Are the CEO and head of sales playing tug-o-war at your company? If so, it will spell trouble.
The most critical relationship in a company is between its CEO and the head of sales. Very early on, it may be the CEO and the head of engineering/product. At other times, it may be the CFO when preparing for a public offering or with the head of HR during a restructuring. Most of the time though, no relationship is as important as that of sales and CEO.
You might protest, so let’s be clear. Without revenue, there is no company. That means having people, processes and systems in place to collect revenue and someone in charge of these resources to ensure that there is a steady stream of paying customers. On the consumer Internet side, this gets a bit fuzzy, but eventually someone is paying to use the product (think Facebook and Twitter advertisers). On the B2B side however, this path is very clear. You sell to stay in business otherwise it’s lights out.
It is the revenue stream that ties the CEO and head of sales together. The CEO lays out the strategy across the company, its goals and its objectives. The job of sales therefore becomes two-fold; fund the company’s objectives and build credibility that supports the goals. Gaining customers obviously addresses the question of funding (which is a way better source of quality funding over banks or outside investors). Customers also provide credibility through product adoption, growing market share, and referenceability.
Thriving companies demonstrate a strong relationship between the CEO and head of sales. There are open lines of communication, expectations are clear, and both are aligned on goals and objectives. The best companies have true partnerships between the CEO and sales leadership. There is a symbiosis between the two that supports stability and creates continuity across the company. There is a trust formed where the CEO can plan ahead knowing that sales has her back and likewise the head of sales trusts that the CEO is ready to support the sales team with whatever resources are required to ensure the team can close deals and ensure successful post sales execution.
All too often however, the relationship between the CEO and head of sales is fractious, irrespective of sales missing their numbers. This disrupts company continuity and stability. So when sales falter, the CEO places all the blame on the head of sales. In turn, the head of sales blames the CEO for execution errors and misaligned expectations. The CEO thinks the head of sales is useless. The head of sales thinks the CEO is a moron. The end result is the replacement of sales leadership and a good portion of the sales team. This kills sales momentum, stifles deal activity, and destroys the bottom line.
What are the causes leading to such a gulf in trust between a CEO and head of sales and what can be done to prevent this issue in the first place? It comes down to three core differences in perspective:
- CEO Vision / Founder Passion – A CEO has a very specific agenda that she wishes to achieve and a certain way of achieving that agenda. In an earlier stage company where the CEO is also the founder, there is agenda plus founder passion. Whether it is a successful CEO or early stage founder, there is a playbook and energy that is not easily transferable. That creates an immediate alignment gap between a head of sales and CEO, something that can only be filled by the CEO spending time with the head of sales. This is particularly important in early startups where the CEO is also the head of sales early on. Once a head of sales is hired, it is important for the CEO to release the sales reigns and act more as a coach and a liaison to key customers and to the rest of the management team. This takes time to perform an effective handoff, so spend the first 90 days working in lockstep so that the handoff is clear and the head of sales can absorb that passion and vision of the CEO.
- Common Language – Many CEO’s have a sales background, but not all. In many tech companies and startups, the CEO is either a technologist or product person. They do not have experience or an understanding of pipelines, forecast, funnel metrics, sales KPI’s, methodology and the like. That is not the world they have lived in. This is where language can become either a barrier or a bridge. It is important for the head of sales to “train” the CEO in the basics and to build a common language so that there can be no surprises due to differences in perception. Even with a CEO versed in sales, it is important to spend time aligning language around process, methodology, pipeline, forecast and metrics because there is no standard template in sales.
- Constituency Alignment – Even when the CEO and head of sales are aligned on language, each is working with different constituencies. Each is managing expectations down the organization and up to the bosses. In the case of the CEO, she has to both manage across a wide organization while also reporting to the board. Likewise, the head of sales has multiple divisions and regions and functions to manage while reporting into the CEO. Because the head of sales is usually not privy to board discussions, decisions are made regarding financial forecasts without input or guidance from sales. This is less the case in established companies, but in early stage venture backed companies, the investors have more sway and use their influence to change plans. It is important therefore to have sales involved in person during board discussions regarding sales objectives, or at the very least have sales go over numbers, forecast, and rationale behind the forecast before the board meeting. When it comes to setting the numbers, transparency becomes critically important.
Both roles, head of sales and CEO, are challenging positions with high expectations, high visibility, and high stress. They are also roles that are most volatile and susceptible to high turnover. It is therefore to the benefit of a CEO and the head of sales to get on the same page, have a policy of transparency, and support each other towards long-term success. By aligning on vision, language, and board expectations, the table is set for a strong and healthy relationship.
Image credit: CC by Michael Coghlan