The Herman Trend Alert newsletter (sorry, no link) provides some interesting statistics from a Cisco survey:

Now the international technology giant Cisco Systems has just released a study of its own organization demonstrating these benefits and more. Using telecommuting, Cisco estimates annual savings of USD $277 Million. In its in-depth “Teleworker Survey” of almost 2,000 company employees, the company evaluated the social, economic, and environmental impacts associated with telecommuting.

The study found that telecommuting significantly increased employee productivity, work-life flexibility, and job satisfaction. In addition, the report cited that “a majority of respondents experienced a significant increase in work-life flexibility, productivity, and overall satisfaction as a result of their ability to work remotely”.

The productivity gains were impressive. Approximately 69 percent of the employees surveyed cited higher productivity when working remotely, and 75 percent said the timeliness of their work improved. Sixty-seven percent reported work quality improvement. Telecommuting can also lead to better employee retention; more than 91 percent of participants said telecommuting was somewhat or very important to their overall satisfaction and 80 percent believed they enjoyed an improved quality of life.

Couple things here – the study does appear to be self-reporting - “…of the employees surveyed cited….”  This type of reporting is always a bit of a concern.  It would be more helpful if there was a technique for putting an objective metric to their productivity.

Second, the value of telecommuting in a candidate’s eyes is noteworthy.  91% said it is very important to their overall satisfaction.  When it comes to hiring salespeople, this is a crucial fact to keep at the top of your mind when designing a compensation plan.

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SellingPower.com’s article deals with something we have seen throughout our many years of sales assessing, hiring and coaching – financial comfort zones.  Here is a good explanation of it from the article (emphasis mine):

Eker stumbled on the concept of financial blueprints while running his first company, a fitness business. In that business, his trainers often referred to a body’s “set point,” or the metabolic rate at which a body is comfortable. Eker, looking back over his financial history one day, realized that again and again he followed the same financial pattern of making a lot of money and then losing it. Up and down, up and down for fifteen years. “Wow,” he thought. “In the same way we have a set point with weight, we must have a set point with money.” His follow-on observations of others confirmed his theory, that everyone has a financial set point they unconsciously return to all their lives.

So true – this plays out time and again in the sales world.  Salespeople often get caught in a stagnant mode once they hit their financial set point.  They stop prospecting, they find busy paperwork, they fine-tune tasks…essentially their behavior goes into cruise control.

When hiring salespeople, it is important to dig for this set point.  Typically a candidate will not provide it willingly, but you can pursue their past successes.  It is perfectly legitimate to ask for a previous W2.  It is always valuable to delve into the largest deals they closed and the commission they earned.

A candidate with enough of a history will show distinct financial set points that you can then determine if they are a fit for your position.  One last thought is that this set point works 2 ways – you won’t retain a salesperson in a $75K position when their set point is $150K.  If your compensation plan is inflexible, capped or unattainable, they will leave once they realize the ceiling.

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The Herman Trend Alert has a surprising report on a survey looking at employee perks for 2008.  The economy may be tanking, but employers are aware of the need to retain talent.

In spite of the drastic effects of the economy on the labor market with announced workforce reductions up 30 percent, a surprising majority of companies (66.7 percent) have chosen to preserve their employee perks. Ten percent of those employers said they had considered trimming perks, but decided to leave them at current levels.

Despite their need to reduce their expenses, almost 55 percent still plan to distribute year-end bonus checks this year (2008). Only 20 percent of the companies surveyed said they had cut or eliminated perks to contain costs. At the same time, 35 percent reported they had to cut these extras to save jobs.

…

The destabilized economy has led to major reductions in force. According to Challenger’s estimates, through September 2008, employers have announced plans to cut a total of over 750,000 jobs. Yet in spite of the softer economy, another survey conducted by a business research firm in Arlington, Virginia and ADP, the payroll provider, found that 34 percent of their respondents reported “recruitment and retention” as their top priority.

