What makes a good sales leader?

Table of contents

List of figures

1. Introduction

2. Success factors in sales leadership
2.1 Perspectives of sales manager and sales representatives
2.2 Role-Modeling behaviour
2.3 Manager performance

3. Influence of Leadership styles in Sales
3.1 Transformational & Transactional leadership
3.2 Influence on sales management Conclusion

List of references

ITM - Integral Total Management Checklist

List of figures

Fig. 1: Success factors in sales leadership (Sales Representative Perspective)

Fig. 2: Success factors in sales leadership (Sales Manager Perspective)

1 Introduction

The effectiveness of its sales department has a major influence on the company's success or failure. By selling products and services profitably to existing and new customers, the sales team is regarded as the spearhead of the company's product management and marketing department. In addition this department is dealing often with a large number of employees and very high budgets.^[1] Consequently, an effective sales management plays a very important role for almost every company. Small improvements can already result in a relevantly increased turnover or decreased costs. Nevertheless, the analysis of unsatisfactory results often remain superficial. If the sales figures are low, the attention of the managers is often limited to the total number of customer visits per week and the number of deals. As a consequence this often leads to an increase in appointments, but not to an analysis of the reasons for such a poor quota. This might be due to a lack of training or to a lack of identification with the company or its products, or is a result of motivational problems due to for example a lack of personal recognition. These often underestimated and hardly-measurable parameters can have the potential to exceed all expectations of success, but also to ruin a company.^[2] For this reason the staffing of executive positions in the sales department plays a very important role.

However, the study "global leadership forecast" of the consultancy company DDI Deutschland GmbH^[3] encompassing 12.000 managers from 1.800 companies in 74 countries shows that only 40 percent of the managers scored the quality of leadership in their companies as high. Even worse are the results of the human resource professionals interviewed. Only 25 percent of these persons rated their company's overall quality of leadership as high. And even though, according to the study, about 50 billion dollar per years is spent in developing leaders worldwide, only 37 percent of the managers rated the quality of their organization's leadership development programs as high or very high.

For this reason, the purpose of this assignment is to analyse the most important required skills of managers in sales, and the influence of transactional and transformational leadership in sales management. This may help companies to find qualified personnel for this position and to improve their leadership development programs.

2 Success factors in sales leadership

2.1 Perspectives of sales managers and sales representatives

There are different perceptions concerning the question, which are the relevant success factors in sales leadership. Already fundamental differences exist between the view of sales managers and sales representatives regarding this point. Deeter- Schmelz et al. carried out a study in 20 08^[4] focusing on this question. The responding sales managers stated as the most important attributes communication and listening skills, human relations skills, organization and time management skills and knowledge possession. The sales representatives also mentioned as most important attributes communication and listening skills, human relations skills and knowledge possession. Even though at first sight this appears to be conform, there are clear differences in the interpretation of these attributes. For the sales managers good communication and listening skills and human relation skills primarily means the ability to communicate openly and explain clearly what they expect from their staff members. The sales reps on the other hand combine with these attributes the ability to communicate openly and on an individual basis. Knowledge possession is important for the sales managers because, according to them, it leads to confidence and trust along with a higher reputation of the manager. For the sales reps the knowledge of their sales manager is important because they can rely on it for support and also for developing their own skills. Interesting in this respect is that the sales managers also mentioned selling skills as an important attribute. For the sales reps however, this was not important at all. Organization and time management skills are important for the sales rep as well. The reasons for this however were different to those of the sales managers. For the managers it is a means to an end. They combine this aspect with the ability to organize themselves more effectively and thereby to have more time for communicating and motivating the reps, and to be more active within the sales process. For the reps this attribute is important because it enables their managers keep the reps backs free from additional internal and external burdens and thereby laying the foundation for an effective sales performance.

Both respondents said that coaching skills are important in order to improve the sales skills of the representatives. The reps added to this point the ability to provide effective feedback. Both groups were also in agreement with the necessity of motivational and leadership skills.

The perspective of the success factors are summarized in the Fig. 1 and 2. As can be seen both respondents agree on the importance of clear expectations, an open communication, and on the development of the sales reps.

Figure 1 : Success factors in sales leadership (Sales Representative Perspective)

illustration not visible in this excerpt

Abbildung in dieser Leseprobe nicht enthalten

Source: following Deeter-Schmelz et al., 2008, p. 10 ff

Opinions diverge fundamentally on the importance of the reputation of the manager and its role model function. Sales managers deem a high reputation based on their knowledge and their own selling skills, as necessary for sales managers, the performance of its sales reps. For the sales reps this point does not seem to play a role at all. In contrast, the salesmen emphasize the importance of the managerial skills of their sales managers. Thus, with respect to further personnel selection procedures, the question arises whether managerial capabilities must be given more emphasis than experience and salesmanship abilities?

Figure 2: Success factors in sales leadership (Sales Manager Perspective)

Success factors in sales leadership (Sales Manager Perspective)

illustration not visible in this excerpt

Source: following Deeter-Schmelz et al., 2008, p. 10 ff

2.2 Role-Modeling behaviour

As seen in 2.1 sales managers consider their own selling skills and their ability as sales persons in general as important factors for the success of their subordinates. Reputation and the ability to lead by example are rated as keys for success. Even though these points were not mentioned by the interviewed sales reps, their importance is certainly worthy of further examination. The possibility cannot be ruled out that the sales persons have just taken their managers selling skills for granted or have seen them as a component of knowledge possession. The role model function, furthermore, might be included in the demanded leadership skills.

