Software sales talent – commission structures… it’s classified!
In my blog titled ‘Software Sales Talent – the wheat from the chaff’ I highlighted the increasing demand for outstanding sales talent and some of the key actions employers need to take to attract candidates ahead of their competitors.
The market remains as competitive as ever and I am consistently asked how best to convert high value sales people from offer consideration to offer acceptance – the usual last push to get them over the line is clarity regarding the commission and bonus structure!
When an organisation is looking for either sales leadership or single contributor jobs to be filled by FMC, a clear expectation is set – “find us the top candidates who can evidence outstanding year on year above-plan performance”. This evidence can be gathered through a number of routes, such as senior leadership references from past line managers or pay slips highlighting commission payments.
With alarming regularity these same organisations seem reticent to provide any real clarity regarding their own commission structures. If you are looking to recruit outstanding above-plan performers then demonstrating how this can be replicated in your business should be expected and embraced. I would be far more concerned about recruiting an individual that shows no real interest in the commission structure and is comfortable with ambiguity!
What should you tell them?
Outlined below are five recommended pieces of information that should be provided to candidates at offer stage before they ask for them – I promise they will help!
1) How many of the current sales team are above plan this year? This information will help provide confidence that the target and variable element are achievable. If some of the team are way above plan and earning big money, get the message out there!
2) How is the commission / bonus calculated and paid? Candidates should be able to understand if they earn commission from the first sale or after achieving a percentage of target. Is there a difference between new business and renewals? Are payments quarterly?
3) How is outstanding performance rewarded? You asked for a performer who delivers above plan, so provide genuine clarity over how this converts into their compensation. Simply stating ‘we have kickers’ is not enough!
4) Can guaranteed bonus be considered? One of the biggest barriers to recruiting a top performer is that they will inevitably have to leave some bonus behind at their current employer. A well thought out guaranteed bonus is one of the most important solutions to overcoming this challenge (on the proviso that the candidate is outstanding!).
5) Something in writing? With the caveat that the variable element is subject to change, is there a document that outlines the current structure? Even more powerful is an example spreadsheet highlighting how performance converts to commission.
While the points highlighted above may seem obvious, it is surprising how often this information is not forthcoming.
It should be noted…
Remuneration structures are often redesigned every 1-2 years and organisations are understandably reluctant to share too much sensitive information with the market. There is also an incorrect perception that a lack of clarity on the variable elements can add a degree of manoeuvrability when negotiating each hire.
As a member of the executive team at a sales based organisation myself I fully understand the challenges of designing and administering an effective bonus structure. We’re often trying to balance effectively incentivising the fee generators, making the scheme fair and having clarity of what gets paid and when.
So whilst companies have to cover their backs that doesn’t mean that the candidate should be left in the dark around earning potential, especially when the variable element is as significant as the basic salary. Every organisation wants to recruit the strongest possible profile, so why run the risk of letting the star candidate accept another role? Clarity is key.