How 700 Sales Organizations Are Fighting the War for Talent

A Way to Look at Performance Measures to Achieve Your Business Goals

We’re entering 2023, and organizations are navigating the post-Covid effects on sales, supply chain, and how we work. Despite recent corporate layoffs, the war for sales talent is raging on. I will walk you through what organizations are doing to retain and attract talent with statistics from SalesGlobe’s 2022 Sales Role and Compensation Practices survey conducted with WorldatWork that included approximately 700 companies.

What Are You Doing?

In the spirit of data-driven creative problem-solving, noting what companies are doing provides valuable insight. The practices I’m sharing with you are not necessarily the answer for your organization. They are, however, going to give you some valuable information that you can consider in your problem-solving when it comes to retaining and attracting talent for your business.

Let’s talk about your organization. My first question is what are your objectives and what are you doing about them relative to holding on to your best people while acquiring new people? Think about your end goals as an organization regarding the current war for talent. That surfaces a few more important questions:

• Where do you want to be from a talent and financial perspective when this war for talent subsides?
• To retain and attract the right people, are you willing to pay a significant market premium?
• Will you pay a premium now or for an extended period?
• How will you offset your increased costs to maintain or improve your profitability?
• Are your cost increases fixed or tied to performance?
• Are you expanding your reach into industries that are outside of your traditional labor market?
• What do your current people value about your organization?
• What is your broader employee value proposition, beyond just pay?

What Are Companies Doing to Prevent Voluntary Turnover and Attract New Talent?

Increasing Base Pay
52% of companies are increasing base pay to hold onto their best people. In terms of industries, Technology (67% increasing based pay), Healthcare (62%), and Professional Services (62%) are leading the way on base pay increases to retain their best. To attract new talent, 50% of companies are offering higher bases with Healthcare (59%) and Technology (57%) leading.

Not surprisingly, this is the number one action that companies are taking to prevent their employees from leaving and to acquire new talent. And they’re often increasing salaries or adjusting pay bands for current employees in large numbers as they experience pay compression or overlap with pay for new recruits exceeding pay levels of their current people who have often been with the company for a few years.

Is there a problem with raising salaries? First, the good thing about this approach is that you’re keeping the people you want to keep by implementing a simple solution: giving them more guaranteed money. But there is a negative side to it, more than just paying higher salaries. Ultimately, your company is also guaranteeing that it’s raising its fixed costs. By raising your fixed costs, you’re committing to that solution for the long term… for as long as you have those people on your payroll. Therefore, by raising your fixed costs, you may be committing to something that, in another two years, may be crunching you. Don’t want to get crunched? If you’re raising salaries, you’ll have to do one of three things to maintain your level of profitability:

1. You can increase productivity per head through increased effectiveness or higher average sale.
2. You can increase your prices to offset your increased costs.
3. You can lower costs in other areas to balance your increased fixed cost of salaries.

Without taking one of these three actions, your tactic of higher base pay will quickly erode your profits. So, if you’re increasing base pay, your organization must be careful and planful.

Increasing Incentives
42% of companies are increasing incentive compensation to hold onto their best people. Technology (47%) and Professional Services (44%) are leading the way. 39% of companies are offering higher incentive pay to attract new talent, again with Technology and Professional Services in the lead, both at 45%. To make a double-hit with retaining and attracting talent, 24% of companies and 22% of companies, respectively, are increasing both base pay and incentive pay.

In an effort to keep their best people and hire new talent, companies are increasing short-term incentives, including commission bonuses. This is a variable cost, in comparison to base pay, which is a fixed cost. But, like base pay, you can still decrease your profit by increasing incentive pay unless you expect your employees to deliver something for that increase.

How do you get additional value for those incentive pay increases? You lead with an increased expectation of productivity and corresponding increase in quota. This may be easier to do with new hires than current employees, as new hire quotas are usually not established ahead of hiring unless you’re in a business where each role has a standard quota. If you’re stuck in that spot, ask me about how you can better align your goals with actual opportunity and productivity. Compared with salary increases alone, weighting your increases toward variable pay gives you, and your people, a stronger relationship between pay and performance.

