Sales Compensation Requires Careful Consideration
By Peter Lyle DeHaan
Our company had multiple offices. Those in larger cities called for having full-time salespeople. At one of those offices, one with a larger geographic workforce to draw from, my ads always received a response. Yet not all respondents were good fits.
For one applicant, Jennifer, our in-person interview was going quite well. She currently worked in retail sales and wanted to move her sales skills into the business-to-business environment. Professionally attired, she conducted herself well, having an engaging personality and a suitable level of enthusiasm—coming across as neither desperate nor aloof.
The 24-Hour Rule
As our interview wound down, I wanted to hire her. Though I had never offered an applicant a job at the end of the first interview, I expected I would eventually do so. As a rule, I always make myself wait at least twenty-four hours to process my interaction with the applicant more fully to make sure I hadn’t overlooked something.
One time, however, I came close to breaking that rule, but fortunately I did not. Because the applicant came from out of town for her interview, I asked my operations manager to take part in the interview process. The applicant enthralled me but not my operations manager. Her apprehension over the candidate gave me a needed pause.
Fortunately, I resisted the urge to offer the woman a position on the spot. Instead, I told her I’d be in touch. In the hours after the interview, I considered her conduct. I realized I’d focused on her many good points and brushed aside the multiple red flags that went with them.
The next day it was clear she wasn’t a good match for our company. Hiring her was bound to produce conflict throughout her employment. She would be a high-maintenance salesperson. And, despite her confidence to the contrary, I doubted she could produce the sales results she promised.
I wisely decided to pass. This experience confirmed the importance of waiting at least a day before offering a salesperson a job.
How Much Do You Want to Make?
I had one last question to ask Jennifer before we wrapped up our interview. I asked, “How much do you want to make in this position?”
She had her answer ready and flashed a confident smile. Her response, however, shocked me.
Even though I had told her this was a salaried position with commission, she gave her answer in terms of an hourly rate. This revealed a disconnect between the entry-level job mentality of where she was at and the professional sales opportunity she applied for. Her perspective of hourly pay was misaligned with my salaried compensation paradigms.
More telling, however, was the low number she gave me. It was about twice minimum wage. Though I hadn’t given our salary range, what I planned to offer far exceeded that amount.
I knew she would be completely satisfied to earn our base pay. As a result, she’d have little incentive to work hard to close sales and earn a commission. This is because she’d already be making more than she wanted to.
Though I could’ve offered her a much lower salary—one slightly less than the amount she wanted to make—and thereby motivated her to sell, it wouldn’t be fair. And I wouldn’t feel right about it.
I wrapped up the interview and thanked her for her time.
Too Much
Though Jennifer disqualified herself by having low expectations, I’ve more often experienced the opposite extreme. These people cruised through their interviews but then ruled themselves out with their lofty compensation goals.
By design, I expected a successful salesperson to earn commissions equal to 35 to 50 percent of their base pay. In doing so, they could earn a good living.
Though they could surpass that amount and earn higher commissions, it seldom occurred—and never on a regular basis. No one ever earned a sales bonus that approached their base pay. It was the nature of what we sold, the amount of a typical sale, and the number of hours in a workweek.
One cocky applicant insisted upon a nice six-figure base pay. He claimed he was worth it. Regardless of if he was, I knew from experience that he’d never come close to making enough sales to justify such a lofty salary. It simply wasn’t achievable. Even if he accepted my offer of a much lower base, he wouldn’t stick around and would leave as soon as a better opportunity came along.
For him, I smiled and segued into my 100-percent-commission ploy. He backpedaled quickly. His overconfident demeanor disappeared, yet he held fast to his need for a high base salary.
Another slick-talking interviewee waved off my offer of commission. “I don’t need an incentive to motivate me. I’ll be more successful than anyone you’ve ever hired.” Of course, he wanted an astronomical salary as well. Our ensuing discussion about why I wasn’t open to his request became quite terse. The interview didn’t last much longer.
These are examples of why I always guard against sales candidates who try to convince me to do something I don’t normally do or doesn’t feel realistic.
Just as Jennifer set her sights too low and didn’t get the job, these two applicants—along with others like them—missed out because their expectations were unrealistically high for our industry.
Sales Management Success Tip
Never offer a sales applicant a job on their first interview. Always give yourself time to fully process how well they align with your company and goals. And never allow an applicant to sell you on the need to offer them a compensation plan that’s unrealistic for your organization.
Read more in Peter Lyle DeHaan’s Sticky Series books, including Sticky Customer Service, Sticky Sales and Marketing, and Sticky Leadership and Management featuring his compelling story-driven insights and tips.
Peter Lyle DeHaan is an entrepreneur and businessman who has managed, owned, and started multiple businesses over his career. Common themes at every turn have included customer service, sales and marketing, and leadership and management.
He shares his lifetime of business experience and personal insights through his books to encourage, inspire, and occasionally entertain.
