Sales Org Design: Sales Management – Scope of Control
I notice in many B2B SaaS companies there is a wrong organizational design starting with too many “player/coaching” issues which is function of what is known as a “Scope of Control“. Read on… and if this is feeling like it’s just academic or theoretical then I really recommend you to reconsider – this is as real as it gets and has a real impact on your revenue growth as I’ve seen again and again at many SaaS companies that struggled and yet were too resistant for their own good to change their strongly held opinions.
A while back McKinsey had a good article about determining the right span of control. I don’t mean to bring some theoretical or academic research to practical day to day sales management but these insights are actually very real and not as theoretical as some would initially tend to think.
So according to them, each role in can be mapped to 4 aspects of managerial complexity:
- Time allocation. How much actual time is the manager spending on her or his own work vs on managing others?
- Process standardization. How standard and formally structured is the work process (i.e. do you have well-defined systems/processes in place)?
- Work variety. How similar or different is the work of individual direct reports?
- Team skills required. How much experience and training do team members’ jobs require? How independent are the direct reports?
I see many earlier stage companies have “player coaches” rather than true VPs of Sales or CROs. And this is actually fine as long as they have 3-5 direct reports but no more. This was actually studied and well defined by McKinsey’s research and I totally agree as this is what I’ve seen consistently in operations. Someone who just manages can have 7-10 direct reports although the typical optimal number of direct reports for an full-time sales manager (or any manager) is 7. But honestly, there is no silver bullet and it’s not a one-size-fits-all.
Remember that there is a well known concept that when n people have to communicate in the group, as the number of people (i.e. “n”) increase on the team, their output typically decreases. The group intercommunication formula = n(n − 1) / 2. With 1 Sales Manager and 7 people on their team, that means there are 28 channels of communication. With 10 direct reports there are now 55 channels of communication. 3 more direct reports equates to a nearly 2x jump in channels of intercommunications on the team. When it comes to Sales Management, that is an unnecessary complication.
Therefore when people take the whole “player coach” scenario too lightly, I wonder if they realize that the cost is much bigger than having a real Sales Manager / Coach who spends more of their time coaching their sales team to grow sales faster rather than have much more limited time for the team and get stuck in too much intercommunication which takes up even more valuable time.
Note that the best leverage to improve the whole team is through the Manager of the team (1-to-many). If you have a great Sales Manager (i.e. starting with the VP of Sales) who has a full time available to coach and improve the team then that is worth 2x to even 10x than just having them also sell and spend half of their time doing what a regular sales professional can do on their team.