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Recruiting and Compensating Salespeople

We specialize in storage systems integration with some unit equipment sales, but no lift truck sales. What is the best method to recruit young talent into our sales force? Also, what is the best method of compensation for them in their first years when they are building a client base?
                                                                                                           
– Jim Green, President,
                                                                                                              Morrison Company (Willoughby, OH)

Dave Griffith: We work local schools, use current employees to recommend, and use the Internet in a major way. Salespeople are on salary during the first year with a cut over commission. We look for a certain gross profit level year one, year two and year three, and we cut salary and up commissions to track to this.

Richard Donnelly: We recruit in a variety of ways. We place newspaper ads. On our Web site, we constantly update openings in our company for sales positions. We’ve developed an internship program for students who want to work part time. This gives us an opportunity to observe the individuals and see if they have the skills to be successful in sales. In addition to the internship, we attend job fairs at the different universities. Some of our young salespeople are referrals from our existing sales force. We normally will put a salesperson who is familiar with the products and territory on our compensation plan. For a salesperson who is not familiar with the territory, we guarantee a salary for 9 to 12 months. Each individual has the option of going off the guarantee anytime during that period.

Greg Morrison: We recruit from local colleges. We also offer a college internship program. Friends and relatives also have been recruited from these interns. Word spreads amongst friends and relatives about a rewarding career at a cool company. Young talent can also be found in our everyday dealings. You never know when you may cross paths with young talent. I have been impressed with many young, energetic, sharp people who are in passing or dead-end careers. One up-and-coming sales rep who is doing very well for us was recruited out of a major tire chain store a few years ago. The young college graduate impressed one of our managers while installing a new set of tires on a Saturday afternoon and was recruited on the spot. We also believe in testing, testing, testing. First impressions are not enough. Pay a fair first-year wage knowing that commissions aren’t going to materialize right away. Our contract states that the base will decrease after a mutually agreed-upon timeframe based on how long it will take to be self-sufficient.

Dave Reder: We have had our best success hiring and training recent college graduates from local colleges. Our compensation has evolved to a base salary, commission and expenses.

Ken Shaw: Our best success has been through word of mouth or relationships within the industry. We do not have a program in place, but I know some organizations that offer employee referral plans that provide monetary awards if a referral candidate is hired and remains employed for at least 90 days. Some plans even offer a grand prize once a year, drawn from the names of referring employees. We have found the best method of compensation to be a base salary for 12 to 24 months for new territories, and a smaller base salary plus commission for existing territories.

Duncan Murphy: We discovered one surprise when we ran ads for an MIS opening. We had huge response, mostly by e-mail. We offered a job in sales to one of the finalists, and he has worked out well. Computer jobs have an allure and require many of the skills needed in systems sales. Income expectations are also reasonable, which allows us to use primarily a salary for 12 to 18 months until the learning curve flattens and the order pipeline starts filling. That permits them to get a taste of incentive pay, but with the security they are used to in a predictable paycheck world.

Jack Phelan: We rely on recruiters to locate the talent, and then we qualify the candidates through our screening process. I am glad that your question is framed in the term of “years.” Considering that the rookie needs to gain product knowledge, learn the company’s selling process and learn the sales cycle, you typically are talking years. We pay our salespeople a base salary and a training allowance. The combination of the two is less than their potential earnings will be after they have a couple years of experience under their belt, but it does meet their financial needs. When the earnings they can realize from being on the salary plus commission program exceed the salary plus training allowance program, the salesperson transitions to the commission plan.

Jerry Weidmann: We advertise in local papers and on the Internet at monster.com, HotJobs.com and local job Web sites. In addition, our employees refer individuals. Our compensation program for a new salesperson is structured with a combination of salary and draw against commissions. Based on the territory or product lines to which they are assigned, we establish a salary that will be permanently part of their compensation and a transitional salary that will allow them to build their territory. Generally, their transitional salary is reduced by 25 percent after six months, by 50 percent after one year and eliminated at the end of the second year. As the transitional salary is reduced, it is replaced with a draw against commission. By the end of their second year, their transitional salary will be eliminated and the draw against commission replaces the transitional salary.

Material Handling Equipment Distributors Association

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