Looking Beyond Pay in a Competitive Market

As the competitive job market continues, one of the top-of-mind questions I am being asked to solve for is: “How do we find, attract and retain the best talent, drive the right behaviors and achieve our sales results? Is our only option just to pay more?”.

My short answer is YES…but how you achieve this is the difference between companies and employees that will win and lose in the war for talent.
Using a case study from one of my recent clients providing workforce solutions, read on for my approach to address pay in a competitive environment and align with the four P’s. People, Progression, Performance and Potential.

People

Many companies overlook People as the key differential in the marketplace. When interviewing my client’s sales professionals, it was evidenced that the employees are the backbone of their success in this competitive job market.
Here’s what we learned and what they said:

Professionals like the challenge of their role, value and respect the leadership team, and enjoy the entrepreneurial style and feel of the company’s culture. Every participant stated that “it’s the people” that make our company unique.
The entrepreneurial spirit exhibited itself by providing access and a sense of personal connection with leaders and decision-makers who consider and listen to what they have to say.
Leaders are the critical link in retaining good employees and recruiting internal candidates.
The people make the company different from the competition. This company is perceived by its employees to be built on a foundation of relationships and trust.

Based on this anecdotal feedback, here are the opportunities to grow and nurture the culture of the organization that will have the downstream impact of attracting and retaining the right people:

Mentorship. Focus on retaining great employees through opportunities to learn and grow. One significant benefit of a mentorship program is providing access to a diverse set of employees to the leadership team. diverse background to leaders within the organization. The gain is two-fold, management will become better leaders (through awareness) while employees learn from exposure and experience.
Development. Create more transparency and communications around internal job opportunities. This allows employees to understand new opportunities within the company and the necessary qualifications to move into and excel in that role.
Investment. Create intentional avenues for incorporating new professionals into the organization. Consider connections beyond the first line manager. Build an onboarding process that includes folks joining in the same role, involves people in various roles and levels, and has a tenured employee acting as a mentor and a guide to navigate the organization for the first ninety days.
Recruitment. Provide the time and resources necessary to allow leadership to fill the pipeline and actively recruit. Employment trends and opportunities change frequently within an industry; therefore, leaders need adequate time for research and learning to adapt to the change.

Progression

Having a career development path provides employees with a structure to enhance skills and knowledge. Knowledge sharing promotes greater job satisfaction and fosters the discovery of new interests and looking for new challenges. Unfortunately, many companies lack a formal path or process. This client also struggled with career progression. Here’s what we learned:

Professionals desire a career path or an earning path but lack a clear understanding of what is needed for that journey.
Professionals desired, but lacked, visibility into roles outside their current organization.
Lack of career path impacts internal and external recruiting. Leadership is unable to clearly articulate to candidates the role progression as it relates to career and earning potential within the company.
Career progression appears to be “localized, on the job training”. Some roles have delayed development due to no formalized training program.

Based on this feedback, the client’s greatest opportunities were in the following areas:

Clear Career Progression. Create a career roadmap outlining education, experience, and skills needed to perform at each position level including how they get what they need to advance.
Role Contribution. Determine what each role within the organization contributes to building the skill and experience for upward mobility.
Action Plan. Proactively identify individuals desiring a career or earning path. Create an action plan and help them select and obtain a mentor to gain the needed skills and experience.
Role Elevation. For those looking for an earning path, differentiate consistent high performers with a senior role that includes additional responsibility with greater earnings potential.

Not everyone is money motivated, some are position motivated. It’s key to inform professionals on what it takes to move to a higher position. If experience and education are needed, moving laterally may be the first step in preparing to move up.

Performance

Most volume-based sales incentive plans focus salespeople purely on earning more commission rather than planning to achieve or exceed a business target. When it comes to sales incentives in the competitive job market, the plan should support and drive the strategic direction and priorities of the business. This was the source of our client’s challenge, rewarding for raw production yet not achieving the growth goals of the organization. Here is what we discovered about their current plans:

Salespeople across business units had varying plan measures even though they were selling similar or the same services. Measures were often evaluated and paid on different scales. As a result, it was difficult to determine who achieved optimal performance.
Salespeople lacked individual goals. For an organization to achieve its goals everyone must contribute at a specific level. Without a performance expectation allocated to each contributor, there is no commitment or ownership in achieving the organizational goal.

These key discoveries led to the following recommendations:

Performance Expectations. Create performance expectations by role and level. Performance expectations should be higher for senior roles. Earnings should come from achieving the higher expectations and levels of performance.
Allocate Targets. Formally allocate senior leadership targets to each producing role in the organization. For management level targets, consider the team size, team composition, opportunity, and growth expectations. Sales targets would be determined based on role level and opportunity.

The recommendations are to standardize plan mechanics across the same roles and business units while supporting monthly production and annual goal achievement. Each salesperson needs to understand their individual contribution to the organization’s overall success. That is the essence of a pay for performance incentive plan.

Potential

retain best talent Performance and earning potential must go hand in hand. Earlier, we touched on the client’s incentive plans being volume-based instead of performance-based. Here is what we found with their current plans:

Commission earnings for salespeople came from monthly raw production and were not tied to annual goal achievement.
Role levels lacked a defined performance and earnings expectation. There was no clear link between performance results and incentive earned.

This finding led to the following recommendations:

Differentiate high achievement (above goal) by differentiating the incentive earned. Higher achievement levels result in higher incentive earned.
Define the number of levels for each producing role. When defining levels within a role, consider industry experience, tenure and other critical factors of success for the role.
Set role level performance expectations. When setting performance expectations leverage historical data to understand typical performance based on experience and tenure to establish a baseline of performance.
Earning potential should increase with higher performance expectations. An individual should see a career progression with title, performance, and earning potential.

Illustrative Example:

Let’s go back to the original question about paying more to retain talent. The answer is YES but only by aligning those talented people, with a clear career progression, with defined performance expectations, and earning potential for their contribution to achieving the company’s financial and strategic goals.

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.