Economy Finally Bouncing Back? Buh–Bye… The Coming Exodus of Sales People

By Per Torgersen on Aug 16, 2013

2 Minute Estimated Read Time

It is mid-2013 and the tenuous, yet positive, economic indicators keep coming: housing prices up by highest level in 7 years, positive job growth in the private sector extends streak to 40 months, unemployment continues to fall. For many of our clients, these indicators present a double-edged sword.  First, the good - there is finally some growth and more strength and security in their business. On the bad side – there is increased concern that sales rep mobility has been artificially constricted by the challenging economic times, and they can bring their mostly transferable skills elsewhere. Based on our interactions with sales forces, that concern is quite valid, as many of those reps who gave up looking will now be much more active in seeking opportunities in greener pastures.

Many sales leaders are unaware of the full impact of the very real costs associated with a spike in turnover. Rule of thumb stipulates that replacing an employee (whether voluntary or involuntary) costs an organization between 1X and 2X that individual’s annual salary due to the investment in training, headhunter fees, HR time, etc. For sales people, that multiple could go even higher due to the following: 

  • Ramp up time for new hires to get to full productivity (depending on experience and effectiveness of training), which directly impacts the company revenue stream from a territory/account base perspective
  • Loss of accounts due to competitive poaching or simply customer perception about lack of attention if account coverage is inadequate, and a territory remains open for some time
  • Sales management distraction from the business, as they have to spend time vetting and interviewing candidates for open territories
  • Talent poaching from companies that departed reps have joined

What can you do to protect yourself, if you are in a leadership role and prefer to minimize disruption to your business and any positive revenue trajectory that has finally developed?

  • First, understand what your turnover rate is – has it increased, decreased, remained stable – Did you lose people you didn’t want to?
  • Next, try to understand what the pervasive attitudes are within the sales force. Look at engagement surveys if conducted, talk to sales management to get their opinion, review to see what kind of reviews your organization is getting from its own employees - Putting safeguards in place to prevent unwanted turnover of good performers is a lot cheaper than trying to establish a new rep in a territory on the back end. So, take steps to secure individual star performers.
  • Finally, make sure you have reviewed your compensation levels, sales incentive plans, and quotas to ensure they are competitive and motivational. If you have not looked at them for a while and you want to lessen your vulnerability, it could be time.

With times finally seeming to get better, don’t get caught at the exit bidding your star performers goodbye…

Per Torgersen

Written by Per Torgersen

Per Torgersen is the resident sales compensation guru at Symmetrics Group. Beyond compensation, Per is experienced at addressing the full spectrum of what makes a sales force effective, from strategy articulation, organizational sizing and structure, customer segmentation, role clarity, territory alignment, incentive design and performance management. If Per is not crafting sales effectiveness programs, he’s likely listening to music; Per is a walking database of pop music across the globe and can name the #1 hit for any given month and year with alarming precision.

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