How does leadership development reduce turnover and retain talent in sales teams?

When it comes to finding and keeping top talent, the stakes are high.

Get it right and you create a culture of collaboration that’s supportive, where people strive for achievement and likely exceed targets (and have fun).

Get it wrong though and productivity slides, along with moral and the bottom line.

The financial cost of recruiting, onboarding, training and getting a new hire up to speed is significant.  According to Gallup, estimates to replace professionals in technical roles is 80% of their annual salary and frontline employees 40%.

If we split the difference and assume it will cost 60% of a salesperson’s annual salary to replace them, and the average tech salesperson is being paid in excess of $200,000, the cost to replace a team member is at a minimum $120,000 per hire.

Replacing 10 salespeople in a year?  That’s $1,200,000.  20 people across the team?  $2,400,000.  Even more concerning, Gallup report that replacing a manager can be up to 200% of their annual salary.

Ouch!  And this is without even considering the impact on client relationships!

So, what do you do?  It’s simple:  Create a culture where talent thrives – and stays!  Simple doesn’t mean easy though.  Simple means being disciplined around implementing a purposeful program, just like high-performance in any field.

The first step is to invest in leadership development.  The team at DDI have run the numbers, and high potential leaders are 2.4 times more likely to stay if there’s a clear development pathway.  88% of leaders also report being more engaged after a focus on development.

Awesome - but leadership development doesn’t just improve retention and turnover rates.  Strengthening and developing your leadership team improves success rates across a multitude of metrics in organisations - not least is a happier workforce.

The high cost of turnover is no surprise to sales leaders, nor is the destabilising effects of constant churn, but addressing these issues needs to go beyond short term fixes of just filling vacant roles.

Sales leaders need to come together with their peers from across the organisation to take a good look at what’s stopping the business from creating an environment that retains the best talent.  Doing this requires a programmatic approach with a clear structure that moves teams through the essential skills that build great cultures.

It’s also essential to acknowledge that the benefits of investing in development will take time – there are no quick fixes to change.

Effective leadership is a critical factor in reducing turnover with studies showing employees who feel supported by leadership are more likely to stay. Harvard Business Review found that leadership development significantly impacts retention, especially when leaders are trained in coaching progression not just promotion.  It’s also important leaders focus on retention for the organisation and not just their team by allowing people to experiment with roles across the company.  In other words, leaders need to help employees look for ways to grow and stay, not leave.

Collective success is an understood requirement in organisations, at all levels and across all structures.  But how often are organisations actually investing in coaching the skills required to achieve collective success?  In our experience, rarely.

The majority of leadership development or executive coaching is focused on individual skill development, so when it comes time to act as a team leaders have little formal skills to engage and end up reverting to old, ineffective ways of working.

Football teams don’t train their players with individual coaches on individual skills then show up on game day and expect everyone to magically perform as a unit.  Why do organisations expect that of their teams – especially their leadership?

Once you’ve decided to implement a leadership development program, how do you measure the results?

If we go back to our earlier example of replacing 10 tech salespeople, reducing churn rates by 20% through improved leadership development and culture gives you saving $240,000 a year.  Invest half of that in developing your team you’re still ahead.

But you’ll also start to reap the additional benefits that come with a great culture through strong leadership: increased engagement, productivity gains, better sales performance, and if you choose the right provider (ahem… like BREWYD ) a healthier workforce leading to less downtime due to physical or mental health implications.

Ultimately, how you measure success depends on the strategic goals of your organisation and getting clear on simple measures.

And finally, if you need even more convincing, DDI’s Global Leadership Forecast for 2023 showed that companies investing in leadership development at all layers of an organisation are far more likely to rank in the top financial performers in their industry - 54% report they’re in the top 10 within their industry.

The effects of a great leadership development program flow throughout an organisation.

They create a common language, a new way of communicating, a new way of understanding and moving through change.  They also build your talent pipeline from within so organisations are less reliant on looking outside to fill leadership roles.

So don’t accept that high turnover is just a part of life as a sales leader, it’s not inevitable.  Look at new ways to invest in leadership development that build high-performing cultures that thrive and people who want to stick around.

Explore BREWYD ’s leadership development program, our Executive Coaching or check out one of our half day workshops to see a new path forward to talent acquisition and retention for greater success.