Looking at the findings from both of these studies, we can infer that a large percentage of employers understand the value talented workers provide to the organization. They know that if they do not take care of their employees during this difficult time, when the economy improves, those employees might leave.

Wise employers will hunker down and engage their associates to help them streamline processes, market smarter, and cut expenses. They will continue to resist reducing bonuses and perks, because they know the future dangers and choose to think long-term.

Remember Clark Griswold in Christmas Vacation receiving his Christmas bonus of a one-year membership in the jelly-of-the-month club?  I guess that would not be a good option in this instance.

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ManageSmarter has a good article that provides 10 ways that you can help your employees through the economic crisis.  There are some simple ideas on the list that a manager should do regardless of the economy.  What better way to retain your employees than to show your appreciation for their efforts?

1. Shortening the work week to four days with extended work hours will increase productivity and give a welcome break for people.
2. Consider giving turkeys to employees for Thanksgiving and accompany the gift with a card expressing appreciation for what everyone is doing.
3. Facilitate a car pool, coordinating rides or give a gas cards.
4. Hold regular one-on-one meetings with employees to learn of their financial situation and their stress levels.
5. Giving employees movie passes or restaurant certificates for excellent work.
6. Boost morale by having senior leaders conduct regular communication meetings with all employees to share what is going on with the company and to solicit ideas on how to help each other deal with economic uncertainties.
7. Bring in childcare services or set up a day care opportunity close to the office to lessen child care travel time and expenses for employees.
8. Make exercise programs and gym equipment available so they can stay trim and fit without paying monthly membership fees.
   Work with your downtown business association to see what after-hours shopping discounts can be arranged to assist employees with saving money.
9. Take some time now to write an individual thank-you card to each employee expressing sincere gratitude and appreciation for sticking with the company and thank them for their contributions.

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According to the most recent Workforce Recruiting newsletter (sorry no link available), 1,100 employers were asked what the main reason was for them not being able to hire their top candidates over the past two years.  Their responses were as follows:

• 35.9% - Said they went elsewhere for higher perceived pay.
• 15.5% - Said they went elsewhere for better perceived career development opportunities.
• 8.0%   - Said they went elsewhere for better perceived work/life advantages.
• 7.1%   - Said they went elsewhere for higher perceived long-term incentive/equity compensation.
• 1.5%   - Said they went elsewhere for better perceived benefits.
• 31.9% - Said they were able to hire the majority of their top candidates.

It would be interesting to know of the 31.9% that hired their top candidates knew exactly what was the deciding factor of the candidate who accepted the offer.

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I know, lame title, but I couldn’t resist. ManageSmarter.com offers up this article - Compensation Complexity Hinders Sales - regarding current compensation plans.  Here are some numbers they quote within the article (my editing):

Only 41% of sales leaders were satisfied with their current compensation plans (down from 59% two years prior), and only 46% believed their plans were promoting the correct behaviors for sales success.

Nearly half (46%) of sales force leaders believe their sales compensation programs have become more complex since 2006.

I always found the compensation plans to be more “complex” when I wasn’t at quota.  Successful selling definitely alleviates many problems.

But there is this:

The survey points out that many companies are making strides toward more effective compensation plans. Among the productive steps forward are companies using three or fewer measures of performance (73%), conducting a plan review at least annually (77%) and changing metrics less often than before (58%).

Those are 3 excellent points regarding sales compensation plans.  Companies that shift the commission structure around mid-term (weekly, monthly, quarterly, etc.) are generally demotivating their sales team.  Consistency is the best policy here.  Try to change it only at preset intervals (annually).

Measuring too much can also be a demotivator.  Simple, straight-forward commission plans work best.  We are proponents of providing commission based on gross margin in as many situations as possible.  This approach keeps the salesperson honest when it comes to discounting.  If they discount, they lose money themselves - a very good structure for money-driven salespeople.

