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Internal Promotions vs. External Hires in Software Sales




A company faced with a software sales manager vacancy is faced with a difficult decision: should they promote someone internally, or hire from outside? There are pros and cons to each decision. In the main, you will need to consider four factors:


  • Cost Effectiveness

  • Skill Sets

  • Sales Relationships

  • Fresh Perspectives


Why you might need a new sales manager


Team growth is one reason a software company might need a new sales manager. Some HR experts suggest that a manager can successfully lead 15-20 team members, while others put the estimate at 5-6. The span of control—the number of subordinates that can be managed effectively—will depend on the scope and nature of each software company’s business...but if your sales team is growing, at some point you will need a new manager.


Expansion is another reason why a software company might need a new manager. Such a company might be moving into new markets, marketing to a new audience, or developing new products it hasn’t previously offered. Any of these expansive changes will often require a new sales manager to spearhead the effort to expand successfully. In fact, the managerial competence of the sales manager can make or break that company’s efforts to expand.


Replacement and Retirement are two other reasons why a software company might need a new manager. Retirement is more planned; it allows HR to deliberately find a replacement for the sales manager who plans to exit the workforce, which is often a move planned years in advance. But replacement can happen suddenly, if the sales manager quits, is fired, or loses their ability to work.


Succession planning is yet another factor that will impel HR to consider the pros and cons of an internal promotion or external hire. Software companies with a vision for growth will eventually need to fill a sales manager role, and as part of their growth strategy they will either want to have a list of employees groomed to step into managerial roles, or a guiding policy that facilitates bringing new talent into the company.


Internal Promotion vs. External Hire: Pros and Cons


So now that it’s apparent that at some point your company will need a new software sales manager, the question becomes: how do I find one?


Cost Effectiveness


Performing an internal hire certainly seems more cost-effective. For starters, you won’t need to educate the promotee about the business, the market, and the product. They will already be familiar with the policies and procedures of the company, and you will save money by not having to train them in many basic areas of job performance.


Skill Sets


However, internal promotions may run the risk of costing you more than you think. Sometimes a good salesperson is not a good manager. Selling and management require two different sets of skills; salespeople are focused on improving individual performance, while a manager is focused on improving the performance of his or her team. This is why some companies even see a drop in sales when they promote their sales stars.


Sales Relationships


Promoting internally also facilitates continuity with the relationships your sales team has built. But at the same time, it’s important to consider that these relationships really belong to the business, and not the salesperson. Moreover, an outside hire can potentially bring new relationships to the business. Even if a non-competitive clause with their previous company barrs this possibility, they might still have the ability to bring in new clients because of their own market experience.


Fresh Perspectives


External hires can also bring some fresh vitality and perspective to the company. It can be easy for any team to get into a rote groupthink that prevents them from expanding and growing successfully. A new sales manager might have exposure to markets, clients, products, and experiences that can help a growing business through its growing pains—whether its doubling the sales team, expanding into a new market, or launching a new product.


How to Promote Internally


These factors—cost effectiveness, requisite skills, relationships, and fresh perspective—are all important to consider. But whether you decide on a case-by-case basis to go with an internal promotion or an external hire (because locking your company into one procedure forever is not a good idea), you will need to have some policies and procedures in place.


In terms of internal promotion, you will want to develop a scouting program or rubric that looks for leadership qualities, and not just gauges sales performance—because as mentioned, sometimes a good salesperson is not a good manager. Mentorship programs that pair up sales people with managers can provide a good opportunity to get to know your team in a more nuanced way, along with developing among mentees the characteristics and traits that are required for good management.


How to Hire Externally


In terms of an external hire, you will need to develop an approach of candidate nurture that attracts top performing managers in demand who are gainfully employed and willing to move to a trustworthy business. You need a quantitate interview process with a structure rubric to assess if they have the traits your software company needs in a sales manager.


Part of this candidate nurture process is developing a company image that genuinely reflects a great company. Managers will be attracted by opportunities for professional and personal development, autonomy to handle challenges—albeit with appropriate levels of support, work that has real value and significance, a team that shares their vision, competitive compensation, and a proven leadership team they can trust.


Unfortunately even the most seemingly foolproof hiring process can be laywaid by pitfalls. Sometimes a great candidate just can’t be convinced to take your offer. Sometimes a seemingly great candidate looks better on paper than they really are. Sometimes a hiring manager relies on a gut feeling that will ultimately let down the company.


Working with a Software Sales Recruiter


These are just a few of the reasons why it’s important to work with a software sales recruiter in your candidate nurture process. A software sales recruiter can verify a track record of candidate success, screen candidates, and source the talent that fits best, from both within and outside your industry. A software sales recruiter with decades of experience in the industry also has a large network and talent pool to draw from, along with the know-how to screen candidates and deliver the best fit for your empty sales manager role.


If you have other questions about the pros and cons of internal promotions and external hires, or you are contemplating filling a new or extant software sales manager role, please send me an email at mike@michaelblair.com and let’s discuss how I can help you.

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