Empowering sales team is good, over- empowering not so much. Strike the right balance!

Off late senior management has been focusing on empowering the sales team, but they generally tend to find a right balance. This has been a cool-mantra for the senior leadership, especially very common with startups and mid-size firms, which have prioritized sales on top of everything. Most of the leaders fail to strike the right balance between empowering and over-empowering. Many misunderstand the difference between the two and then end up choosing the wrong one.

What empowering sales team means.

There is a no straight forward formula for this, instead finding the right structure for the sales team and their rights within the organization depends on nature/size and dynamics of the organization and industry. Many believe that giving all rights and powers (which can overrule processes and controls) is empowering, this definition fits for having an over-empowered sales team. This structure may yield short term rewards like spiked top-line, notional EBITDA (accrued profits, not cash, remember cash is king), high motivation among sales and other allied teams. In cases where the sales team has not followed the processes or have taken necessary approvals (which is not required in this structure, since they are powered to take decisions).

What this leads to is, sales team take decision on behalf of credit and collections team, as they may approve a credit term by themselves (not required to go to finance, because the management believes in having sales team taking all decision and close the deal). If I can go on with examples like this sales team can take over taxes (will take decisions on tax matters, because they need spontaneous answers on tax, since they need to close), commercial (had to accept the partners/customers commercial, reason- had to close the deal), this list goes on.

These short-term benefits can turn toxic for the origination who fail to strike the right balance, a bad credit decision end up not having any cash in system, despite fancy top-line which was booked, and sales incentives were paid out, tax decision and other commercials decisions can end putting organizations into losses and compliance issues. In short, the short-term benefit is not a benefit either for the organization nor for the sales team, as it may lead to long term and irreparable problems.

The leaders believing in giving unquestioned rights to the sales team, don’t believe in setting up processes or just trying to replicate large organization. Both these approaches are lethal, as processes are building blocks of any set-up, and replicating just one structure of the empowering sales team will not work. They either ignore other control (segregation of duties) and systems which supports the sales team in large organizations get and each of their transaction is closely monitored well to mitigate any unforeseen credit risks, tax exposures or any commercial failure. Large companies invest heavily on their IT infrastructure to support these kinds of on-spot decision making, with use of new age data science, AI and machine learning.

The achievements of an organization are the results of the combined effort of each team, whether it be the customer facing sales or the back office support team.

As the old saying goes – you learn by observing others, by listing to industry peers/other leaders, or learn by your own mistakes. All ways are fine as long as the wheel of learning is moving, the difference lies on how much cost you pay to learn.