A head of sales is the person who organises salespeople’s work and makes decisions so that the department meets its agreed sales plan. They decide what the team should do, ensure it gets done and take responsibility for the result within the authority given to them. The owner sets the goals, commercial terms and permitted spending, while the head of sales manages the department within those boundaries.
The head of sales refused a salesperson’s request for an extra discount. The salesperson wrote to the owner, got permission and sent the customer a new proposal. The head of sales learned about it from the change in the deal value. In this illustrative example, everyone is busy selling, and the buyer received a quick response. But the next disputed decision will go back to the owner: the team has already seen where it can get a different answer.
It is easy to explain this as a lack of authority. So is sending the head of sales to learn to be tougher. But first you need to understand exactly what the owner overruled. Did the head of sales make a calculation error? Did they refuse within their authority? Or did they refer an exception to the owner because they had no authority to approve it themselves? These situations look alike from the outside. They call for different actions.
I believe the head of sales’ authority is particularly clear when they turn someone down. An action everyone approves of passes quietly. A refusal shows whether the company recognises the head of sales’ right to choose.
The head of sales role
The head of sales role defines a person’s place between the business’s goal and salespeople’s daily work. A salesperson guides the buyer towards a deal. The head of sales decides how the team should work: who needs help, which negotiations need preparation, which mistake to correct and where employees should focus their time now.
A commercial director, if the company has one, has a wider range of decisions to make: sales areas, channels, commercial terms and the allocation of resources between them. In a small company, these matters remain with the owner. The boundary depends on how the business is organised, so the job title should be accompanied by a specific agreement on decisions.
A strong salesperson can handle difficult negotiations on their own. A head of sales also needs to deliver results through other people. If they personally close deals for the team, the owner should decide how much time to leave them for management. Otherwise, their own sales will take up the whole day, and everyone else’s mistakes will wait for a free evening.
The daily tasks are covered separately in “Head of Sales Responsibilities: What to Assign to the Head of Sales”. Here, the agreement concerns something else: which decisions by the head of sales take effect without your response, and on what grounds they can be reviewed.
Which decisions the head of sales makes independently
Start with the actions that salespeople currently come to you about. Ask the head of sales to collect these requests from the last five working days. For each request, they should state their proposed option and why the owner’s involvement was needed. This list will quickly separate matters that require your money or a change in terms from the habit of asking permission to carry out the department’s work.
It helps to distinguish three ways of making decisions in the agreement.
- Decides and acts independently. The head of sales assigns tasks to salespeople, chooses how to help with negotiations, requires a proposal containing an error to be corrected and arranges training in a specific skill. No prior approval from the owner is needed if the action fits the agreed working conditions.
- Decides independently and informs the owner. For example, they reject a request for a concession forbidden by commercial rules, even though the salesperson expected to close a large deal. The owner receives the reason for the refusal and an option for continuing to work with the buyer. Informing the owner does not turn into waiting for permission to refuse.
- Prepares options for the owner. The buyer asks for terms beyond those permitted, extra spending is needed or the company’s commitments need to change. The head of sales brings the calculation, options and their recommendation. Until a decision is made, the sales team works under the existing terms.
A common confusion lies in the second group: “keep me informed” starts to mean “wait for my reply”. Write down explicitly which messages require a reply. Otherwise, the formal right to decide will remain, but work will still stop until the owner joins the conversation.
Decisions on prices, the budget, the product and staffing matters that rest with the employer do not pass to the head of sales with the job title. They prepare proposals to change these. If the owner grants authority to make specific commercial concessions, they separately set the limit and the conditions for using it.
Discounts within and beyond the head of sales’ authority
Let’s take an illustrative example, not a RENTROP case study. It is here to discuss authority; the amounts and limits have been chosen for the calculation.
An order sells for 100 thousand roubles. The direct costs of fulfilling it are 80 thousand. Before any discount, 20 thousand is left for other costs and profit. The owner set a lower limit of 15 thousand for this amount and authorised the head of sales to approve concessions within that limit, with the order contents unchanged and full payment in advance.
- A discount of 3 thousand: the customer pays 97 thousand, leaving 17 thousand after direct costs. The decision is within the head of sales’ authority.
- A discount of 5 thousand: the customer pays 95 thousand, leaving exactly 15 thousand. This is the limit of their authority.
- A discount of 8 thousand: the customer pays 92 thousand, leaving 12 thousand. The head of sales has no authority to approve this proposal independently.
Fifteen thousand cannot be called net profit here: the other costs have not yet been deducted. To choose the limit, the owner needs to calculate the figures for their own business. There is no point in copying someone else’s five per cent discount into your company.
Now it is clear what a refusal means. When the request is for eight thousand, the head of sales is respecting the set limit. When the request is for three thousand, they have the right to decide whether that deal needs a concession. The permitted maximum does not oblige them to give it to every buyer. Otherwise, the head of sales has been handed a calculator, with the choice left to the salesperson.
If the contents of the order or the direct costs change, the old calculation no longer provides a basis for the decision. The head of sales first obtains new data. Authority to grant a discount depends on the deal’s terms, not just on the percentage in a reference sheet.
