Pricing insight: What hiring managers should know for pricing roles
Pricing insight:What hiring managers should know to recruit pricing roles
Written by Joanna Wells, Author of TeamBuilder360, & Director of Taylor Wells – Experts at building pricing teams
Pricing insight talent in Australia is in short supply. There just aren’t enough people (especially for mid to senior positions) with the expertise in B2B pricing insight and commercial management. More often than not, people have ended up with a business card or LinkedIn profile that says “pricing” on it without the pre-requisite skills, testing or certification. People “in pricing” are often doing something else like accounting, sales ops and marketing until a pricing-focused role just came up. And in some cases, people are simply assigned to the task (as opposed to being a good fit for the role).
Dedicated pricing insight and experience is scarce: There isn’t the volume of pricing people out there with dedicated careers in pricing management. Even if you found pricing managers with a number of years’ pricing products and services they may have limited knowledge and skills to practice value based pricing management and/or align their marketing, sales and pricing insight architecture to customer value drivers. It is a mistake to assume that all pricing managers have the same levels of knowledge and skills simply because they have a professional background in pricing. Even today, the majority of pricing managers operate within a cost plus pricing framework regardless of the commercial requirements or business model constraints at hand (even though a cost plus mentality is a major contributor to margin erosion).
Specialist recruitment, team composition and pricing talent evaluation should be three integral elements to building a specialist pricing team (and avoiding bad hires) in a marketplace with a number of skills and talent gaps. Many businesses, however, have little insight into the capabilities of pricing people and teams. Few measure individuals’ pricing competency, then tailor recruitment and training to fill skills gaps. As the B2B business environment gets even more complex, it can be hard to move people between roles. Decisions regarding promotions are too often subjective. Without proper analysis, aligning pricing skills to strategy is guesswork.
Why is this happening?
Pricing management is a relatively misunderstood and under defined function compared to sales, marketing and finance functions. Sales and marketing management functions have at least 80+ years’ development on the relatively new pricing function. Say you work in sales or marketing and people generally have a pretty similar reference point and understand what these jobs entail. Say you work in pricing and commercial management and there will be a multitude of interpretations, definitions and reference points (and quizzical looks).
Pricing and commercial management is not a certified or regulated discipline in the same way as accountancy or actuary. It does not require post graduate or professional qualifications, examinations, and pass marks across all key competencies to be certified a pricing practitioner. Yet, pricing teams are critical to business growth: They can manage millions of dollars of revenue at any one time. They can be central to leading and engaging teams to make better pricing decisions. And, they are relied upon by other teams to put commercial insight and pricing best practice back into the sales process to protect and grow earnings.
The era for value based pricing professionals
Over the past 20 years, large companies in B2B industrial across the USA, EU and ANZ have made consistent and substantial investment into recruitment, talent evaluation and team development. Large businesses like Caterpillar, DuPont, DOW Chemical and Coca Cola have all developed a talent pipeline of pricing and commercial executives. All of these businesses use talent evaluation and assessments to ensure employees are working in the right functions and roles. They all screen and vet candidate capability and entry to specialist pricing teams. Each of these businesses has talent management programs for pricing and commercial teams. Caterpillar, for example, has made pricing insight a core strategic capability (as stated in their Global Deal Business Model program) and there are at least two pricing insight executives on the Caterpillar board of directors.
Overcoming mismatches in the business through pricing insight
1. Specialist recruitment
Recent research show 49% of professional and managerial appointments are unsuccessful. Finding the right pricing people increases productivity across the organisation. Pricing management hires are critical to business growth, but they also come with a high degree of risk. Poor appointments can reduce morale and increase attrition across previously high performing teams. Great pricing managers drive performance. To improve the quality of hiring for specialist pricing roles, challenge candidates to showcase their unique value proposition beyond CVs and past experiences. Maximise the recruitment process by engaging candidates with your commercial requirements and business culture. Be confident that you are investing the right amount of resources on the right person and role.
2.Good team composition
In fast changing environments, a number of mismatches are likely to occur in the business. How you make up a team and mobilise talent will help you identify risks and opportunities. Honest conversations with some team members may be required to find a place where skills are a better fit.
A lack of buy-in and support can often reduce the perceived value of the pricing team in the business. And, when this happens, the pricing team becomes an administrative reporting function, as opposed to the revenue generating machine it ought to be.
4.Targeted pricing coaching
A bad hire will eventually impact net profitability, disrupt the sales team and effect team morale. When teams lack (or are perceived to lack) pricing skills and real world knowledge, pricing teams will struggle to gain respect and momentum in the business and with customers.
If people automatically reject price changes or recommendations it is generally because there is a lack of trust and confidence in current pricing governance: i.e., the pricing strategy and/or the teams’ ability to implement strategy and/or price management misalignment, politics, silos or turf war (as described by Patrick Lencioni).
6.Trust & accountability
A causal driver for compliance or resistance to pricing generally comes down to trust. If there is limited trust in the strategy, team capability and pricing system (i.e., list price and discount structure), it is very difficult to cultivate team accountability for pricing decisions and performance (and a blame culture generally ensues).
Taylor Wells:What hiring managers ought to know before recruiting pricing positions is written by Joanna Wells, Author of TeamBuilder360, & Director of Taylor Wells – Experts at building pricing teams
Taylor Wells is a specialist advisory firm that has developed a search, evaluation and recruitment process in the field of pricing, commercial and analytics. Our business was started after identifying weaknesses in the traditional agency recruitment model. Our purpose is to support management and HR to eliminate the risk of a bad hire. Our workshops and diagnostics ensure pricing or commercial teams are deeply engaged with the sales and marketing teams to achieve greater levels of margin and earnings growth. We have developed our own digital platform to identify and evaluate talent and we partner with subject matter experts to help us operate efficiently.
Director of Taylor Wells
BA/ MA Psych. CANTAB, Msc Org. Psych, Dip.Couns Psych