Employee turnover is extremely costly for any department, particularly in sales where quarterly quotas and revenue goals need to be met. The average cost of recruiting, hiring, and training an employee is typically 200% of an employee’s annual salary. In addition to that, the opportunity costs associated with wasted time and lost sales for the quarter can impact the entire department’s quotas, which can reflect poorly to a board of directors or executive management.

According to Gallup, the top five reasons employees cite for leaving include: the immediate manager, a poor fit with the job, coworkers not being committed to quality, inadequate pay and benefits, and finally, a lack of connection to the organization and senior management. Add the stress of trying to make quotas and traveling frequently, and sales reps are even more susceptible to leaving their roles. With turnover as such a costly problem, what are the best strategies to employ to reduce turnover and keep your sales team sustainably engaged?

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Be strategic and meticulous when hiring.

The first step to avoid churn is to hire right. Hiring right, however, is no simple task. Harvard Business Review asks management to consider an alternate approach to traditional hiring: Instead of first soliciting resumes, start with a pre-screening and test instead to reduce the load on your recruiters. Testing helps eliminate candidates who are unsuitable (or may have embellished their resume), narrowing down the applicant pool to a more qualified pool that can then proceed to the more costly steps within the recruiting process. This reduces opportunity costs and saves valuable time of recruiters and interviewing managers alike.

A large supermarket chain based in the UK recently used an online situational judgment test that was customized for their company. This test helped screen out the bottom 25% of applicants prior to recruiters reviewing the applicant CVs. Because the candidates that were called in for interviews were better qualified, recruiters now were able to hire one out of two of every candidate interviewed instead of one out of six, saving over 73,000 hours of managerial time -- a huge savings in opportunity cost.

Improve the onboarding and training process.

In a Allied Workforce Mobility Survey, it was revealed that only 66% of companies train their new employees. Furthermore, the average amount spent onboarding is $99,191 per year, approximately $67 per new employee. Top companies spend significantly more, at about $178,868 per year, leading to employees that are much more likely to stay for at least a year and meet or exceed performance goals.

Once a hire has been made, the next steps in the new hire experience are crucial to building a strong foundation from which to enable future success. According to Tim Campos, Facebook’s chief information officer, it is a best practice to get all of the employees’ technical equipment, from an employee's PC to their phone, fully calibrated prior to the actual first day. Furthermore, it's important to be specific about all of the practical aspects of the role, including how to set up a meeting, where the printer is, etc. By creating the best possible onboarding and training experience in the beginning, managers can ensure their sales reps are fully aware of all the resources and knowledge available to them prior to getting started.

What Tastefully Simple, a gourmet food sales company based in Minnesota does, is assign a buddy to the new hire, helping to form a relationship where assistance is offered along the way about all the basics, as well as incorporate them into the company social scene by inviting them to break and lunch together. Creating a solid, scalable training process can save time for the company in the long-run and reduce churn.

Additional ideas include developing training videos for products, having reps shadow more experienced reps, connecting reps with mentors, developing sales goals, giving them a clear overview of the past sales trends and strategies, and helping them understand the buyers, processes, and resources within the department.

Set appropriate compensation and benefits packages.

According to Oracle, over 90% of performance and talent management software systems are not integrated with a compensation system. Awarding high performers accurately is crucial, especially when high performers contribute up to 67% greater revenue in sales roles but often only receive a difference in pay of 5-10%. Creating a strong differentiated compensation program involves integration across five separate areas: Strategy, technology support, tactics and programs, measurement, and communication. Goals should always be SMART: Specific, Measurable, Attainable, Relevant, and Timely.

A large global financial services organization based in Canada implemented an MBO (management by objectives) bonus structure, which included varying pay and equity distribution based on company and business unit targets that had to also be applied across different geographies and currencies. The integrated implementation of this new structure, complete with a streamlined technology solution, enabled a shift toward a performance-based culture and significant retention that saved up to 20,000 hours in resources.

Personal recognition goes a long way -- don’t skip those 1:1s.

To further ensure that any compensation and benefits programs are effectively implemented, managers should be diligent about 1:1s in order to accurately assess employee engagement and accomplishments, as well as get a pulse on any red flags for employee turnover. Furthermore, effective acknowledgement for employees' hard work and accomplishments can take shape as simple emails, peer recognition, monthly emails to the wider department, and being an advocate for your employees by reporting their accomplishments up to higher management. These 1:1s are crucial to strengthening the bond between an employee and manager, the lack of which is one of the top five reasons employees cite for leaving a role.

Conduct and act on insights from exit interviews.

Employees are able to be honest during the exit interviews, so gleaning insights on ways to improve the organization from their feedback is extremely valuable. These types of questions can yield interesting answers:

  • Why did you decide to leave the company?
  • What did you find most and least satisfying about working for the company?
  • What kind of performance feedback did you receive?
  • Did any company policies or procedures inhibit you from performing your job duties to the best of your ability?
  • How would you rate the level of support you received to perform your job duties?
  • What advice would you pass on to the next person selected to perform your job duties?

The next step is to develop a review process for revising management strategy and policies to reflect the feedback from employees who are leaving. Too often, this feedback is left dormant in the files of employees who have left.

Committing to cultivating an engaging, rewarding, and responsive approach towards managing a sales team can lead to exponentially beneficial results across all aspects of the business. Adopt or adjust some of your strategies to see if you can reduce costly rep turnover, and positively impact the overall productivity of your organization.

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Originally published Jun 30, 2014 6:00:00 AM, updated April 29 2019

Topics:

Sales Hiring