Enhancing Reward and Recognition
25% of companies are increasing reward and recognition to hold onto their best people without significant differences by industry. However, enhanced reward and recognition is not in the top five to attract new talent, because reward and recognition typically would include new hires.

Reward and recognition includes programs like contests, President’s Club, and bonuses outside of the core incentive plan that motivate participants in ways that are complementary to the incentive plan. These types of programs give you flexibility and allow you to change over time. Again, like incentives, there is no commitment to a long-term fixed cost. Reward and recognition programs may also include a combination of cash and non-cash components such as trips, experiences, and accolades in front of the organization.

A big appeal of reward and recognition is that it draws upon other human motivators and is very visible to the organization, which can in turn motivate others to perform at a higher level. It doesn’t cost your organization much to provide a sense of achievement and pride.

Offering Hybrid Work
37% of companies are offering hybrid work as a retention tool with Technology (53%) and Professional Services (46%) significantly ahead. 33% of companies are using this tactic to attract new talent. In addition, 27% of companies are offering 100% remote work to attract new talent again with Technology (45%) and Professional Services (43%) significantly ahead.

Hybrid work is a hot topic. A major post-pandemic tension point that companies have been wrestling with is misaligned employer and employee expectations on return-to-work. In mid-2021, our research on employee and employer expectations across 380 companies showed that 76% of employees across companies anticipated continuing to work remotely, at least part of the time, while employers anticipated that only 34% of employees would continue to work remotely. Further, 32% of employees said they would find another job if their employer didn’t allow remote work! This shocker revealed a greater than 40% gap in expectations between employees and employers. And employers, due to either avoidance or fear, weren’t clearly communicating expectations or policy, creating further tension and risk.

At this point, as we enter 2023, hybrid work has become a reality and a longer-term practice for many companies. While field sales roles have long been hybrid roles for many organizations and inside roles traditionally housed in call centers, this hybrid opportunity is now being included as part of the employee value proposition for all sales roles.

Retention Bonuses and Signing Bonuses
23% of companies are offering retention bonuses to keep their top people, far behind the base and incentive pay increases as I described above, with Technology (37%) and Healthcare (31%) in the lead.

To acquire new talent, 34% of companies are now offering signing bonuses, which is in a close third place to higher base and incentive pay, with Healthcare (54%) and Technology (47%) also in the lead.

What’s the advantage of retention bonuses and signing bonuses? First, they create a level of immediate visibility and impact by delivering pay in one or a few lump sums. That can carry significant weight to either keep an employee engaged or to help a potential recruit make the decision to join. Second, following through with my earlier theme of fixed costs, retention bonuses and signing bonuses are not a recurring fixed cost. They are expensed and done, which allows you to maintain your ongoing cost structure. Third, these bonuses can help you keep people within your defined pay bands, especially for new hires who may break through the pay band with a higher base salary and end up above some of your current, more-experienced people, which can create bigger pay equity issues.

Now that I’ve filled your head with statistics, I’d like you to let these practices and numbers sink in so that you can apply them to the problems you’re solving for your organization. No company is on the sidelines in this war for talent, so I highly recommend that you are proactive about your fighting tactics and creative in your problem-solving, rather than following the pack.

For more resources, check out SalesGlobe’s LinkedIn page,  and be sure to watch the full readout video here.

Sales Compensation Programs and Practices Survey Results

WorldatWork, in partnership with SalesGlobe, conducted a survey to gather information on sales compensation plan structures and practices to reward for sales success and drive performance to the goals of the business. Click here and complete the form to receive your copy of the full survey results.

SalesGlobe is a leading sales effectiveness and data-driven creative problem-solving firm. We specialize in helping Global 1000 companies solve their toughest growth challenges and helping them think in new ways to develop more effective solutions in the areas of sales strategy, sales organization, sales process, sales compensation, and quotas. We wrote the books on sales innovation with The Innovative Sale, What Your CEO Needs to Know About Sales Compensation, and Quotas! Design Thinking to Solve Your Biggest Sales Challenge.

Mark Donnolo

Founder and Managing Partner at SalesGlobe

“We help companies solve tough sales challenges to connect their sales strategies to the bottom line.”