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When looking to promote a new sales manager, who do organizations typically promote? Not surprisingly, organizations often offer promotions to the top sales representatives, and these offers are often accepted by sales representatives who view management as a next step in their career path, or as a sign of prestige or stability. But promoting your best salesperson into sales management may not be best for the sales representative or the company overall.

My colleagues — Danielle Li at Harvard and Kelly Shue at Yale — and I analyzed data from a provider of sales performance management software hosted over the cloud, and found that organizations tend to promote the best salespeople even though the best salespeople tend to make the worst managers. This finding is consistent with the adage that “the best salesperson doesn’t necessarily make the best sales manager,” and more broadly, with the Peter Principle — the idea that we promote people who are good at their jobs until they become stuck in a job for which they’re unqualified.

We found that the best sales managers came from the ranks of salespeople who were involved in complex deals that often involved crediting contributors across the sales pipeline, products, and geographies. Perhaps this isn’t surprising: Salespeople who can successfully navigate their own organizations to make a big sale may be better suited for management than lone wolves who prefer to work alone. However, greater team credits were negatively correlated with promotion to management. To reiterate: Firms tend to promote the best salespeople even though they make the worst managers, and avoid promoting team players even though they tend to make the best managers.

Therein lie the core questions: How do you strike this balance of retaining high performers within your organization, even if the linear career development is to move to management? And how do you keep from turning one success into a failure in another role? From our research, here are some ideas to think about when looking at sales rep promotions and the changes that could be made for a more successful sales organization overall.

From the data, we found that when a top-ranking salesperson gets promoted and goes to manage a team, the performance of the entire team goes down. There could be many reasons for this. It could be that it’s just destructive for the accounts. Or it could be that they got promoted but worked better independently, which is a trait that doesn’t transition well to being a good manager. Obviously organizations also take a hit to their numbers when they lose that great salesperson, who is now not out there selling, to management. Sales leadership needs to see the actual cost of promotions and determine what is best for both the individual and the company itself.

If your star salespeople are really important, then you must have an incentive structure that rewards them as salespeople, as opposed to one where they need to go into management in order to advance their careers (and paychecks). It appears that the organizations with large commissions had more salespeople stay in sales because a star salesperson in that kind of environment can make more than the sales manager. This is one way companies can fight against the Peter Principle and not turn great salespeople into bad managers.

The idea for an additional rating system comes out of many engineering and corporate settings. It’s another way organizations, at least outside of sales, have tried to fight the Peter Principle. Often you will see one rating system for giving out bonuses, and then another rating system for assessing the potential for promotion. Many technology companies will say, "Here's your rating as a software engineer. But here’s your rating on whether you’d be a good manager, what you would need to work on to get there, and how you’d be rewarded.” This approach provides transparency of the challenges and potential rewards of a promotion without needing to immediately take that career path.

We also found that the salespersons who moved on to become good sales managers had often been involved in a lot of complicated deals and shared credits for very complex sales. For example, some were deals that spanned different products, territories, and parts of the sale cycle. It appears that these people might have more of the political build to navigate an organization and might share the values of communicating and working within larger teams.

Sales leadership needs to see the actual cost of promotions and determine what is best for both the individual and the company itself.”

Alan Benson | Assistant Professor, Department of Work & Organization, Carlson School of Management, University of Minnesota
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