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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We preach to our clients that simply placing an onlie ad is not a sound sourcing strategy.  Managesmarter.com has an article that gives 3 good, quick tips for leveraging the Internet to fill open positions.

The only way to effectively recruit is to use multiple channels. You’re trying to find that one person who is exactly right, and that means exploring multiple avenues. This includes your offline efforts, by the way—don’t stop networking just because you’ve posted a job online. Work multiple sources (both online and real world) to get the word out about your opening.
Make sure you’ve got an accurate, well-written, exciting job description. You need a posting that sells the job and your company. A good job description should be the first message a potential candidate sees about your company. It should provide a good story, but also a realistic picture of the level of responsibility and some sense of career potential. In the online world there’s no character limit, so you can go into detail and include links to strong Web pages. Never view writing a job ad as a chore; don’t just delegate it to HR or someone who reports to you.
Pick several places to post your ad online. Here’s where it gets tricky: There are several online sourcing options, all of which come with trade-offs. Let’s start with blogs, e-mail listservs and interest groups such as Yahoo! Groups. These options are probably stronger in building long-term recognition than in immediately producing large numbers of applicants.

One thing I would add is if you’re not using LinkedIn, Facebook or MySpace in your sourcing, you’re missing the boat.  Start by getting your profile on these sites and connecting, then push your open positions out to your new network.  It’s not about knowing the right people and being directly connected to them, it’s about being connected and allowing your network to push your opportunity out to people they know that may be a good fit.

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The frequency of layoffs has started to rise as the economy continues it’s slow progression (no, it hasn’t recessed).  Up here in Minnesota we have experienced some large layoffs recently.  But there is an interesting point in all of these layoffs when it comes to salespeople.

Many times the underperformers are released first as a method for upgrading the sales force.

One of the large corporations up here announced a sizeable layoff that reduced their employee count by 5%.  Yet, the following week they had multiple employment ads on multiple sites looking for different levels of salespeople.  This approach is not surprising as you will see it often during slow economic times.  The major companies use the cover of a slow economy to jettison salespeople who have had targets on them for some time.

This fact means that all sales hiring today needs to be careful.  There are strong salespeople who get cut loose, but you have to have a process to find them.  The pretenders, the salespeople who can do enough to mostly hide on your payroll, are also out there.  These salespeople are more difficult to identify and screen out of the candidate pool.

It is imperative that you have a process that goes far beyond resume, interview, gut-level decision.  If you need assistance, we can help.

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I had a sales candidate ask an excellent, subtle question yesterday - “What other positions is this company currently hiring?”  Again, the subtlety of this question provides a view into a company’s needs, growth and possible turnover.  It is an excellent question to ask in any interview.

The second part of this equation is for the hiring manager to appreciate the question.  What I mean is this - listen carefully to the questions being asked by the candidate.  We often watch hiring managers trip over themselves to answer a good question without appreciating the question itself.  Some times the hiring manager cannot even recall the questions asked in the interview.  This is problematic for successful sales hiring.

Someday I am going to capture every question asked by a candidate in the interview and put them in a document, in order, and then present them to the hiring manager.  The questions themselves and the sequence of questions is important for successful selling (read: qualifying).  This ability is observable in the interview process…if you are looking for it.  Don’t miss it.

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Another odd line from a sales ad:

make direct fact-to-face sales calls

I did a double-take on that one, “fact-to-face”…is that some new business lingo with which I am not familiar?  I think it is a typing error, but even if it isn’t, ads are better served with common language (i.e. no buzzwords/phrases).

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Ere.net offers up an excellent Kevin Wheeler article that explains how gut-level hiring occurs.  Here is the crux of the problem:

Interviews are examples of how easy it is to abandon the tools of objectivity, the scientific method, logic, and the rules of evidence, for our “gut” or for “chemistry.”

While there is considerable evidence showing that testing candidates is far more likely to predict successful performance, we still rely almost exclusively on interviews. Though numerous researchers have pointed out the need to gather a variety of data about a candidate, we generally settle for an application form and an interview.

Why are we so resistant to testing and other more objective sources of data?

Wheeler goes on to quote a psychologist who lays out the mental decision process that occurs in the majority of hiring managers:

Tom Gilovich, a Cornell University psychologist, writes:

“Information that is consistent with our pre-existing beliefs is often accepted at face value, whereas evidence that contradicts them is critically scrutinized and discounted.”