In 1997^[5] Gregory A. Rich analysed the effect of the sales managers role-modeling behaviour with respect to the job satisfaction and the overall performance of salespersons and their trust in their managers. Role modeling was defined as "behaviour on the part of the sales manager perceived by the salesperson to be an appropriate example to follow that is consistent with both the values the sales manager espouses and the goals of the organization". In this study Rich was able to show that the more sales managers exhibit appropriate role-modeling behaviour as perceived by salespeople, the greater the salespeople's trust and loyalty is to the sales managers. In turn he showed that the higher the salespeople's trust and loyalty is, the greater is their job satisfaction and their overall job performance. Nevertheless, a direct link between role-modeling behaviour and sales performance, could not be proven.^[6]

In summary it can be said that the salespeople's trust in their sales managers is an important factor for their satisfaction and for sales performance. A role-modeling behaviour is an effective way of earning trust for the sales managers. A study by Thomas L. Powers et al. in 2012 came to a very similar conclusion regarding the most important sales management skills.^[7] Rated as the most important skill of a sales manager was the ability of building trust with the sales force. Role-modeling behaviour ranked fifth in this study.

2.3 Manager performance

In a study in 1996, Russ F. A. et al. concentrated on the question how important a sales managers' performance as a manager and his/her managerial behaviour is regarding the stress encountered by the sales force, sales force satisfaction, and sales force loyalty.^[8] In addition to measuring manager performance in general, they focussed on the question whether management tasks, leadership style, and decision-making behaviour can be linked to sales manager performance.

Manager performance in this study was explicitly not defined as generated sales or the level of success (title, income) reached by the sales manager. Rather the authors defined it as "the contribution of the sales manager's managerial behaviour to the achievement of the organization's goals."^[9] This of course includes sales success, but also several other aspects such as customer relationship, the attitudes of the sales force, and the quality of information provided to higher level management. In order to evaluate this performance, the sales manager's themselves, their superiors and their subordinates were asked to summarize the performance of the sales manager based on a numerical order, with 100 representing the ideal manager, 50 as average, and 0 as the worst possible case. These scores were summed up to an "Overall Performance Rating". This rating, furthermore, was corroborated with a multiple item-rating scale using nine managerial behaviours directly affecting the sales force. These were:

1. Managing new sales personnel orientation
2. Conducting regular goal setting sessions
3. Initiating regular progress reviews
4. Initiating training
5. Conducting performance reviews
6. Conducting calls with sales reps
7. Managing inside/outside sales as a team
8. Developing personal development plan
9. Conducting sales meetings

These items were complemented by the sales manager's superior and were summed to a "Behavioural Performance Rating". The scale was strongly correlated with the overall rating provided by the sales managers' superiors and the "Overall Performance Rating".

The study showed that the managers’ performance was significantly negatively correlated with to the sales force role stress and significantly positively correlated with the level of the sales rep satisfaction. In addition, it was weakly linked to a sales reps' organizational commitment and intentions to stay in the organization. These results were confirmed by Powers et al., who stated that the management's understanding of the company's strategic direction is important to the success of the sales organization and that sales management skills are related to sales performance.^{[10] [11]}

3 Influence of Leadership styles in sales

As mentioned previously, Russ F. A. et al., also focused on the question if leadership style affects the sales managers performance. The authors analysed especially the influence of transformational and transactional leadership.

3.1 Transformational and Transactional leadership

Transformational leadership is a theory developed by Bernhard M. Bass. It is based on a leadership style identified by James MacGregor Burns and Robert J. House in 1977 and 1978.^[12] The “transformational leadership theory” has been given much attention over the past few years. Transformational leadership promotes a positive change in the organization and motivates and inspires subordinates individually to exceptional performance.^[13] It includes four key elements:^[14]

1. Idealized influence: The leader serves as an admired, respected and trusted role model for his/her followers. The followers identify with their leader and want to emulate them. Apart from the leaders behaviour the idealized influence depends on the characteristics that are associated to the leader by the followers such as capabilities, persistence and determination.

2. Inspirational motivation: The leader creates an enthusiastic and optimistic team spirit. He/she motivates and inspires his/her followers by providing them with a meaningful and challenging goal.

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^[1] see Haas, A. & Stübiger, N., Erfolgreiche Vertriebsführung, 2014, p. 1

^[2] see Kuntz, в., Mitarbeiterführung im Vertrieb, 2016

^[3] see Evan, s. et al., Global Leadership Forecast 2014!2015, 2015

^[4] see Deeter-Schmelz, D. R., Goebel, D. J. & Kennedy, K. N., What are the characteristics of an effective sales manager, 2008 p. 10 ff

^[5] see Rich, Gregory A., The Sales Manager as a Role Model, 2001 p. 319 ff

^[6] see Rich, Gregory A., The Sales Manager as a Role Model, 2001 p. 325

^[7] see Powers, T. L, Jennings, J. c. & DeCarlo, T. E., An assessment of needed sales management skills, 2012, p. 212

^[8] see Russ, F. A., McNeilly, K. M., Comer, J. M., Leadership, Decision Making and Performance of Sales Managers, 1996, p. 1-15

^[9] see Russ, F. A., McNeilly, K. M., Comer, J. M., 1996, p. 3

^[10] see Russ, F. A., McNeilly, K. M., Comer, J. M., 1996, p. 10

^[11] see Powers, T. L, Jennings, J. c. &DeCarlo, T. E., An assessment of needed sales management skills, 2012, p. 216 f

^[12] see Russ, F. A., McNeilly, K. M., Comer, J. M., 1996, p. 4

^[13] see Morton, w., Everything You Need to Know About Transformational Leadership, 2012, p. 5

^[14] see Bass, B. &Riggio, R., Transformational Leadership, 2005, p. 5 ff