How an owner can review a refusal and preserve the head of sales’ authority
Banning employees from contacting the owner is a poor way to take this idea forward. The head of sales can make a mistake, miss information or hide a breach. The owner needs a direct channel for reports about such matters. But asking for the same request to be considered again and reporting a new fact require different responses.
A new fact has emerged. Suppose the direct costs in the illustrative calculation fell to 76 thousand, with the order contents unchanged. After a concession of eight thousand, 16 thousand would remain. This is now within the set limit. Pass the new data to the head of sales: they now have grounds to reconsider the refusal independently. The basis has changed; the authority remains in place.
An exception to the limit is needed. The costs are unchanged, but the owner wants to agree to a remaining amount of 12 thousand for a specific business goal. That decision is theirs. Record the following with the head of sales: why the concession is being made, how much the company is giving up beyond the authorised amount and whether the decision applies only to this order. In the example, the amount left is three thousand below the set limit.
There are no new grounds. The salesperson simply disliked the answer. The owner then refers the matter back to the head of sales, leaving their decision in force. One way to respond is: “Show the head of sales what information they have not taken into account. If the terms are unchanged, their decision stands.” This wording is ready to use with your team.
The owner retains the right to stop a mistaken action immediately. After stopping it, they should explain exactly what was not followed: a company rule, a calculation or an agreement with the buyer. If they only say “I decided differently”, the head of sales will not learn what to correct in their next decision.
Look separately at recurring exceptions. If the same condition has to be bypassed again and again, the owner will need to review the condition itself or stop making exceptions. Otherwise, the head of sales will be telling buyers about restrictions that no one inside the company follows any more.
An agreement you can use with the head of sales
Below is a template for the company in the calculation. It connects decision authority with data, notification and a review process. You can give it to the head of sales so they can prepare your terms.
By Friday, 16:00, prepare an agreement on independent decisions in the department. Attach the requests salespeople have made to me over the last five working days and mark which ones you could have resolved yourself. For commercial concessions, propose limits supported by calculations. State separately when I need to reply and when receiving a message is enough. At the meeting, we will agree what you can decide and announce the procedure to the team.
Completed section on discounts:
- Aim. Agree terms with the buyer without the owner’s daily involvement, while maintaining the set amount left after direct costs.
- The head of sales’ authority. Approve or refuse a concession with at least 15 thousand roubles left, the order contents unchanged and full payment in advance. The choice is explained by the terms of the specific deal.
- Data for the decision. Confirmed order contents, current direct costs, payment terms and the reason for the buyer’s request. The head of sales arranges for this data to be prepared.
- Limit. An amount left below 15 thousand, different payment terms or changed order contents require a fresh review under the relevant conditions. Until then, the salesperson does not promise the buyer a concession.
- Referral to the owner. The head of sales passes on the calculation, an available option within the rules and a recommendation on the exception. They state when the customer expects a reply.
- Review. The head of sales receives new information first. The owner approves an exception with a stated reason and scope. An employee has the right to report a breach directly to the owner.
- If the owner has not replied. The department offers confirmed terms and tells the buyer that the additional concession has not been approved. Silence does not count as permission.
The owner announces the agreement. The head of sales should not have to prove to salespeople that yesterday’s convenient route to approval is now closed. The first time someone bypasses the head of sales, the team will see whether the owner’s response matches the announced rules.
How to tell whether management has passed to the head of sales
The number of messages sent to the owner is a weak measure in itself. The department can go quiet while questions remain unresolved. What you need are decisions that have been carried through, with clear grounds and consequences.
For the first month of the agreement, ask the head of sales to prepare three examples by the last working day: an independent approval, an independent refusal and a request for an exception, if there was one. For each, include the original terms, the decision, the reply to the buyer and the outcome. If the deal is still ongoing, the outcome is its current status, without counting any future payment.
An independent approval shows whether they managed without your guidance. A refusal shows whether the limit held after the salesperson objected. An exception shows whether the owner received prepared options rather than a request to deal with the customer themselves. You do not need to check every exchange on the head of sales’ behalf to do this.
The department’s financial result is assessed alongside this: achievement of the agreed sales plan, concessions, payments received and losses. If sales have increased through terms the company did not intend to offer, a good figure does not resolve the question about management. If the department lost an order after a justified refusal, examine the reasons and whether the limit suits the business. You cannot automatically blame the head of sales for following your decision.
There is also a reason to reconsider the head of sales’ appointment. Their authority has been announced, information is available and the rule is clear, but they keep passing every choice up to the owner or fail to ensure that a decision is carried out. The discussion is now specific: which decision they left to the owner and what they lacked to carry it through themselves.
When you need a head of sales, and when you need to hand over management
If there is no one to make daily decisions, defining the authority creates a clear task: finding a person. RENTROP offers an outsourced head of sales for this. Before choosing someone, it helps to state which decisions they will need to make independently.
Another need arises when the owner wants to stop acting as the overall head of sales: replacing a person alone does not solve this task. RENTROP has a separate product for this — turnkey sales management.
In the opening example, the salesperson got a discount with a second message, and the head of sales’ decision disappeared without explanation. An effective handover of authority changes this very moment: the owner considers new grounds or an exception, while a routine refusal by the head of sales remains in force. The department gains a head of sales when that person’s decision still stands after someone has decided they want a different answer.