Picture the scene. Your sales team consists of one superstar, some solid performers and a few that you really need to have a think about. Your superstar loves selling and consistently pulls it out of the bag. The problem is that they’ve been doing the same job for a while and they’re starting to get itchy feet. What to do?
In an effort to retain your superstar, you promote them into a management position. They’re happy. They feel like they’re progressing and stop looking at jobs on LinkedIn.
Fast forward eight months, and things are bad. Your newest manager has changed from a pumped-up superstar into a grumpy handful. They’re pissed off that they’re making less money and they’re failing as a manager. Morale is low and revenues have flatlined.
It’s a classic story many sales team leaders are familiar with, and it’s a concept that has a name: the Peter Principle.
The “Peter Principle”, laid out in a 1969 book by Dr. Laurence J. Peter, describes the following paradox:
If organizations promote the best people at their current jobs, then organizations will inevitably promote people until they’re no longer good at their jobs.
In other words, businesses manage careers so that everyone “rises to the level of their incompetence”. Sales is a perfect environment to see the Peter Principle in action.
The Harvard Business Review recently examined data on the performance of salespeople and their managers at 214 businesses. They found that sales performance is highly correlated with promotion to management, but sales performance is actually negatively correlated with performance as a sales manager. In other words, businesses tend to promote great sales people into management, even though they become crap managers.
Dodging the Peter Principle requires businesses to promote a less successful sales person with the right skills instead of the superstar. But how do you do that without losing your superstar? There are two options:
The Harvard Business Review research found that businesses with the strongest pay-for-performance also promoted the best managers. In other words, by rewarding sales performance with increased pay, firms are free to promote the best potential managers. Superstars don’t feel obliged to become managers in order to earn more money.
Secondly, promotions aren’t all about pay, so create alternative career ladders for sales superstars that include extra responsibility and prestige. For example, is there an option for an enterprise sales path that allows your superstar to progress whilst continuing to utilise their existing skills?
Incentive pay and dual career ladders will ensure that you keep your sales superstar and you get the best possible management team. Everybody wins.
Problems with recruiting and retaining good sales people? We’d love to discuss how we can help. Contact us today to find out more!
For more information on the Peter Principle, follow us on LinkedIn.
Do ONE crucial thing to boost your 2023 sales success
28th March 2023
Join Flume Live for an introduction to sales velocity – crucial hacks to power your pipeline
23rd March 2023
Selling in a tough climate – 5 key takeaways
14th March 2023
The sales funnel is dead. Long live the sales ‘nail’!
7th March 2023
Preboarding | Onboarding | Everboarding
13th February 2023
Selling in a tough climate – the challenges
31st January 2023
Sales 2023 : Three big questions
30th January 2023
Flume’s trends and predictions for the events industry
30th January 2023
5 Steps to Power your 2023 Pipeline
14th December 2022
5 Key recession-busting sales behaviours
13th December 2022
Sales Innovation Expo 2022 Trends
30th November 2022
How to align your customer success team with your sales process
2nd November 2022
Sales velocity: How to increase average order value in sales
17th October 2022
Sales velocity: Increasing the number of sales opportunities
17th October 2022
28 Sales Acronyms used daily
8th September 2022
Sales velocity: Speeding up the decision-making process
24th August 2022
Sales velocity: How to improve conversion rates
13th July 2022
Sales kick-off meetings: How to use the momentum to power long-term change
17th May 2022
Drive retention and performance through a sales academy
9th March 2022
Call AI: The sales coaching technology you need in 2022
22nd February 2022
Drive real results from sales training in 2022: Why the traditional model doesn’t work
2nd February 2022
Sales Engagement Summit – Hosted by Raoul
16th December 2021
How business development reps can give buyers the confidence to say yes
3rd December 2021
The biggest mistake sales development reps make (and three things you should do instead)
9th November 2021
Five myths you need to know about customer success teams
11th October 2021
The four levers you can pull to increase sales velocity and how to make an impact
1st September 2021
Outcome Based Selling
3rd August 2021
Why most sales training doesn’t work and what to do about it
1st July 2021
3 reasons why writing a proper proposal is worth your time
18th March 2021
How to win a sales pitch…
26th February 2021
Sales Professionals: Why you shouldn’t assume you’ve got remote selling nailed
15th January 2021
Is your sales team ready for 2021?
4th January 2021
Selling Virtual Events
26th November 2020
Why salespeople must be ‘long-term greedy’: A five-step approach to winning more sales
13th November 2020
Closing skills: Why the pandemic has made it even harder to close that deal and what to do about it.
1st November 2020
Post Covid: How to fill your B2B pipeline with customers who do want to speak to you?
5th October 2020
3 steps for monetising virtual events
15th July 2020
Storytelling
18th May 2020
5 tips for closing in the crisis
4th May 2020
Using audience insights to engage with customers
20th April 2020
Biggest challenge of leading a remote sales team
15th April 2020
“Clients don’t want to engage with me”
6th April 2020
The world has changed – what should I sell?
31st March 2020
Leading remote sales teams
30th March 2020
Selling in a crisis
25th March 2020
Proposal writing research: Why your proposal doesn’t work
17th March 2020
How to accelerate your sponsorship revenue
17th February 2020
How selling to the individual increases your chance of them buying by 2x
7th February 2020
New Year, new rules. How to deliver sales training that actually works!
2nd January 2020
Half of B2B sales people will miss their 2020 targets. It’s time to shift perspective.
18th November 2019
Questions that drive more sales
15th November 2019
How to speed up prospect decision making… PART TWO
21st October 2019
How to speed up prospect decision making – PART ONE
14th October 2019
The biggest mistake salespeople make… and how to avoid it
26th July 2019
You have the right to demand more ROI from your sales training (and here’s how you get it)
16th May 2019
How to grow customer accounts this year
22nd March 2019
5 big sales mistakes from this year
23rd December 2018
How to turn the marketing trust crisis into sales opportunity
5th October 2018
Why is it so hard to find great business development talent?
21st September 2018
It might be hot outside but you still need a SCARF.
12th July 2018
The Peter Principle: Great Salesperson, Crap Manager
25th June 2018
The ‘great deal graveyard’ and how to avoid it
8th June 2018
The secret to selling in today’s market: Old-school to New-school
22nd March 2018
Why people DON’T buy from people they like
28th February 2018
What salespeople can learn from Nike
5th February 2018
Why “yes” doesn’t mean YES
26th January 2018
Take charge of your sales career in 2022
15th January 2018
How sales and marketing must work together to deliver results: tips from the front line of B2B selling
20th July 2016
6 facts and stats B2B sales people cannot ignore
26th May 2016
The amazing power of stories and 5 ways to make them sell
15th October 2015
The trouble with Blitz Days and how to increase their effectiveness
7th October 2015