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  • Duane Cashin

Compensation As Recruitment Strategy

Updated: Feb 17



If you feel like it’s getting harder and harder to attract great sales candidates, you’re right. 

Luckily, we can help.

Getting quality candidates is a tough job that requires an overall hiring strategy (as opposed to haphazard attempts at posting jobs and making rushed decisions that just cost you money). 

Part of that strategy is developing an attractive compensation plan.

Now, while we have argued that most compensation plans don’t motivate in the way that they used to because candidates are growing more intrinsically motivated, that does not mean you can ignore compensation completely! 

Salespeople have to make a living, and the good ones know what they’re worth and will demand they get it.  ​ Crafting incentives, including compensation, is critical to attracting and retaining good candidates (it’s just not the only strategy you can have).

That being said, consider the following assumptions about sales compensation:

1. The higher the compensation, the better. 2. Compensation isn't that important to most salespeople. 3. Compensation is always relative. 4. Base salary is usually more important than the percent of the commission.

Do you believe these statements to be true or false? In reality, the only true statement is #3.

Surprised?

If so, then how you develop a compensation plan for your sales force may need some work.

Consider the following when designing it:

1. Job requirements set the pay.

If the job isn’t particularly difficult, or there aren't many significant requirements, expectations, experiences, or expertise required, then $40K may be fair.   But, if what you seek is a salesperson who has had success selling expensive products or services to CEOs in a highly competitive space, and you need this person to both find and close new business, then you are describing a salesperson who would expect a compensation plan to pay much more than $40,000 (think six figures).

2. Forget industry standards.

Forget the notion of paying according to industry standards. Why? Because you won’t always hire a salesperson with experience in your industry!  The most effective candidates are often the ones who can be successful across multiple industries. These reps will bring business acumen and depth to your team. If your industry provides an $80K base and the salesperson being interviewed comes from an industry that pays just $35K base, you will overpay and under motivate.

3. One size does not fit all.

Once again, you'll need to move away from the one-size-fits-all compensation plan. Extrinsically motivated salespeople will thrive on a low base and high commission plan while intrinsically motivated salespeople will perform more effectively on a high base with a small commission plan.  Always ask candidates to provide an earnings history broken down by salary and commission (and bonus if applicable). This will help you know what they expect.

4. Consider the salesperson’s needs.

What a salesperson needs to earn to pay bills and support his or her lifestyle and family must be considered at the start, and you may need to subsidize this person during ramp-up if the plan is weighted toward commissions. They just won’t be making enough at first.  What salespeople desire to earn to get what they want in life must be considered for long-term retention as well, regardless of how they are motivated.  As a rule of thumb, salespeople who experience consistently growing income with you will stay with you. Those that don’t will look for their next opportunity.

Are you making costly mistakes when it comes to setting your company’s compensation plan? (If you’re unsure, you can calculate them here.) ​ If you are, please reach out to us for help. Together, we’ll develop a plan that will help you attract and retain the very best.

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