In the fifth and final installment of Sales Force Focus, Marie looks at perhaps the most vital aspect of sales recruitment & training - hanging on to your talent!
The importance of retaining top talent is more acute than ever today. One issue is the sheer cost of staff turnover and routinely replacing lost talent; another is a severe shortage of the right kind of talent making top people hard to replace; a third is the lost opportunity cost due to the disruption caused by talent turnover, particularly in sales; and a fourth is the likelihood of revenue following the sales talent, particularly at the highest levels. Running through all this is the fundamental issue of identifying exactly what top talent looks like, and where to find it.
Last year, Aberdeen Group published a research brief1 highlighting the cost side of the equation in relation to recruiting six-figure earners (which is the kind of remuneration we’re talking about for the top echelons of the sales profession). They found that employers were especially keen to reduce employee turnover and improve retention, one of the factors being that large organizations face estimated replacement costs of around 86% of annual salary at this senior level. With a typical 10% annual turnover rate, this would cost an organization employing 50 such six-figure earners a hefty $500,000 a year in replacement costs alone. And that is always assuming the replacements are there to be found!
Of course, the retention situation in pharma is probably more complex than in other industries, given the state of flux in the sector. Another survey from last year – this time from Booz2– found that 68% of respondents (from the US and leading EU states) believe that the current pharmaceutical model is broken and needs significant repair. Respondents saw major challenges, including growing price pressure, emphasis on cost-effectiveness, and more restrictive market access, while many predicted sales-force time for their products would decrease. Many also expected to shift spend from their current focus– community MDs – towards key accounts, payers and hospitals/GPOs. Those who believed the model to be broken planned to reduce spending on physicians disproportionately and increase spending on non-traditional stakeholders.
This has all been documented extensively elsewhere on this site but it is important to note that the new focus on key account management brings with it its own challenges. Pharma organisations are suddenly busy understanding how to identify and employ a completely new type of sales professional – the Key Account Manager (KAM) – one with different qualities, including enhanced business skills, before they even begin to think about retention. What’s more, high-performing individuals in the true KAM role are as rare as hen’s teeth!
Even then, identifying, hiring and retaining KAMs is not the whole story: if the KAM is the ‘farmer’ in the familiar hunter/farmer sales model, then an organisation may also want to recruit their ‘hunter’ equivalent, the Strategic Selling expert. Operating at C suite level, Strategic Selling delivers the potential for significant revenue gains, but is one of the most complex proactive sales approaches, requiring skills more akin to those of a business analyst than classic salesmanship. It demands the ability to proactively identify and position, for the customer, the way forward in the face of a current or imminent business problem, in a situation where the customer has yet to identify how to resolve it. And, you’ve guessed it; such individuals are just as rare as their KAM counterparts!
So what to do? The first step is to understand that switching to a KAM/Strategic Selling strategy may mean that the organisation is in for a bumpy ride, at least initially. It should be recognised that few of the individuals in a traditional pharma sales team will transform into high-performers in true KAM or Strategic Selling roles, at least not without relevant development and possessing the requisite critical reasoning ability and behavioural profile.
The skills that are critical for both these new roles revolve around an individual’s understanding of business (rather than sales) issues. They share the need for ‘Proposition Development’ – if you can’t put your ideas into a strong business case, all the work you have done is wasted; and ‘Benefits Realisation’ whereby you are selling a future ‘promise’ of positive business benefit. Consequently, you need to be able to prove that the promise has been delivered; if not, again, all the work is wasted.
Because of their focus on and understanding of business issues, such individuals tend to challenge weak management. In a classic ‘product/feature, attribute, benefit’ sales environment, they will come across like Martians. They will talk differently – often about issues which even their company management (especially if in a smaller or historically tactical sales-based company) may not even understand. Thus, they can easily be regarded as ‘loose cannons’ because they are not understood and don’t slot into a classic pigeon hole.
What has this go to do with retention? Well, faced with such a prospect, management might well be tempted not to retain such high-calibre individuals precisely because of the waves they can make – but this would be a mistake! Strategic Selling and Key Account Management requires an entirely different style of operating which invariably involves deep and extensive changes to the organisation, affecting manufacturing, marketing and the way the business is managed.
For many companies this inevitably leads to quite an uncomfortable period of adjustment. One way around this may be to give such individuals a title such as ‘Director of Partner Engagement’ or something equally fancy so they are clearly positioned outside of the ‘norm’. Secondly, organisations should consider giving them a more direct reporting line to the CEO or main board rather than have them report in through the sales channels.
As for retaining this talent, you need to put in place a business strategy that works for the Strategic Selling and KAM roles and then support them in delivering against that strategy. You also need to manage their ‘direct motivators’: you can understand exactly what these are during the hiring process by assessing what motivates a candidate along with the other factors that determine performance.
Beyond that, organisations should aim to follow best practice in terms of retention, just as they would with other key roles. We call this process ‘Active Talent Retention’, and it drives the entire hiring, onboarding and development process. (Note that Active Talent Retention is part of a dynamic system: once you have the right talent for current market conditions, the process doesn’t just stop; the market will continue to evolve and both organisation and individual talent will need to keep pace.)
Talent retention at the higher echelons starts long before the ‘onboarding’ process when a new employee actually joins an organization: it begins with the search for the right candidate. The key to attracting quality candidates is often an employer’s reputation in the talent marketplace – its so-called ‘hiring brand’: word of mouth and peer-group recommendation are key factors in a candidate’s decision whether or not to join an employer.
The way that employers conduct the search and hiring process is another important factor in retention: our clients tell us that using a credible assessment tool not only helps them determine whether or not the person concerned is right for the role under consideration; it brings the additional benefit of underlining the professionalism of the employer to that candidate, and consequently, its attractiveness as an organization to work for.
Continuing through to the on boarding process, the Active Talent Retention approach becomes ever more powerful. New hires who are well-supported by their employers almost inevitably come up to speed faster and start making a contribution earlier – a fundamental consideration for people in a sales role. This drives success, which is an important motivational factor.
At the same time, appropriate on-going assessment can provide organizations with a development needs analysis for every employee, while offering the means to work in partnership with them in creating a personal development plan. This forms the start of a development journey that employee and employer will make together. From the employer’s perspective, this provides the opportunity to feed in its view of how a specific role will develop and how that role will grow with the individual. In terms of effective retention, it is of paramount importance that the employer communicates the concept of this shared journey right from the outset.
The fundamental key to effective talent retention is the ability to understand what good looks like – which talent is suitable, which needs to be redeployed, where you’re headed in terms of development, whether there’s room for growth, which talent you want to retain, what will motivate an individual to perform and feel comfortable in a role – which is why an accurate and highly predictive assessment tool underpins the whole process.
In pharma, the issue of retention is more involved, given the current complexities within this sector and the sheer scale of the change we’re witnessing. It is clear that we are entering a period of profound market transformation: my view is that the industry may not yet have grasped quite how much change will be involved. Amid all this change, one thing is certain, however: whatever the strategy, having the right people in the right roles is absolutely vital and this is the issue that can and will determine the success of numerous organisations over the next few years.
This article is part #5 of our Sales Force Focus series, for the other installments click the links below:
1‘Challenges in Sourcing Six-Figure Talent’, Aberdeen Group, January 2011.
2Pharmaceutical Sales and Marketing Trends 2011, Booz & Company, February 2012.
You can download our free role definitions here, including those for the Key Account Manager and Strategic Selling roles. If you would like to discuss any of the points raised in this article, please email Marie Crespo at: firstname.lastname@example.org.
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