The Cost of a Failed Sales Manager? $4 Million…

The Cost of a Failed Sales Manager? $4 Million…:from The Sales Challenger™ by Stacey Smith
A member recently shared with me that they’ve estimated the average cost of a single failed sales manager to hover around $4 million, calculating all the direct and indirect costs of lost productivity, attrition or poor team engagement and lackluster customer experience, not to mention recruitment, salary and training costs. Simply put, bad sales managers are toxic.
So, how can we build better managers?
Well, what if we all started with better raw material in the first place — surely prevention is better than cure, right? Some of the best companies follow the principles of Train, Certify and (only then) Promote. Putting manager candidates through their paces BEFORE promotion is much less risky than trying to do so after the fact.
A few years ago, Kohler, the manufacturer of specialized plumbing fixtures, had to let managers go at a rate of 10-12%.  It turns out that succeeding as a manager in a more complex sales environment proved too high a “double jump” for its newly promoted reps.
In order to build the right bench of future manager talent — ultimately achieving some truly remarkable results — Kohler developed a “Top Gun” training program that rigorously identifies individual development needs of manager candidates and provides a customized training regimen that includes live training in the field, embedded in the candidate’s typical workflow, and peer support from other Top Gun candidates.
To reduce sales manager failure, Kohler instituted a rigorous three-stage process:
• Stage 1—Screen reps for management competencies; to receive consideration, a rep needs to be a solid performer but not necessarily a star
• Stage 2—Have candidates independently evaluated against the competencies and skills required by first-line sales managers
• Stage 3—Individually customize training to target each candidate’s specific skill development needs; then certify
Sales reps may only receive manager promotions after successfully completing the requirements outlined above and executing against objectives outlined in individual development plans.  To determine candidates’ effective completion of Top Gun, candidates’ supervisors use checklists outlining candidates’ specific objectives.  These checklists objectively track candidates’ completion of required courses, presentations to supervisors, virtual classroom sessions, and elective projects (e.g., successful completion of an account plan).
The program provides a number of benefits, not least of which is that it’s a highly transparent and fair way to filter out less qualified candidates. Top Gun’s penalty-free, opt-out clause ensures that candidates deemed unfit for management positions may exit the program and pursue non-management career paths.
Executives note that this practice serves as a continuation of Top Gun’s emphasis on matching individuals to positions that best utilize their skill sets. Personally, I believe this is such an undervalued positive benefit, so important in changing a sales culture with a “only way is up” mentality — Super Sellers have just as much prestige within the company as do managers.  In addition, executives note that the costs associated with removing sub-standard manager candidates outweigh the potential costs of candidates’ decisions to pursue alternative career paths outside the company.
As a result of this approach, Kohler’s manager involuntary turnover rate sees dramatic decrease — dropping from 10-12% to no more than 2%. Moreover, Kohler is able to see results from these pre-wired new managers faster, with ramp time decreasing 1.5x within the first 4 years.
One final point, I’d recommend that you start screening for future managers from within your current pool of Challenger reps. As shown in SEC’s data on manager effectiveness, you’ll need managers who can demonstrate (and coach to) the selling behaviors most likely to win!
I’m keen to hear what lessons your company has learned about manager screening…what else works?
SEC Members, see the full Kohler manager screening case for additional information on the screening process. And for more tips and resources on building effective managers, see our Developing Managers topic center or review the key findings from our recent study on the manager skills that best drive growth.