of major change initiatives required to succeed today don’t gain traction, and there’s a feeling of transience and instability throughout the sales organization – all of which result in reduced revenues.
HR Chally Group’s Stevens says his company’s best-in-class research points to a direct correlation between turnover in the sales-management ranks and customer satisfaction. In a survey of 90,000 customers, the sales organizations receiving the highest rankings reported management turnover of only 10 to 15 percent, meaning the average sales leader stays with those organizations for about 10 years. When turnover reaches 50 percent – or when managers leave every two years – customer satisfaction drops significantly, says Stevens.
International Data Corporation (IDC) recently set out to quantify the revenue impact of chief sales officer tenure. In a benchmark survey completed this spring, IDC asked, for the first time in this regular survey, about the tenure of responding organizations’ global heads of sales. “I think it will be one of the indicators of who is doing well,” says Michael Gerard, VP of IDC’s Sales Advisory Practice. “I suspect there will be a correlation between tenure and company performance.” Results of the survey will released by early September 2010.
VPs Also to Blame
The blame for fast VP exits does not lie entirely with CEOs. Vice presidents of sales certainly bear some responsibility for this issue. The numbers speak volumes: According to IDC’s 2010 Sales Barometer study, half of all sales reps aren’t meeting quota, sales costs are outpacing revenue growth, the number of leads required to generate a sale has increased for two-thirds of sales organizations, and 72 percent of sales professionals say their sales cycles are longer than they were six months ago. In short, “there’s a lot of disconnect between buyers and the sales reps showing up at the door,” says IDC’s Gerard. And ultimately, responsibility for that disconnect sits with the head of sales.
Part of the problem is that selling is highly complex today, says Angela Bakker Lee, managing principal for ZS Associates’ sales effectiveness practice worldwide. Today’s sales professionals must be able to engage prospects in business-level discussions; collaborative and creative problem solvers and technology savvy; and able to interact effortlessly with clients on blogs, Twitter, Facebook, other online social networks, face-to-face, or by any other medium.
The new reality of the sales profession has been particularly challenging for sales veterans who came up through the ranks when face-to-face selling was king and product knowledge could get you the sale. And yet these senior folks hold many of today’s sales-leadership roles.
“The increased complexity of the sales job is one reason you’re seeing shorter tenures today,” says Lee, who believes that we may be in the midst of a changing of the guard – a weeding out of old-school sales VPs who aren’t effectively selling in today’s new environment. As more technology-savvy, business-savvy leaders move into the VP role, she anticipates tenure length will likely start climbing again.
“In the last three to four years, I’ve seen the biggest shift in the sales role in terms of how people buy, what customers expect, and how they interact with you in all my twenty-five years in sales,” agrees Mary Delaney, president of Personified, a CareerBuilder company. Yet while the runaway advances in technology have certainly made the job more complex, Delaney points out they’ve also made it easier for VPs to voluntarily change jobs, which they are doing with increased frequency.
In their 2009 Executive Retention Report, ExecuNet and retention firm Finnegan Mackenzie identified a “retention deficit disorder,” noting that more than half of senior organizational leaders are engaged in active job searches, and a whopping 94 percent of VPs said they would take a recruiter’s call.
“When you’ve had a particularly hard day commuting, you can get online and in five seconds find the thirty companies that are closer to home. The day you don’t get the pay increase you expected, you can get online and find out who’s paying more,” says Delaney.
In the end, while opinion as to the root causes of sales VP turnover varies, there’s one point on which everyone is in agreement: The shrinking tenure of this position must be reversed. If companies want to see a turnaround in their revenues, they need to stop the VP departures. When stability and the right people are at the top, performance will follow. •