Scalability is high on the agenda for many CEOs (chief executive officers), and rightly so. From a sales and revenue perspective, the premise is a simple one: Scale the sales force and scale the revenue (with a bit of luck, the profitability too).
Of course scaling the business is not isolated to just the sales force. All other core and supporting functions typically get the same treatment.
However, with scale come potential problems.
Let’s look at the revenue generation engine of the organisation, the sales department, and explore some common scenarios that can play out.
Clearly this is not an exhaustive list but here are three situations to avoid:
1. Scaling without sales capability
Often, the decision to scale is driven by decent revenue being generated from an existing or small sales force. The numbers are strong, the profit is solid and therefore, increasing the headcount should result in the requisite growth factor.
The issue is that capability doesn’t scale at a proportional rate with headcount. It lags. Increasing headcount is not a particularly difficult or lengthy task, but finding and developing capable talent can be.
While the capability lags, so does the revenue. But where pain is really felt, is the impact on profits as the business is carrying the costs without the returns.
2. Scaling without leadership capability
This is a big one. Finding capable sales talent is one thing, finding effective sales leadership is another thing altogether.
Often, salespeople are moved into management positions prematurely, purely as the management requirement increases.
Sales leadership during times of scale reaches far beyond just process and day-to-day management. Given the sales capability gaps, sales leaders must be able to:
- increase sales capability rapidly
- compensate for weakness or decline in revenue during the lag time.
3. The management focus dilutes/shifts
Managers are often either great at managing or great at selling, but rarely able to effectively do both. It is not that they can’t sell; it’s just that it’s difficult to be able to achieve both concurrently.
Strong “selling” managers often manage their people poorly – and during a scaling process this is a train wreck waiting to happen.
Strong “people” managers normally miss their numbers – and at a time where revenue compensation is needed (because of poor sales capability) this isn’t ideal either.
There is another issue; salespeople failing to deliver don’t stay in businesses for long. As a result, sales staff turnover increases placing a higher recruitment demand on the managers.
Now the already “ineffective” management team is buried in relentless recruitment, when they actually need to be equipping and selling. The team’s focus has shifted.
This all sounds rather glum. But of course it doesn’t need to be.
Effective CEOs and senior leaders have the ability to ‘see around corners’ – the perspective to spot the train wrecks before they occur and action the right intervention to avoid the crash. Perhaps these three issues are worth putting on the CEO’s radar.
We all love to scale, but scaling while eroding profit is really not a good look.