In May 2018, the government published its Tech Nation 2018 report on the state of the tech sector in the UK. It found that two of the biggest challenges facing tech leaders over the next 12 months are Brexit (no shock there) and access to talent. In fact, 83% of respondents rank the latter as their primary concern.
However, while all talk seems to hinge around the demand for technical talent, the need for those who can lead the sales function seems to have been overlooked. Yet it is the VP Sales who are unquestionably one of the most pivotal players in any tech business.
Good vs. bad
Theirs is a role that can make or break the business’s growth, which makes finding the right person critical. Get your VP Sales hiring right and current stakeholders will be happy, organic revenues can continue along an upward trajectory and the business itself will become an increasingly attractive proposition for would-be VCs. But take on the wrong person and the implications can make a serious dent in your bottom line.
Indeed, according to the Recruitment and Employment Confederation (REC), 85% of hiring managers admit to having made a bad hire.
Mistakes happen but ignorance over their cost implications is a little harder to swallow. Of this 85%, one in three (33%) don’t believe this negatively impacted on the business financially. This is absolutely not the case.
In fact, the cost to the business is simply huge and stands at more than £132,000 for senior roles.This is only touching the surface: costs are one thing, missed opportunities are quite another.
Practically every tech founder, VC and head of talent will need to hire a VP Sales at some point and most will have seen the impact the right hire can have on the business. Our experience of providing leadership talent to some of the world’s most innovative and fast-growing tech companies over the years is that the revenues lost due to a bad hire are approximately 10-times the cost incurred in hiring that person. In terms of pounds, shillings and pence, you’re looking at around £1.3 million that is missing from the bottom line…. just take a second or to get your head around that.
This raises a couple of key questions: Why are businesses clearly getting their hiring strategy so very wrong? What else can tech leaders do to support the people “owning the revenue number – those with a target on their back”, as Tom Glason, Chairman of the London Revenue Collective put it?
To answer these, we need to add some context.
Thriving but not surviving
To say that the UK tech sector is performing well right now would be one of the greatest understatements of all time. Indeed, 13 of Europe’s 34 unicorns are located here, generating some $23bn in revenues between them – think Deliveroo ($1.8bn), Fartech ($4.4bn) and The Hut Group ($3.18bn). And in the first nine months of 2018, more VC investment entered the country than ever before.
This landmark year has further consolidated the UK’s position as the most highly invested region in Europe for the tenth consecutive year, according to Pitchbook’s 3Q 2018 European Venture Report. However, with so much VC money entering the market, the pressure is on for tech businesses to bring in the VP Sales talent that can accelerate growth…and fast.
Sounds straightforward enough, right? Not so. In their haste to scale and satisfy stakeholder interests, tech leaders often find that mistakes are made when it comes to hiring a VP Sales.
Some hire too early in the hope (and expectation) that the new incumbent will drive sales from day one. But the business itself isn’t ready to scale and the result is that over-inflated targets and stakeholder demand see some tech start-ups flounder before they even get going. It hasn’t transitioned fully from concept to market and as such, revenues don’t match forecasts which inevitably sees the VP Sales take the bullet. On the other side of the spectrum, there are those that don’t hire soon enough and find themselves trying to play catch up. Neither situation is good and the success or failure of the VP Sales comes down to getting the timing right.
Knowing when to make the leap and ‘getting’ what is needed
Where you are in your scale journey will dictate the ‘type’ of VP Sales that you need. For instance, a business that is currently at £1.5 million annual recurring revenue (ARR) with ambitions to scale to £10 million ARR within 18 months will require a true do’er – someone who will roll up their sleeves and get on with the job of turning sales around quickly.
However, once you become a £10+ million business looking to scale to £50+ million or more, this style of VP Sales simply won’t cut it. The approach now needed is more consultative in nature. It is one that is focused on developing and maximising those opportunities over the longer term that can deliver higher and more profitable returns, rather than concentrating on the deals that are available in the here and now.
Recognising the types of VP Sales that are needed and the timings for when each will be hired is critical to the success of both the individual and the business itself. Add an understanding of the different stages of funding rounds, product types, geographies and revenue growth to the equation and it becomes apparent that the right person needs to have more to them that you might think.
Navigating the talent pool
Investment into the UK tech market is accelerating at a rate of knots, but we’re all struggling to keep pace and demand for top talent is outstripping supply. Time really is of the essence and tech businesses tend to go down one of two routes – they take on the responsibility of hiring themselves, or they bring in a recruitment agency to help them. Both approaches can and often do have catastrophic results.
Competition for talent is at its most intense right now within the tech sector, across all levels of the organisation. So, when a VP Sales comes along that appears to fit the bill, hiring managers often waste no time in making the hire before their competition gazumps them by making an offer sooner.
This reactionary approach to hiring is not the best strategy. Neither is gambling on a generalist recruitment agency – given the very specific requirements that a VP Sales must have, hoping that they will truly ‘get’ what you need is simply a fallacy.
Hope is not a strategy and this perhaps explains why the average VP Sales only remains in situ for just 15-19 months. This doesn’t need to- nor should it- be the case.
By partnering with a hiring partner who has a demonstrable track record in searching, identifying and securing the right VP Sales talent specific to the stage of where each business is at on their scale-up journey, the impact of your new hire will be long term. See for yourself the difference this can and will make to your business: 360leaders.com/casestudies/