From the perspective of an industry dealer, sales representatives pose no challenge in assessing the characteristics that drive them. It doesn’t take a Rorschach test to understand that all they’ll see in the ink blots are dollar signs.
And despite the laser focus behind their motivation (or perhaps because of it), the office dealer rep can be toughest to maintain from an HR perspective. The promise, or prospect, of greener pastures keeps them constantly eyeing the neighbor’s yard. Yet, like any other employee, a salesperson wants to feel valued and appreciated beyond the compensation package.
We’ve turned to Keith Roher, CEO of advisory/recruitment firm Next Level Impacts, to share a few ideas that transcend the monetary component of the employment proposition. A former top executive with Zeno Office Solutions, Roher offers some insight into how dealers can make themselves more attractive to the top-performing salespeople, from altering their compensation structure to changing the approach for evaluating interview candidates.
National statistics note that there are more available jobs than there are people out of work, so that means it’s a buyer’s market for currently employed job seekers. Outside of compensation and benefits, how can dealers paint an attractive picture to prospective employees?
Roher: It depends on the type of candidate they are trying to attract. We have a client that likes to grow its own base, and they’re searching for college graduates who have a year or two of real-world experience. For that type of candidate, a number of companies have been toying with offering student loan relief that is tied to a number or a gate they need to achieve. The debt relief may be paid out over the year, perhaps quarterly, with limited strings attached. This entails getting to know the candidate beyond the typical questions. You find out what the candidates are striving for in life. When they start talking about long term and purchasing something big, there’s always a ‘but’…there’s the money thing. When you ask them if they’ve paid off their student debt, 90% of the time the answer is no. They’ll say it’s a low-interest/no-interest loan that they’ll pay off over the next 10 years. I tell them “No, don’t give them any interest. What if we could pay it off now?” That way, they can spend time growing their net worth. But the first step is paying off that college debt.
Number one, you can accept that in this industry—and no one wants to hear it—you’re going anywhere from an 18-24-month period where you’ll have a turn. It’s just a natural evolution.
– Keith Roher
This is something a dealer needs to factor in when the presidents and VPs are doing their annual budgets. For one, it’s a nice talking point, and two, if college debt relief is mentioned in the listing, it will get someone’s attention.
For the more mature reps, some of the bigger dealers want us recruiting from the competition for experienced people. For them, and I’m not a fan of this, more and more dealers are offering flexibility for working remotely. The company car is also a big incentive for reps. Brad Rollins at Dahill did a good job of that for many years, and they were nice cars like BMWs. Again, there was a number tied into it, and more often than not, it worked well for Brad.
We’ve heard about how millennials like to constantly change careers to avoid being mired in the same position and stagnating. How do we, as dealers, keep our employees inspired and challenged?
Roher: I’m torn. There’s no option: you have to have millennials, and in the next two years they’re supposed to represent about 70% of the workforce. Number one, you can accept that in this industry—and no one wants to hear it—you’re going anywhere from an 18-24-month period where you’ll have a turn. It’s just a natural evolution. Yes, there are some people you will be able to promote and get them into the management ranks. But those roles are few and far between, and some of them aren’t ready for it. They’ll be looking for the shiny next object, and then they will bounce on you. It goes back to the cultural standpoint—keeping it fresh and fun, and maybe exercise a little less micromanaging.
I think the industry’s entire compensation plan needs to be overhauled. Everyone’s still using a similar playbook from 10 years ago. It’s definitely a buyer’s market.
– Keith Roher
I had a rep who was with me for 25 years at Zeno, and she would write $1 million a year in business. When I was building Zeno, I was a stickler for everybody having to be in the office. I had to see them every day. Over time, after maturing some as a manager, I realized that we obviously can’t treat every rep the same. When I got this person to come over from a competitor, her big thing was working from home. She said she’d be in the office, but she liked working from home and got more done on the phone. I said prove yourself, and once you’re consistent, I don’t care. That was it. The moral of the story is, give reps gates, then reward with little things like the ability to work remotely. They value not having to come into the office the first thing every morning for a meeting that could have easily been handled in an email. Reps enjoy the latitude and flexibility. The reward threshold could be a number, a revenue or profit gate, or a gate for the number of appointments they set for the month.
In your opinion, what aspect of a dealer’s hiring process most commonly needs to be revisited?
