2021 was the year of unprecedented M&A activity (over $4 trillion) globally and although we have seen a slowdown in 2022, it is shaping out to equate to pre-pandemic levels, which is to say- it’s time to roll up our sleeves and get to work. And it’s not going to be easy. In the current economic environment, we are seeing companies beginning to pull back on expenses, continued layoffs are looming, and yet there is a level of investment that is required to turn expectations into outcomes.
In this series we will address some of the biggest challenges that sales faces in the midst of M&A from leadership to the frontline. We’ll kick this series off with some basics including the biggest challenges facing the sales organization from leadership to the frontline. We’ll also include insight from SalesGlobe’s own experience with a series of M&A experts and insight from the C-Level on how to navigate M&A. Enjoy the series, and please be sure to listen to our podcast where we delve into deeper questions on demonstrating success in the midst of uncertainty.
We recently conducted a study on incentive compensation practices with our partner, WorldatWork, that included 600 companies. Over 50% of those companies had been part of a merger or acquisition in the last 24 months. In the chart below, they reported the biggest challenges that they face within the sales organization as a result of company mergers or acquisitions. These challenges have a direct impact on getting the synergy outcomes that are the responsibility of the sales organization to achieve, so this is a good starting point to understand some root cause issues that can impede progress towards synergies that are even more critical to achieve during times of uncertainty.
Similar titles or work structures more often than not carry very different responsibilities, experience requirements, talent expectations, and ultimately, pay. Whether someone identifies as inside sales, new business sales, account manager, national or strategic, customer success – depending on the company size and maturity, customers and buyer types, and the products and services they offer – all of these factors impact how the role is defined. This is one of the biggest challenges that sales leaders, managers and frontline workers face at the point the decision is made to integrate the teams. In M&A scenarios, there is often a concerted effort to leave the teams alone for a period of time (generally within the first year) in an effort to address the primary impact to revenue with is the buying base of customers.
Addressing their concerns and potential fears in an effort to retain all revenue associated with the company acquisition is a priority. Optimally, a role mapping process takes place during due diligence to give the leadership team a good picture of the entire sales organization talent pool, but often this does not occur. When a sales leader has this information in their hands, it’s a great tool to begin to communicate and assuage unfounded fears of the sales team, and to demonstrates to the whole team that leadership has a foundational understanding of what people do. When there is a great disparity across roles, if the sales leader does not address this and communicate the understanding, this is where the team first begins to break down and undesired attrition can occur.
I recall a global communications technology company that we were called in to help with their integration of a recent acquisition. The acquired company was only slightly smaller than the acquiring one, and was primarily European, with a global footprint. The company that had purchased them was dominant in their field and was primarily a U.S. based organization. Inside sales meant two very different things across the companies and was managed very differently with vastly different expectations. The parent company leveraged inside sales to sell hardware that carried with it strong branding, being a leader in its space. The role was considered entry level, and managed inbound leads with some of the more experienced team members engaging in outbound lead generation activity. This role was also considered the training ground for the more experienced sales roles. For the acquired company, inside sales was their primary coverage model. Inside sales reps carried a large quota, and a minimum experience of 15 years in technology sales.
As you can imagine, two well-known companies with very different coverage models already knew “just enough” about how each sales organization worked, and this created a mass exodus from the acquired company of their best salespeople. The problem was that no one understood how the roles worked, and so the rumor mill went to work, and it was working overtime. People in the most experienced roles heard from within and from their competition that the parent company planned to eliminate the inside sales role from the acquired company and turn their business over to the large call center located in the United States. Consequently, they left and went to work for, you guessed it, their largest competitors. As it turns out, nothing could have been further from the truth. But since no due diligence had taken place up-front, it was now a scramble to do this work and for the sales leader to communicate what they knew. Notice that I said “what they knew” and not “what they were going to do about it”. The sales leader wasn’t sure what to do yet, it was way too early in the integration process to make any dramatic change.
Doing your due diligence doesn’t mean you have to have an answer yet, but it does mean that you need to communicate an understanding of the landscape and communicate that across the team so that everyone is on the same page. For now, it’s just good to know that this is a big challenge, and if not addressed early on, creates internal disruption and concerns that contribute to unintended consequences that include losing great people and losing good revenue. Communicate that you understand the differences across roles, let people understand what those differences are so you can begin to build a team that understands each other, and is not necessarily threatened by one another. How you conduct this role mapping exercise can be found here.
Part 2 of this series will focus on incentive compensation pay alignment to the role.
WorldatWork, in partnership with SalesGlobe, conducted a survey to gather information on sales compensation plan structures and practices to reward for sales success and drive performance to the goals of the business. Click here and complete the form to receive your copy of the full survey results.
In this survey we reveal big stories that include:
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