Hiring Your First CRO? Tradition is Not Your Friend.

March 1, 2021 Rolly Keenan

Swaths of business leaders talk about tradition and precedent as a great thing. However, the reality is that using the past to guide the future in business can actually be good or bad. It seems a subtle point to make but when it comes to hiring your first Chief Revenue Officer, I’d say it is critical to understand that traditional onboarding hampers success.

As with many considering hiring their first CRO, one could expect to see heads of marketing, sales, CEO's, and startup founders trying to capitalize on their business momentum and bringing in a CRO. The intention behind the hire is often to coordinate a host of revenue influencing departments and organize income generation. It sounds like a fantastic opportunity to rid an organization of clumsy process.

Hiring a CRO: The Right and Wrong Way

With opportunity in mind, the CRO onboarding often conforms to a precedent of how executives have always been hired in past companies and operations. The leadership decide what the role and pay looks like, what the experience profile should be and the types of organizations that this new executive should come from. Inevitably, a head-hunter or recruiter is procured to “go find a CRO” and all that detail is just in the mechanics of normal business. The onboarding process falls into routine as if they were hiring a chief marketing officer, head of sales or a chief financial officer.

The difficulty is that a CRO is different and hiring as normal is detrimental. It lacks sophistication and understanding of the CRO role. It lacks the appreciation of the duty that leadership in marketing, sales, service and success leadership have to revenue. Without redirecting these roles and instilling collective responsibility, how can a new CRO be effective? There is a plan that is necessary. Steps that are necessary. There is a foundation that is critical in order for an organization to actually be ready for the Next Generation Executive: the CRO.

Of course, I am assuming this is how the hiring organization views their first CRO: as the next generation executive although many do not. They may see this as a new C-level role that takes the place of 2 other roles—the CMO and head of sales. Or they may see it as a mathematical addition to the team—another dotted line C-level executive that has a seat at the table capable of arguing the pure math when making decisions in sales, marketing and the like. It is not as straight-forward as filling a role as much as it is changing the fabric of the enterprise.

In my experience, without putting in the sequential groundwork to prepare for this new executive, you are likely to see very little difference in business performance at best. In fact, at worst you could see confusion and frustration at all levels. Before I explain one of the key steps to setting a new CRO up for success, I will make a plea. For this new executive role, don’t pursue the familiar route of onboarding. Don’t just go through the motions of hiring an executive search firm and looking for the perfect Rockstar executive that showed exemplary success as a CRO at another firm. Consider the deeper impacts and put in the groundwork.

Reimagining the CRO Role

In our new book, we detail 4 key steps to bring in your first CRO. In Step 3, we advise the need for thorough and robust discussion surrounding the alignment of compensation between your Modern Front Office Executives. These executives are typically the CMO, Head of Sales, Head of Customer Support, and Head of Customer Success - the customer impacting leaders of your business.

For most of these positions, compensation packages rely, in part, on variable incomes or bonuses related to the achievement of department goals. Unfortunately, when priorities are divergent, the bonus system encourages conflict or even a deterioration of revenue. Hardwiring revenue unhelpful KPIs to leadership bonuses regardless of the overall cohesive outcome are among the many costs to individualized remuneration systems.

The answer to this issue lies in creating three shared goals that account for the majority of individual executive bonuses – deal size, cross-sell and retention. Collaborative goals not only encourage teamwork and engagement but create mutual accountability for business performance without sacrificing service.

For example, shared responsibility to the above goals mean the Head of Support is no longer solely focused on closing out a service ticket as fast as they can. Bonuses should not be linked to getting average support times to under 3 minutes at the expense of making sure that customer feels supported enough to renew their contract with the company. The Head of Support now shares in the 3 key priorities that are far and away, more important than cutting the support time.

It needs to be in the financial interest of your top leaders to work with all other Modern Front Office leaders to accomplish their most important goals. Once this has become the norm, which we believe takes a minimum of 3 business cycles, there will be a natural evolution of Revenue to being a new shared focus. All the Modern Front Office executives become, by definition of their organizations’ expectations, focus on the whole of Revenue.

What do we mean by business cycles? The cycle depends on the industry. I could see cycles running in quarters or seasons in retail, while a business cycle for airlines might be much longer. It is also understandable if there is leadership turnover, or contracts with particular leaders that need to come to an end that would drag this out longer than three cycles. The key here is that the organization needs time and patience to adjust its focus.

In Conclusion…

If you believe that the CRO is just another executive level title that you can simply slide into the business momentum you’ve created, you may not find this article very helpful.

However, if you are looking to bring on your first CRO because you see the same vision, we see with our clients at Tegrita—that Revenue should now be the headline for all your customer-facing executives to roll-up under then take a moment to consider this: All the past decades of business momentum across thousands of organizations created people-centered, siloed departments of sales, marketing, support and success. You’ll need some time, albeit less than decades, to lay the groundwork for the next generation executive. Your new CRO.

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