Roher: The assessment testing slows down the process. Not that you want to hire fast, but some of these dealers are hard-core maniacal when it comes to assessment tests. I believe there’s some value to them, but to drag out an interview process and go back and forth because of a test…I’m just not sold on it. I did it for a long time, and there are pros and cons. They’re great coaching tools that all dealers should use post-hiring, but not in making the decision. I can see if you’re on the fence about a candidate and they score just horribly. That’s a good sign not to hire the person. But I have dealers who will interview youngsters and love them. But a week later, when the candidate doesn’t score well on the assessment, the dealer will say, “Oh, we can’t hire him.” I put more weight on a field test, where the manager goes out in the field with the candidate. Too often, they’ll do an assessment test and not a field test, which I feel is a mistake.
Let’s say the test comes back and the candidate’s closing skills are below the industry benchmark. My question is, what’s the closing-skill ratio of the manager in charge of that rep, based on the benchmark? If it’s low, then how is he going to develop the sales rep you end up hiring? If they base their decision on the assessment, then I feel they need to rethink and be retrained on how to use it.
As we are well aware, salespeople are generally driven by income potential. With other industries offering higher salaries, how can we sweeten the overall compensation package?
Roher: I think the industry’s entire compensation plan needs to be overhauled. Everyone’s still using a similar playbook from 10 years ago. It’s definitely a buyer’s market. Let’s say I have a client that needs to place five reps in different markets, and like many dealers today, they’re open to going outside of the industry to find them. When you start going after ADT, Cintas, SaaS or managed services reps, these salespeople are getting between $45,000 and $65,000 in salary. Meanwhile, I’ve got dealer clients with salaries still starting at $36,000 or $40,000, and that factors in a car allowance. Some dealers are gravitating toward paying a higher salary with less on the gross profit, which is more competitive. When dealers budget going forward, I think they would have more success in getting a better-quality candidate if the salaries were higher.
What I usually see out there is $50,000 for entry level, maybe less in the Carolinas. But when you hit Florida, Texas, California and the Northeast, it becomes more difficult to poach away reps from another industry. When they hear $40,000 to $45,000 for salary, the answer is “no way.” We’re walking them through the commission piece, the upside and why it’s more aggressive. That’s easy for us because we know the business. But when you’re asking a 25-year-old from another industry to come on board at a starting base of $45,000 when he already has a $62,000 base, it doesn’t resonate.
Social media, particularly LinkedIn, has bolstered our ability to find candidates, but it also ushered in the age of résumé saturation bombing. At what point does it become most advisable to enlist the services of a recruiter?
Roher: Look at your EBIT line and your year-over-year performance for the last three years. Even if you are flat, then you’re doing well. But we know there’s no way you’re flat. Unless you’ve done acquisition, you’re probably going backwards. The number-one focus needs to be increasing rep productivity, and that’s what I stress to dealer owners. If you have 10 salespeople and they’re averaging $50,000 a month over a 12-month period—which is the magic number—then look to get them to $51,500. The benchmark for hardware is usually 42%, so imagine if all 10 reps were getting an additional $1,500 a month. That’s $15,000 a month and $180,000 a year. When you do the math on that at 42%, this amount ($75,600) drops to your bottom line. That needs to be the focus of your company. To improve rep productivity, there has to be development.
…when you’re trying to recruit from a competitor or another business technology-type sales organization, that’s when you need to hire the professionals.
– Keith Roher
A lot of dealers I work with have their own internal recruiters. If you have a recruiter, he or she is calling and going to college/job expos; they’re good for that. But when you’re trying to recruit from a competitor or another business technology-type sales organization, that’s when you need to hire the professionals. This is what I’ve spent my life building. I understand what dealers are looking for and I know how to ask the right questions. Anytime I hire new recruiters, I sit in on calls with them for 90 days until I let them do their own recruiting. But whoever a dealer chooses, they first need to look at their EBIT line and top-line number.
What makes Next Level Impacts special is we are good at rooting out passive candidates. There’s a lot of selling on our part. Not to pat ourselves on the back, but I don’t think there’s another recruiter that can do what we do for the copier business in terms of pulling people over from other industries. We’re selling the comp and the commission piece hard. I’m able to help candidates break it down. But there’s a lot of work involved.
Are there any talking points or trends we should be following as 2020 garners steam?
Roher: For the copier community to continue to try to thrive, there has to be a sexier service these guys can offer beyond copiers and printers. When I talk to dealers, they say, “No, these are the basics, the fundamentals, and we’re sticking to them.” But their top- and bottom-line revenue suggests taking a different approach. A lot of youngsters coming out of college who want to get into sales are really excited about an area such as cybersecurity. They love the sophisticated technology. The best part is, dealers don’t have to be the ones truly supporting it; they can rely on third-party providers. To me, that’s a cool talk track to use.
