Hiring Commissioned Salespeople? Don't Use a Standard Selection Process

I’ve only had brief bouts with commissioned salespeople but I learned two things from my experience that I carry with me to this day whenever I talk to people about this subject:

  1. It is one of the toughest jobs to start and be successful in.
  2. It is one of the toughest jobs to hire for.

As for point one, I don’t know what to say. We’ve tried a ton of different programs to help people get their start in these sorts of positions. The most successful people don’t seem to need too much guidance though. We’ve tried giving training pay for a month or two just to see if we could get them over the hump but it never made much sense in the dollars and cents department.

As for point two, that’s really where my mind took a flip. I couldn’t figure out why our selection process, no matter how well defined and executed, still ended up with 75%+ turnover in the first 90 days. Behavioral assessments be damned, something wasn’t adding up. Here’s a quick shortcut on something that took me a couple months to figure out:

Most selection processes assume that the company has the most at risk in making the selection. Given that assumption, questions are asked in a way that will reduce that risk or make the risk more acceptable.

Whenever you are hiring a commissioned salesperson though, that risk now falls squarely on the candidate. There is a serious opportunity cost for that person if they take a job that they don’t succeed in (because they won’t get paid). So if you are looking to reduce risk in your selection process (as you would typically do), you are actually increasing the likelihood of a bad fit hire. You throw a hitch into their risk assessment efforts that make it difficult to determine if they could be successful.

So we started talking to sales candidates like we would talk to a partner. We talked about our process, our business, success rates, failure rates, industry trends, leads, turnover… whatever. We focused questions of the candidate on past results, skill sets and industry or job specific knowledge. We helped them decide how they could handle our risk factors as a willing partner and we would evaluate their talents (and possible pitfalls) like we would a partner. If it meshed, great. If not, no biggie.

Was it a grand slam? No, but it was significantly more effective than the behavioral based, scientific process we used to use. It also helped us identify those who were entrepreneurial minded and interested in growing their own portfolio of business (because that’s what it really takes to be successful in this environment).

It didn’t change the fact that commissioned sales positions still stink to identify the right talent for but it at least made it easier for us to identify quickly those who were wholly unprepared to take the risk that commissioned sales demanded.

18 thoughts on “Hiring Commissioned Salespeople? Don't Use a Standard Selection Process

  1. If someone cannot give up the behavioral based questions, first interview your successful agents with the questions that have been hired somewhat recently (e.g. in the last 6 – 15 months). Look for trends. One might not find anything. Othertimes a topic or question will appear multiple times which might be usable in a future screening process.

  2. I currently hire commissioned sales people and one thing our company does to defray the risk for new candidates is provide a safety net when they start out. We structure their salary so that they either get the commission amount or a guranteed minimum amount, whichever is higher. This incentivizes them to achieve, but provides security if they have a bad week. This goes on throughout their training period until they get comfortable in their position. I have talked to a few other companies in investing who use a similar program and were successful with it.

  3. Good post, Lance. I agree, hiring these reps is so tough, and is nearly accidental. I hate to say that, but my experience is that you cannot really tell what might motivate someone and when.
    Frankly, I have found most success with moderately successful direct sales people..those who gave it a college try, but who didnt quite make enough to support themselves.
    Any other ideas for places to look?

  4. You aren’t going to find great salespeople off the street responding to some feeble Craigslist ad, because they are busy getting rich somewhere else. You’ll have to grow them and go through a ton of bodies, or pay me to do it for you. Sorry Charlie.

    • interesting that i just came accross this blog and saw you rreply.
      so here is my Q. when you say “or pay me to do itfor you”, is that just a comment, or do you acctually interview prospective employees?

      please reply only if you are able to assist in recruting a commission based business development individual.

      thanks

  5. If you change how you look at things, the things you look at will change. Sometimes a different perspective is all that is needed. Additionally, possibly helping the salespersons to have greater clarity around their talents specific to their sales positions might also help especially for commissioned based sales pros. Most folks including salespersons do not know their key attributes or talents. For my 2 cents, I believe those who are hungry will hunt and sales folks who are on salary only have a tendency to become lazy especially when quotas remain the same or are marginally increased.

  6. These are very difficult positions to identify the right talent for. However, it is no more or less difficult than other high risk, high reward positions. The key challenge is to understand what specific set of skills would be required to be successful. Once you have defined that, then you can set your sights on going where those types of people with those skill sets would be.

    For example, I have found some success with targeting candidates out of real estate for technology sales roles. It worked because many of the skills of a good realtor are a close match to selling in the early stage / start-up technology market.

    The other points about establishing a partnering model are good. The mistake most companies make is hiring commissioned agents is that the incentives do not match the risk that a sales person takes on. That needs to be calibrated correctly otherwise you are going to have high turnover.

    Lastly, most start-up firms think hiring commission sales people as a good idea to defray cash outflows. It is a bad idea however as I truly believe it is encumbent on the founders to actively sell. Most start-ups are not mature enough to handle the management overhead and educational needs to make such an arrangement successful.

  7. My company, a direct mail advertising company, employees 60+ commission sales reps over 27 states. Of our total 340 FT and 500 PT positions, they have been the hardest positions to fill for the last 8 years I have worked here.

    We do know that our learning curve is long—so for the first 12-18 months our new hires are compensated with a salary + bonus structure. After te 12-18 month period is up, they are weaned off the salary and switch to a straight commission vs draw.

