A look at The Great Resignation and what you can do as an organization to mitigate its impact on your sales organization.
Over the past year and a half, the workforce has shifted to remote working thanks to the COVID-19 pandemic. COVID has irreversibly changed the way people think about their career. And we are just starting to realize the effects of that now.
As life gets back to normal, people are rethinking their work situation and the importance of flexibility in their daily lives. Employees are now in search of more money, flexibility, and happiness. For organizations that aren’t adapting fast enough, it’s leading to a dramatic increase in resignations, which the media is now referring to as The Great Resignation.
Consider these statistics:
- According to the U.S. Bureau of Labor Statistics, a record of 4 million Americans quit their jobs each month in April, May, June, and July of this year (source).
- Additionally, a recent Microsoft survey shows 40% of the global workforce is considering leaving their jobs this year (source).
- According to HubSpot, the average sales turnover rate is 35%, compared to an average turnover rate of 13% for all industries. That’s nearly triple the average turnover rate (source).
Keep Happy & Motivated through The Great Resignation
A lot of organizations are nervous about The Great Resignation and the impact that it’ll have on them, and rightfully so. Churn is expensive, especially when it’s something that could have been avoided in the first place. Generally speaking, organizations spend anywhere from $30K-$120K in cost for each new hire, not including salary. Employee attrition is an underrated but huge cost to organizations.
In sales specifically, turnover has a lot to do with compensation and underperformance, just to name a few reasons. In fact, 89% of sales reps actually reported leaving their role due to deficient compensation (source).
Retaining top talent in sales is less about giving formal raises or promotions and more about creating a compensation plan that motivates them and makes them feel valued for the right reasons and behaviors.
Below we’ve outlined a few ways you can fine tune your compensation plan to minimize turnover and keep your employees for years to come.
1. Provide visibility into your compensation plans.
You may think you’re giving your reps visibility into their compensation plans, but if they can’t write their plans out in 1-2 sentences on a whiteboard, that’s an issue. Lack of visibility into how reps are paid leads to increasingly poor performance and lack of motivation.
Think about it, if your reps are confused about how, when, and why they’re getting paid, the behaviors you were originally hoping to motivate aren’t going to be top of mind.
2. Ensure reps can see what they’re making today.
Imagine accepting a sales job and having no idea what you’d be making? That probably wouldn’t work for anyone. It’s critical to give reps insight into what they’re making in real-time to keep them motivated.
Your team shouldn’t have to wait until the end of the month for their commission statements. The data needs to be available to them at their fingertips in real-time because if you’re not offering this, another company is.
3. Make sure the way you track and pay commissions is reliable.
As important as it is for your reps to have access to real-time data, this won’t matter if your team doesn’t trust the numbers and quickly understand the calculations behind them. If sales reps don’t trust the calculations in their paychecks and are forced to track commissions on their own, as an organization, you have a few problems on your hands.
Aside from the fact that your team doesn’t trust in leadership or finance to provide accurate data around their earnings, they’re also spending time away from their phones and away from closing deals. As a result, this lack of productivity can mean an even smaller commission check at the end of the month.
4. Give reps more control over their compensation.
Although the amount of compensation a rep receives is a huge motivator, human psychology tells us that job satisfaction isn’t always about the money. Money is what we’d consider an extrinsic motivator- or something that’s externally rewarding. Other examples of extrinsic motivators are things like prestige, power, and experiences.
The problem with extrinsic motivators is that they aren’t as lasting or sustainable. In fact, research shows that extrinsic motivators actually demotivate some employees.
Intrinsic motivators, on the other hand, are based on personal values and are internally rewarding. Examples of intrinsic motivators are things like productivity, purpose, mastery, and autonomy. Research shows that intrinsic motivators last longer and actually do a better job at driving employee satisfaction (source).
So, why is this important when we’re talking about compensation? Allowing your reps to have a say in how they’re compensated provides more autonomy and control over their paycheck. Not only will this result in a more rewarding work environment, but it will also help your team become familiar with the sales commission structure, reducing confusion and providing them with a chance to ask questions.
Here are a few ways to involve your reps in more conversations about compensation:
- Ask your team for feedback throughout the year using surveys, slack, email, or in person conversations.
- Give your reps a chance to review compensation changes before rolling them out. Don’t guarantee changes to comply with their feedback but hear them out and answer any questions they may have.
- Consider offering a choice of non-cash benefits as an incentive for certain milestones. Let your reps decide which they choose.
Learn more about motivating employees through compensation in our recent blog post.
5. Be Proactive vs. Reactive
Your compensation policies and practices have a huge impact on the behavior and performance of your sales team, which is why it’s important to be proactive about changing your compensation plans to fit the needs of your employees and customers.
Don’t wait for a problem to arise. Instead, do constant pulse checks to catch an issue before it happens. Check out this recent webinar, which highlights the process of doing sales compensation health checks, that you may find helpful.
Mitigating the Impact of the Great Resignation
With the office becoming decentralized, employees can work from anywhere in the world. Failure to adapt to today’s landscape can cause many challenges for organizations, including a high turnover rate.
Never forget that people work to make money. It sounds simple, but this basic fact is often forgotten about. So, instead of panicking about The Great Resignation and trying to revolutionize, go back to the roots and take a look at how you’re paying your people. Don’t overthink it and keep it simple, but give your compensation strategy the respect it deserves. How you pay people will ultimately be the foundation for retaining your employees.