Does Micromanaging Sales Reps Cause Turnover?

Does Micro-Managing Sales Reps Cause Turnover

A common complaint I hear from sales professionals is how much they hate being micromanaged. It’s often a main driver compelling them to look for a new sales job. It seems intuitive that micromanaging sales professionals can lead to frustration and the potential for a mass exodus. Despite that, many companies are increasing their investments into CRMs, processes and reporting to gain deeper and deeper insights into their sales reps’ every move. There’s a danger here in using that data to micromanage their team. Perhaps these companies are onto something and they are willing to trade a potential increase in turnover for an even bigger increase in quota attainment. Buried inside of CSO Insights Annual Sales Compensation Report are the answers to the following question:

How Does Micromanaging Sales Reps Affect Performance (Quota Attainment and Turnover)?

The Findings.

CSO Insights surveyed 800 companies on a variety of compensation related topics. Within this report, we find a surrogate for directly studying the effects of micromanaging sales reps. CSO studied how the # of metrics that a company ties into a sales reps’ compensation affects performance. It could be assumed that companies who tie multiple goals and behaviors to compensation are doing so to drive and manage behaviors well beyond simple revenue generation. Whether it’s intentional or not, the more metrics they tie-in, the more these companies are moving towards micromanaging their sales reps.

CSO broke companies into one of three groups:

  • 1-2 metrics (either raw revenue or new client revenue and existing client revenue). It could be assumed that sales reps at these companies were allowed the most freedom in how they pursued sales and their day-to-day activities.
  • 3-4 metrics. In addition to the metrics above, companies in this group also compensated their sales reps on an additional 1-2 metrics. Unfortunately, the report does not give us any examples of what these additional metrics might be.
  • 5-7 metrics. A key driver mentioned in this report with companies in this group was “The importance of providing their managers with timely and accurate process metrics.” Tracking and distributing this information requires a sizeable investment which leads us to believe that these companies encourage their sales leaders to “manage” their reps’ activities and behaviors more so than the 1-2 and 3-4 metric companies. Whether or not these companies are true “micromanaging” environments it would be hard to argue that they don’t “manage” their reps more so than the other 2 groups of companies.

Here is what they found:

1-2 Metrics 3-4 Metrics 5-7 Metrics
% of Reps @ or Above Quota 54% 66% 53%
Sales Force Turnover 21% 17% 25%

I would have guessed that the group of companies with the most metrics (the micromanagers) would have experienced the highest sales force turnover. I would have also guess that these companies would have the highest % of sales reps achieving quota. What CSO discovered is that the micromanaging companies performed worse in BOTH metrics. Clearly, there is a fine balance between properly managing and over or micromanaging sales reps. This delicate balance is elegantly labeled the “Dichotomy of Leadership” by the authors of Extreme Ownership. I am guessing that any potential increases in sales performance found by compensating and managing more behaviors is negated by the increase in turnover and loss of tenured (ramped up) sales reps.

Is There a Cure for Micromanagers?

If you are presently working for a micromanager, the data above should compel you to find greener pastures. It’s literally costing you money. For those sales leaders wondering if they might be micromanaging, Harvard Business Review has a great read – 11 Signs That You’re a Micromanager. If you exhibit any of the “signs” listed in the HBR article I would direct you once again to the book Extreme Ownership. The authors, Jocko Willink and Leif Babin, are former Navy Seal officers with a combined 2 Silver Stars and 3 Bronze Stars. They led the most decorated special operations unit of the Iraq War. From their experiences, 2 of the most important qualities in any leader are humility and the ability to learn from mistakes. Given the data on the impact of micromanaging sales reps; these seem like wise words indeed.