How To Keep Your Top Sales Performers

“You can’t cut your way to prosperity.”  This is a phrase I’ve heard in many a budget meeting and long before President Obama began using it in conjunction with the Sequester. In the short term, cuts can bolster the bottom line.

Over the long term however, delaying or eliminating investments in your business can cut your competitive advantage. This is as true for media businesses as it is for those in other industries.

Another old saw that is probably more true in media than in other businesses is “Every night our most important assets walk out the door.”  And, companies readily acknowledge that it is their sales teams that bring in the revenues and generally have the best relationships with the clients responsible for these revenues.

So, why are companies so willing to set up situations both in management and compensation that can demotivate the very people on whom company prosperity depends?

I’ve been thinking about this a lot lately because like you, I oversee a sales team and because it’s the time of year when I’m looking at budgets and the beginning of our new fiscal year. That, combined with the memory of how difficult it was to hire a new sales executive last year, made two articles in the July-August issue of our member magazine, The Financial Manager (TFM), catch my eye.

The first is written by Chuck Kirkham, VP of sales for media rep firm Canadian Primedia Sales & Marketing, looks at ways to develop effective compensation plans for sales professionals. In the second, Barbara Kurka, principal of BFK Coaching and a former HR exec for Katz Media, suggests strategies for retaining top sales talent in what has become an increasing competitive market. Spoiler alert: it’s not just about the money.

Re-Examining Sales Incentives 

According to Kirkham, who has worked in media sales and management for about 30 years, sales incentive programs too often focus on the stick rather than the carrot.

To illustrate his point, he describes the sales incentive programs he has encountered over the years, which range from a straight commission to a combination of salary and bonus. “One company that put a cap on the amount of commission a sales person could make is out of business. Other companies offered heavy bonus programs, and they are still in business but have been close to bankruptcy a few times. And a third group of companies that employed a certain three-step process to increase sales are actually growing.”

Kirkham’s three-step process comprises:

• Defining the percentage of the product’s price the company can afford as the cost of sale.
• Defining which elements are to be covered by this cost of sale — such as salary, commission, benefits, travel, entertainment and a car.
• Focusing on commission, “the sole dynamic cost” compared to the other two elements, which represent fixed costs.

In his experience, some companies implementing sales incentive programs that incorporate these three elements have added other dynamic costs into the compensation equation. Two common adjustments have involved accelerating commission rates or offering bonuses that are paid when specific sales objectives are achieved. He warns these variations can actually decrease sales for the company, because they create two disincentives to sales executives.

“First, if sales executives feel the bonus (or accelerated rate) is not attainable within a specified period of time, they will stop selling and wait for the next attainable bonus period before they start up their efforts again.”

The second disincentive applies when the bonus is attainable. Kirkham notes that in this instance, sales executives are being incented to do just enough to reach their bonus and then stop selling until the next incentive period. “Companies with these bonus programs are encouraging their sales executives to stop selling at some point during the period.”

Another detriment to these types of incentives, according to Kirkham, is they encourage sales executives to control the sales flow in a way that maximizes their financial results rather the company’s. When companies move to counter this by interjecting controls to indicate when it appears their sales executives are manipulating the flow of orders, they create “a vicious circle promoting a lack of trust between both sides.”

Instead, he recommends using a straight-line commission program to erase the stop-and-start pattern by removing the reason for their sales executives to “take a breather.”

He also recommends against companies reducing an executive’s commission rate for the next year because of a concern that he or she is making too much money. In his experience, this practice can turn an incentive into a stick rather than keeping it as a carrot. “If the company has a successful sales executive why hinder their success? A high performer lowers the company’s overall cost of sale — that one sales executive’s fixed costs have not changed while the company’s sales have surpassed budget.” You can’t cut your way to prosperity.

Inspiring Top Performers

Another important investment in top performers, something often more limited than money in a consolidating industry, is time. As BFK Coaching’s Barbara Kurka points out, most one-on-one meetings are spent with non-producing employees rather than using that time to inspire the ones who are contributing the most to the bottom line.

Kurka says the idea of spending more one-on-one time with top performers is almost counterintuitive: “Those folks are usually pretty self-sufficient — self-starters who work hard and produce better-than-average results. They’re not squeaky wheels, so why give them any grease?”

However, as she reminds us, we already know the answer to that question: to avoid the shock we experience when we find out a top performer has decided to leave the company.

Instead of losing top performers to competitors, Kurka says we can focus on a simple way that can help to make them “more engaged, more enthusiastic about their work and better contributors to your team and to the organization.” She believes managers can achieve this outcome by investing two hours a month on one-on-meetings that meet the following criteria:  

• Conduct the chats only with your top performers or those who will be top performers.
• Let the employee set the agenda. The employee is asked to bring three to four top issues to discuss, as well as at least one opportunity.
• Let the employee know this is his/her meeting. Kurka recommends spending time beforehand to ensure the employee understands that the issues belong to him or her.

• Make your role clear: to listen to the issues and help the employee and the team achieve success.

“This is not a problem-rehash or gripe session,” advises Kurka. “You’re reversing the normal course of events, and change takes time.”

She adds that this approach will result in having the employee take ownership of issues and the way they are resolved. “You are coaching your employee to be better at self-management.”

As Kurka concludes, the most important outcome of these meetings is that top performers will feel heard and recognized for contributions that are above and beyond the norm. This will in turn result in their being “more engaged in their work and more invested in the company.”

The common theme here is investing; investing both time and money for success. If indications from the Advertising Sales Leadership panel at last week’s Media Finance focus seminar in New York are any indication, 2014 will be a good year for industry ad sales. It seems to me that focusing resources on your ad sales team to ensure your piece of that bigger pie is a good strategic investment.

Sales compensation continues to be a hot topic in the media industry, particularly at this time of year. If you are willing to share your experience, please post a comment below or in MFM’s discussion forum on LinkedIn. As always, I look forward to sharing the feedback in a future column.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.