During a recession, scale-ups should avoid the unnecessary risks, costs and stress of hiring a full-time sales leader and consider a fractional VP of Sales instead.
In the last few years, scale-ups have benefitted from record funding levels with $100 billion of capital pumped into European tech in 2021 alone. But, with inflation on the rise and a global recession on the horizon, scale-ups on both sides of the Atlantic will face markedly different conditions in the near-future.
As sales growth stalls, scale-up CEOs may be tempted to revamp the sales team by hiring a VP of Sales, but hiring a full-time sales leader during a downturn is not only risky, it’s unnecessary.
An unnecessary risk
No full-time hire is risk-free, but hiring senior commercial roles like a VP of Sales is particularly challenging. According to Scalewise’s May 2022 survey, more than four-fifths (83%) of senior leaders in b2b tech think filling senior commercial roles is hard or really hard with most hires taking at least six months.
Even then, there’s no guarantee of success. Hiring the wrong sales leader is not only one of the most common scaling pitfalls, but also one of the hardest to correct. After taking the time to hire, onboard, test and then realise your mistake, it can take between 12-24 months to get back to the drawing board, albeit financially and motivationally poorer than before. When you factor in the opportunity cost and growth disruption of a bad hire, it can end up costing 5 to 27 times the sales leader’s salary.
In short: is hiring a full-time sales leader worth the risk?
An unnecessary cost
During periods of uncertainty, investors batten down the hatches, focusing on sure-things and squeezing access to funding. With investment at a premium, scale-ups need to reduce their cash burn and improve their capital efficiency to avoid a potential downround or borrowing at worse terms. A great VP of Sales will eventually implement efficiencies across the sales process, but the added productivity will come at a cost.
According to Glassdoor, the average salary of a VP of Sales in London is £110,000, but scale-ups will have to spend double that for a top-of-the-range sales leader, not to mention recruitment fees and additional cash compensation. This outlay will not only force drawbacks elsewhere in the company, but can also disrupt a carefully cultivated culture during a sensitive time.
In short: is hiring a full-time sales leader worth the cost?
An unnecessary stress
Growing a scaling-up is stressful at the best of times, but in periods of economic turbulence, it can feel like you’re constantly putting out fires. With additional pressure from the market, investors and competitors, it can be tempting to gamble on a VP of Sales to ease the strain, but hiring in the current climate is hardly a walk in the park.
Even if you’ve hired a VP of Sales before, know exactly what to look for and have the financial resources to spare, there’s no guarantee you will easily find a sales leader that fits the bill. Hiring deals can fall through for myriad reasons, be it personal terms, company culture, remuneration or simply a change of heart. Drawn-out searches drain internal resources both physically and mentally, with weary CEOs more likely to make rash decisions.
In short: is hiring a full-time sales leader worth the stress?
Hiring a fractional sales leader: the alternative solution
Great VPs of Sales are highly sought-after for a reason: they can revolutionise your sales strategy and accelerate growth. But, during an economic downturn, scale-ups can access this impact without the risk of hiring a full-time sales leader by hiring a fractional sales leader instead.
As fractional sales leaders have experience leading sales along the scaling spectrum, scale-ups can choose a VP of Sales with the exact skills and expertise for their current need . Working a fraction of the time, they cost a fraction of the salary, enabling you to hire an exceptional VP of Sales that you might not have been able to afford otherwise.
Focused on pre-agreed tasks over a short-period of time, scale-ups can even outsource fractional hires to Scalewise reducing the stress of hiring.
In short: fractional is the perfect solution for hiring in a downturn.
To find out more about interim and fractional sales leadership, check out our Definitive Guide to Interim and Fractional Leadership.