Reporting Structure

Here’s how it typically goes:

A startup hires a VP of Sales. S/he actively sells to customers until enough growth or funding comes in that a team of reps can be hired. The reps will be expected to be very well versed in the product details. In super technical areas, an initial SE or two may be hired to support the sales staff and perhaps participate in services implementations.

The next level of growth changes dramatically based on several variables.

The two somewhat conflicting goals when considering the reporting structure are:

  1. Checks and balances
  2. Sales alignment

Checks and Balances
In a perfect world, reps and SEs would be ideally compensated on fostering deep, long-term relationships with customers. Because this is usually not the case (they end up being purely quota based), sales engineering has morphed into having a check and balance responsibility on the account. Ask any customer which vendor role has higher credibility, reps or SEs, and SEs will always win out.

If I was a sales manager that would stop me in my tracks. I can’t think of a more dangerous symptom as this effectively means a lack of trust pervades the relationship with the customer. Why most sales organizations accept that as business is usual absolutely confounds me, but that’s a separate topic. Because of more frequent turnover, overt focus on quota, changing account assignments, or similar systemic problems, SEs are often the bedrock of the customer relationship. They are trusted. SEs are put in a position of checking and balancing the rep within the account (i.e. the true guardian of the relationship).

For the record I don’t think that’s right, but I do understand that that’s how it is most of the time. With that in mind, as the sales organization grows, a separate SE management chain is usually in order to prevent the SE getting steamrolled on the account team.

The 2nd aspect of this system is that most reps and sales managers have never been in the SE role. I personally believe that most sales managers could manage SEs quite effectively. There have, however, been enough that couldn’t that it has more or less removed that as an option for all but the small and/or extremely enlightened sales organizations.

I do understand the inherent difficulty. Good SEs can bring extreme clarity to complicated scenarios. If you’ve never been in that position, it’s very easy to not notice the extent of preparation that goes into it. Things like extensive product and industry training, trade shows, lab time, customer presentation or demonstration prep, technical research, etc. can all seem like time spent not selling. Simple is HARD, and it takes time. Time out of the field is still one of the hottest debated issues between sales and SE management today. Having the SE manager as the gatekeeper to taking this time away from the SE, thus, is a necessity to ensure maximum effectiveness.

Removing the need of checks and balances, it makes the most sense to get everyone on the same team and as close to the customer as possible. This means that reps and SEs would report to the regional/district sales manager and be tied to specific accounts. If we need the checks and balances what is the next best thing? Optimally you want an SE leader for every line of business that your sales organization is broken down into and reporting to a sales director or higher depending on the size of the company. Putting SE managers reporting into regional/district managers does not create enough separation to implement the gatekeeper role.

Having a central SE organization under the head of sales can also work, though it can introduce some tough political issues. Sales directors will all feel they not getting enough resources, or will be tempted to lay blame for loss of sales on the SE organization (scapegoating).

Breaking SEs up into more than one group can have disadvantages of less pooling of resources or fewer conversations between areas, though this can mostly be solved with the assignment of central person/team that can act as a coordination point. This is especially important in larger companies that can benefit significantly from combined budgets for training, events, lab resources, etc.

If you’ve had superior results with a particular model, I’d love to hear about it.