That is exactly right.  We have a customer who reviews the resume and comes to a conclusion.  He then spends the interview attempting to verify his conclusions.  He uses “questions” like “You sold to this type of customer, didn’t you?”  This approach is the opposite of objective.

Wheeler ends the article with a suggestion that we wholly support:

Use objective tools such as validated tests and multi-rater feedback. By starting with one or two well-known tools, we can refine and hone them to our exact needs until they are excellent at predicting success. Proctor and Gamble has been doing this for more than two decades with remarkable success.

We can help - we have objective, online assessments.

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We received an email heads up about the new book from Bradford Smart titled Topgrading for Sales.  What I like is the promo page they have put together for the book - it includes a movie trailer…of the book’s content.  A very web 2.0 approach which I appreciate.

The topics include how to interview, hire and coach top performing salespeople.  The one thing that catches my eye is the calculator for mishires.  This topic is bandied about without a definitive number for what a bad sales hire costs a company.  The number is certainly staggering no matter how it is calculated.

The opportunity cost is the killer…and a number that is incalculable.

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Interesting article here from RecruitingTrends.com that highlights a speech given recently by Dan Hanyzewski, staffing director from Nike.  There is one piece of data that caught my attention immediately:

“This is the first time in American history that we’ve had four generations at work at the same time,” Hanyzewski says. How do you communicate an employer brand that will attract such a broad audience?

Quite a dilemma, isn’t it?  The task of branding your company effectively for 4 different generations is a tremendous undertaking.  But the discussion then turns to a critical point (my editing):

“One of the most powerful metrics is time,” Hanyzewski says. But, what’s does it mean? What’s the expectation? It’s not time to fill. “If you had an understanding of what that role being empty represents on a daily basis, then you will know what it means to the bottom line.” Whether a position is open 75 days or 125 days, unless you know what the vacancy cost is, it won’t help you know the impact, Hanyzewski adds.

Seventy days or 125 days, unless you know what that vacancy cost is, it won’t help you know the impact, Hanyzewski says. Hanyzewski explains that if you can calculate your vacancy cost due to lost revenue, and maybe you deduct 10% due to the declining economic climate, and you know the vacancy has existed for 6 months, and you multiply it by the number of territories, then you now know the reality of time to fill because it’s real money. “Now you can come to the table with a real business concern.”

Exactly.  The costs in sales is even more dramatic.  An open territory is lost revenue to your company and added revenue to your competition.

I think the counter-argument we see is managers discussing the cost of a bad hire.  Their view is that it is cheaper to wait to get the perfect hire than to accelerate their process to make a strong hire.  You can effectively argue both sides of that equation until you get to one pertinent point - what if you don’t find the perfect hire?

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I read this line in a sales employment ad this past weekend:

Actual Year 1 average earnings  - $100,000  - $200,000 ++ REALISTIC

A $100K spread?  You know, this type of line is an immediate red flag for a jobseeker.  It may be true, but most salespeople will be skeptical.  They will put a multiplier of <1.0 on the number.

The sad part of this ad is that it was posted by a sales recruiting company.  The best bet in these ads is to be somewhat conservative on the compensation and keep a tight range on the potential.

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$4.50 here in the Twin Cities.  According to this Pioneer Press story:

And if the price hits $4.50 per gallon, more than half of the commuters in the Twin Cities said they’ll be looking at changes in their daily commute.

The survey found commuters are most aggressive about looking for options in Atlanta, Dallas and the Twin Cities. They are slowest in San Francisco.

The gas price is a strong lever in sales recruiting right now, but you have to be prepared to discuss the reimbursement side of the equation.  We have noticed a definitive upclick in the discussion of mileage reimbursement/car allowance.  In fact, this topic is coming up in the first or second phone discussion.

Nationally, some 31 percent of 2,915 respondents indicated they’d be scoping out options once gas hits $4. That can include more flexible working hours, taking mass transit, telecommuting or other changes.

“Other changes” is where we step in.  Working closer to home or from home are important incentives in today’s market.  If your company does not have a remote workforce option, you need to implement one - it is that important for sales.  Second, use this option in your sourcing efforts.  I guarantee this topic is at the forefront of almost every salesperson’s mind.

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