My last The Friedman File, “Full-Time Sales Professionals: Caveat Emptor,” generated lots of response from readers. In fact, it had the highest number of opens in the four-year history of this newsletter. Mission accomplished: I struck a nerve!
Many readers shared their own firm’s struggles with holding seller-doers accountable for selling (many would rather just keep “doing”) and the complexity of measuring the efficacy and value of full-time business developers given today’s complicated, inter-connected sales process.
And so I bring the second in this two-part series. This issue tackles some of the most important questions your firm should ask and attempt to answer regarding hiring and compensating full-time business developers, with helpful insights from some CEOs and BD professionals who’ve been successful.
What should you look for — and avoid — in the hiring process?
Identifying and hiring key sales talent is a real challenge for most firms. Most firms have made mistakes along the way — the key, of course, is to avoid repeating these mistakes. “Historically, we’ve been lukewarm towards hiring sales people and have had a number of false starts,” says Gary Bowman, CEO of 400-person civil engineering and land development firm Bowman Consulting. He admits to making some poor hires — often individuals who are “washed up” in their career and making a final attempt to resurrect it. “They wave a Rolodex around and talk about their wonderful contacts, and you can get sucked into paying someone to be exposed to their Rolodex.” Bowman references these charlatans as “big hat, no cattle.”
Larry Smith, CEO of 500-person geotechnical, environmental, and sustainability consulting firm Haley & Aldrich, agrees: “The only sales professionals I want to hire are those who have deep relationships and have generated meaningful sales over time. I’m not swayed by the ‘million contacts’ pitch.”
Jon Pettit, managing principal of 550-person A/E firm DLR Group, emphasizes that you should fully enjoy conversations with candidates across the table (and they should feel the same level of comfort) since this is how you’d want a prospective client to feel when meeting with them. “You can get a sense of that in an interview. It’s a delicate balance — they shouldn’t be overly aggressive, but you also shouldn’t have to work hard to draw information out of them.” The research they’ve done on your firm and the questions they ask are crucial, because that’s what you’ll be asking them to do of your clients and prospects,” he adds.
Is a technical background necessary?
Like many factors, this can depend on your firm and your markets. “That would be wonderful, but those people rarely exist,” says Pettit. “A person with these types of skills and a technical background is a potentially great project leader, and we can’t find enough of them, either.”
“My preference is to hire sales people who have a strong background in what we do,” says Bowman. They may not be a degreed engineer, surveyor, or planner, but it would be nice if they’ve spent time in a construction environment,” he says. “That said, we’d do ourselves a disservice by saying that they must have a technical background — that’s akin to requiring that our CFO come from a professional services background.”
Scott McFadden, chief development officer at 325-person engineering and consulting firm Birdsall Services Group, adds, “I’m not a technical person, yet I do a lot of BD with public and private clients. For prospective clients, it’s more important that you have the sales skills and the right personality than the technical knowledge. But for mining existing clients, it’s more important to have the technical background.”
How should sales people be compensated?
As anyone who’s tried doing it knows, assigning sales credit is tricky business — particularly given that many folks are often involved in the process beginning with lead identification and ending with a win. In addition, the process itself is often iterative and circuitous, so it can be difficult to correlate a specific action with the ultimate winning of a project. And how should divvying up credit for follow-on work be handled? Should some of the revenue be credited to the sales person who generated the lead even though the project team is responsible for pleasing the client?
Among those interviewed for this article and others I’ve spoken with, there’s a strong consensus that sales professionals should not receive commissions on sales. Instead, they should receive a base salary and have access to the same bonus pool as other employees, typically based on some combination of company and individual performance with respect to goals in place.
“Earlier in my career, I was in a firm that gave business developers a commission for work that was brought in,” says Cindy Radecki, director of business development for 120-person architecture, planning, and interiors firm Lord Aeck & Sargent. “This created enormous animosity between the business developers and the technical staff because staff didn’t get bonuses when they did the work.” “Sales professionals (like other staff) should earn a salary and be eligible for a bonus based only on performance using a balanced scorecard approach,” says Jim Johnston, President of Birdsall Services Group’s Environmental Division.
At DLR Group, a sales person’s bonus potential is based on the success of their client sector, not their sales. “Any salesman can win work by offering cheap fees and choosing the wrong clients,” explains Pettit. That’s not the behavior we’re trying to reinforce. We tie their bonus back to the profitability of the sector because they do control the type of projects and clients we go after.”
While most firms shy away from commissions, most do advocate creating sales goals. Based on my research, these goals typically range from 10-20 times one’s salary. “A sales person ought to bring in at least $2 million of work each year (and should have their fingerprints on at least $10 million in a year), says Haley & Aldrich’s Smith. Johnston cautions, however, that smart people “can figure out how to beat the numbers every day and Sunday.”
Most important, as they say in the investment community, “your results may vary.” Actual sales figures vary widely depending on client sector, typical size of projects, and the ability to transport relationships from one firm to another, to name just a few factors. While there are no one-size-fits-all metrics that apply equally well to all firms, we all know the truism “that which doesn’t get measured doesn’t happen.” What are your thought on this topic? Call or e-mail me at 508-276-1101 or rich@friedmanpartners.com.
