Today I tackle the third part of the Congruence model, that is the Human Resources piece. Thank you all for the kind words and flattery. I understand that some of you actually enjoyed the prior posts, while others actually went back and revisited, compared notes, and even used some of the methods I provided to further drive the effectiveness of their strategies.
Recruitment and Selection of Key Account Managers
As a leader, manager or owner, you must put in place appropriate procedures for recruitment, selection, and training to generate key account managers who can effectively carry out their several roles and responsibilities. You must also develop ways of retaining them. In particular, reward systems must be carefully thought out. Clearly, financial compensation is an important issue, but you must also consider several other types of reward mechanisms.
Candidates for this position could be recruited either internally or externally.
- Internal Candidates: Typically, sales consultants make the easy transition to key account managers. However, the capability profile of successful key account managers is quite different from that of successful seller-doers; not all successful salespeople are able to make the transition. Since relationship building is such a critical factor in key account management, your company’s needs for high-caliber managers in other positions must be carefully weighed against both the key account manager’s personal development goals, and the requirements of key account relationship.
- External Candidates: The second source of key account manager candidates is executives working for other organizations. Such candidates may have significant key account management experience and/or considerable knowledge, experience, and relationships at the key account, developed with a competitor, a noncompetitive company, or as an employee. Such candidates may lack intimate knowledge of the account, but balance this deficit with powerful key account credentials.
Training of Key Account Managers
The specific training required by newly appointed key account managers is in part a function of the major customer, its key accounts, and the nature of the desired relationships. It also depends on the knowledge, skills, abilities, and experience of those executives appointed to be key account managers. Some key account managers may require specific training in planning, others may benefit from better negotiating skills, proposal development, and time management. Of course, training should not be a one-time event, and periodic educational and training programs should be considered.
Retaining Key Account Managers
Well trained effective key account managers are an extremely valuable corporate resource. To executives in major account, if the relationship is successful, key account managers often will be the face of your company. If a key account manager leaves his or her job, the potential exists for any value residing in the relationship to disappear overnight.
Management must realize that in their plan to establish successful KAM, if your compnay lags the market in rewarding key account managers, you will surely lose critical personnel. Certainly, you will have to maintain a database on the destination of departing employees to ascertain where noncompetitive situations exist.
In addition to financial compensation, you must consider the full range of available reward systems—promotions, other formal rewards, and intangible personal rewards— so as to preempt unexpected key account manager resignations. Management should also consider processes such as identifying role models and developing mentoring relationships, as well as assisting the key account manager in balancing personal and family life with work responsibilities. 2
Rewarding Key Account Managers
The starting point for developing a reward system is clarity on the requirements of the job. In particular, you must be clear about the appropriate performance metrics. Let’s discuss performance measurement before turning to reward systems.
Performance Measurement: Using the “balanced score card” approach, you will have to measure:
- Financial performance– including sales revenues and profit contribution.
- Growth– including new applications developed and sales to previously unsold customer divisions.
- Customer– including customer satisfaction
- Internal– including the quality of internal firm relationships, inventory management, and team leadership.
In measuring key account manager performance, you should select metrics that meet four often-competing objectives:
- Alignment with the vision, mission, strategy, and objectives at the key account
- Controllable by the key account manager
- Trackable by the firm’s reporting systems
- Focused, meaning avoiding too many measures
Reward Structure: Should be highly motivating and should generate high levels of effort and performance. Some of the more popular and highly sought after rewards include financial rewards, promotions, recognition, and other intangible personal rewards.
Compensation should involve mainly three principal variables (base, commission. bonus). The greater the amount of revenue the key account manager can impact, the greater should be his or her financial compensation. The more importance given to current sales revenues as the key account manager’s objective versus long-run development, the greater should be cash compensation.