    I have looked at the fill process everywhich way but loose and I must say I’m intrigued by the position Lance presents. Now, since our reps do not take on the most risk during that first year (the company does since we are paying them a salary), I still believe I’ll hold on to my behavior based process.

    However. . . .

    I’ll likely experiment with switching out of “finding out about them” earlier and switching into “let me tell you more about our company” sooner.

    Please keep up these conversations guys——these are elusive fills. . . . I love to hear and and all ideas and practices!

  8. Great poster and comments! Can anybody here tell me what kind commission fee is good enough to motivate commissioned salespeople to work hard? Any rules here to follow? Your comments and suggestions are appreciated sincerely!

  9. Lance: While I composed several responses to your dilemma I think there is one major issue you need to address asap. You are now opening up to your potential employees ( whether they are commissioned or salaried ) and you’re thinking is that they’ll just forget everything you say if they don’t get hired. Giving out your business practices like candy at Halloween will cost you far more than worrying which assessment will provide you with a worthy candidate. Believe me it is, A BIGGIE!”
    PS: After being in the selling profession for 40 years the debate over comm.vs. salaried has been discussed over and over again and there is not a one size fits all answer. Find what works for you – look at some of the hiring practices of the major companies for advice and examples. In a more modern phrase – Delete the Risk Button and Install the ” Shared Investment Slogan” it sounds much better than risk .

  10. Lance, your observations are astute as you admittedly have scant experience with the challenge. I could write a book on this topic and probably should, but am having too much fun and success with my work as it is structured.

    A couple of keys to success with commissioned sales people, 1. Yes, partnering model works….top down authoritarian does not….the successful personalty won’t be receptive to a “boss”, and the significant other of the salesperson is the real manager anyway….bring that person into the initial interview if possible…you are really partnering with the household UNIT. If not, as the money does not show up right away…you, the salesperson and the opportunity will be undermined…as with most entrepreneurial endeavors, at the start,if one divides the number of hours into the money earned it looks grim….and even if the salesperson isn’t doing that…you can be sure someone in his/her life will. You need a RELATIONSHIP with THEM so that each week you can teach a bit more to allow the salesperson to earn a bit more…and have him/her on the team long enough to realize the success you know is there.

    2. Put, in writing, what you will do, including comprehensive training (which most people don’t get in a commissioned sales job) and likewise, in writing, what the salesperson will do…your expectations of the role…be detailed. Get agreement from the salesperson. And, keep track of how you both meet the agreement…..if you don’t have someone who will be cooperative and committed enough to make something of the opportunity, you will know very soon and save yourself time and other resources.

  11. Good comments everyone.

    As far as the confidentiality thing, I understand that. We either balanced the company specific information with industry figures to generalize the information or we made them sign NDA’s. That may seem sort of extreme but a high potential person could pull in half a million dollars of business. You’d do that with any vendor you were working with that closely.

  12. I love the idea of thinking of a potential commission-based sales person as a partner. Too often we’re by so-called experts to look for people who have the most experience in the role for which we’re hiring, but the problem with that approach is that it is very likely that great sales people who have done what we want them to do for us likely are still employed. Granted that recessions like this have a way of making great people unemployed but great sales people don’t stay unemployed for long. Some of the best sales people that we’ve had did work which was similar to what we want them to do for us but not the same work. Their skills were transferable, not identical.

  13. I have been recruiting commissioned based sales people for over 15 years. I wish I could say that I was a quick study in what it takes to identify the proper traits in selecting the appropriate candidate. I am in the Insurance and Financial services industry with one of the top companies. The company has all these tools and assessments that supposedly allow you to select what should be future successful agents. I agree with the comments from SalesComp that behavioral based assessments are not enough. That is the same system my company uses. Around 5 years ago, I ventured outside of the box with the help of proper coaching and mentoring. I decided to take the extra step to find out about the person’s finances and, if they have a spouse or significant other, whether or not there is enough income from that source to allow them to get started up without having too much financial pressure. The next step is to REALLY find out if the person is truthfully motivated. Everybody that you interview will tell you how awesome they are and how they were the top salesperson at their last company. See, it usually is not a skill issue with people I interview, it ts a will issue. Are they going to be willing to do the most important aspect of their job which is prospecting? I give a new candidate 25 – 30 market surveys to be completed with individuals introducing them to the career the candidate is looking to enter, asking a few questions about life insurance and financial planning and, finally, if they would grant the candidate an appointment if he/she decided to take the position. If the candidate is WILLING to go out and have these surveys completed within a week, I probably have a viable prospect. If he/she is not willing to have these surveys completed, you shouldn’t be surprised if you hire him/her, that his/her performance is less than desirable. I conduct a three interview process and make sure that one of these interviews includes the spouse or significant other. I know if there is support coming from home they have a better chance of being successful. It all starts with me and my willingness to go the extra mile in identifying proper candidates. Of course, there is nothing fool proof, but I have a first year retention rate of 85% for new hires and a 3 year retention rate of 50%. Not too bad in the commissioned based world. Hope this helps!

    • Just starting a business, hired a consultant company for business model and forms, legal help and such. I work part time and have decided to hire comissioned based sales so I can continue to work until this think gets going. Your comments were so helpfull. I want someone who has the will and a partner based mindset, to help me grow this business. Will take your advice on significant other being involved , I know if it was my husband I would then understand the potential and have more patience with the process.

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