Our Sales Director and Operations Director are pointing fingers at each other because our gross margin on closed projects is slipping. How do we structure the Accountability Chart and assign clean ownership of gross margin on our weekly Scorecard?

Question

Tyler Smith · Accepted Answer

Gross margin erosion is a classic battleground between sales and operations. To resolve the finger-pointing, you must look at your Accountability Chart. Every number on your weekly Scorecard must have one, and only one, owner.

The Sales Director is responsible for selling projects at the approved pricing model and estimated scope. Therefore, the Sales Director owns the target margin at the time of contract signature. If sales representatives discount your services or make unrealistic promises to close deals, they are bringing bad margin into the business.

On the flip side, the Operations Director is responsible for executing that scope of work within the estimated hours and budget. The Operations Director owns the delivered gross margin. If operations takes a profitable contract and spends too many hours or resources delivering it, they are responsible for the margin slippage.

On your weekly Scorecard, separate these into two distinct metrics. Track sales margin percentage, owned by sales, and delivered margin percentage, owned by operations. When either metric drops below your target, do not allow the team to debate it during the Level 10 Meeting™ review. Put it on the Issues List and use IDS® to identify if the sales team underquoted the job or if the delivery team was inefficient. This establishes absolute clarity and accountability.