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The more companies we work with, the more we see communication breakdowns being the root of most problems.  Our work with our clients spans more than just recruiting.  We assist them in onramping their new salesperson.  This function places us in the unique position of working with both the salesperson and the sales manager.

One of the more dysfunctional situations we encounter is a communication breakdown between the manager and salesperson.  One manager complained that the salesperson wasn’t doing what he asked, but he never confronted the salesperson.  Another time we had a salesperson who would not submit his weekly call report.  Ever.  Yes, he was let go (even we so-called experts miss on occasion).

Those experiences led me to this Selling Power article about compensation - a recurring theme on The Hire Sense this week.  The opening statistics are shocking (my emphasis):

According to a recent WorldatWork survey of compensation practitioners and HR managers, 76 percent of organizations report revising their sales plans every year as a matter of course. However, the same survey found that only 58 percent of organizations communicate these changes directly to the frontline sales manager.

Makes me wonder with whom do they communicate the change?  The article continues with an excellent point:

Since frontline sales managers are the people doing the hiring, their ability to understand the incentive plan is really critical to making the right hire and putting together the right recruiting message, says Stoeckmann. If they fully understand the compensation and incentive program and are kept up-to-date, they can be very effective recruiters.

As a recruiter, it is difficult for us to have a full understanding of the compensation (especially commission) plan.  One thing sales candidates always want to know is how “real” is the plan?  How many people make quota?  I can’t imagine a situation where a sales manager didn’t know those details.  That would be a tremendous red flag for a candidate.

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We have really come to enjoy Dave Stein’s posts.  They are timely and cut straight to the heart of the issue.  Today’s post is no exception.  Working strictly on the sales side of organizations, one of the areas we look at while profiling their sale is compensation.  Most importantly, we look to see if the compensation structure rewards the behaviors the company expects of the salesperson.  More times than not it won’t and from one of Dave’s comments, he sees the same issues:   

I am bringing this up because compensation is another dysfunctional area within many companies.  During the past quarter, I’ve been engaged with several clients where “errors of commission” are preventing them from achieving their team and corporate goals.

We ran into a situation a few years back where a company President wanted to upgrade his sales team and bring in an experienced national salesperson who could help him grow his company.  He was okay about having to pay more for sales experience, but his commission plan wasn’t aligned.  The commission schedule for a sales person to break the 6 figure mark meant he or she would have to more than double the total revenue of the company.  If they accomplished that feat, they should be running the company.

Through all this compensation discussion, Dave makes an extremely important point:

One important point: Having the right people in sales jobs comes first.  The best comp plan in the world doesn’t mean much when the salespeople it is intended to motivate don’t have the requisite skills and traits to succeed.

I couldn’t agree more.  If you don’t know where to begin, let us help you get started.

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In case you missed it, the IRS is raising the mileage reimbursement rate from the current 50.5 cents to 58.5 cents starting July 1, 2008.

“Rising gas prices are having a major impact on individual Americans,” said IRS Commissioner Doug Shulman. “Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile.”

Keep this new rate in mind if you have any candidate offers going out soon.  You will want to adjust the mileage reimbursement as this is a very hot topic among outside sales candidates today…along with telecommuting.

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This article from abcnews.com discusses different corporate plans to help employees deal with the rapidly increasing gas price.  Of all the creative approaches I have read of late, I think this one takes the cake (my bold):

The career search Web site Jobing.com’s program really helps employees’ wallets. Those who meet certain requirements (such as length of time at the company, a good driving record and completion of a safe driving course) can get their car completely wrapped with the company’s logo. The reward: 100% of the employee’s gas is paid for along with a monthly $500 stipend. The company has an approved list of cars that employees can choose to either lease or buy.

Peter Difilippantonio was one of the first employees to get a wrapped car at Jobing.com. He purchased his Jeep Cherokee in October 2003 and paid it off last year using the $500 monthly stipend. Since the benefit doesn’t end when the car is paid off, he uses that money on household expenses.

I’m sure you caught that last sentence.  Now that is a clever perk.

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