Well this is awkward: How to talk about money
The one thing that almost all hiring managers dread is the “money conversation.” It’s awkward, and it certainly isn’t dinner party small talk. Money isn’t the only reason people decide to accept a job offer, but it’s a huge part of nearly every candidate’s decision, so it’s worth figuring out how to address it in a way that feels more comfortable and positions you to extend a job offer that gets a resounding yes.
Ideally, when you decided to hire, you did your research, using tools like the LBM Journal’s 2018 Sales Compensation & Benefits Report (available in next month’s LBM Journal), or salary.com, and have an idea of what you will need to pay to be competitive in today’s market. But there can be a vast difference in the value to your company from one sales rep candidate to another. For example, are they new to the industry or will they bring 10 years of experience and millions of dollars of contacts with them?
The best way to get current and accurate compensation information for your market is by asking every candidate you interview about their compensation expectations. What I typically say is this: “I don’t want to waste your time if we’re way off in our expectations. So, it would be helpful if you can let me know your ‘walk-away’ point—the number that you need to see to reasonably consider making a change. If I know we can’t get to that number, I won’t waste your time (or mine).”
As you well know, sales compensation plans are often far more complicated than just an hourly wage or a base salary. This is why it’s also good to ask about how their previous compensation was structured. You’ll learn a great deal simply by asking this in your interview process. If you’re not sure how to structure your compensation plan, you can use this information to inform your decision and to help you build a plan that is competitive and still leaves room for profit. It’s a good idea to ask if they have a non-compete or non-solicitation agreement in place at this time as well.
(Caveat: Avoid asking them about their salary history if you’re in one of the cities or states that’s made that question illegal. You can learn more about this new law by Googling “Salary Question Ban” to see if you’re affected.)
Almost all candidates will answer immediately, relieved to determine if it’s going to be an issue. But some candidates don’t want to share for fear they’re leaving money on the table. I usually let them know that we need to know what they’re looking for to be able to continue the conversation; if they aren’t comfortable sharing, we can’t move forward in the interview process. If a candidate still won’t answer at this point, consider it a huge warning sign of a future pain-in-the-neck employee and move on to other candidates.
The best way to get current and accurate compensation information for your market is by asking every candidate you interview about their compensation expectations.
One of the biggest challenges in hiring is a disconnect between the compensation you expect to pay and the level of experience you want. If you’re like most companies, you’re not hiring for key sales and leadership roles often, and so you may be working off a compensation range you developed in 2013 and that isn’t going to be competitive in today’s market. Because I work with building product professionals every day and am much more aware of what the market is demanding, my pre-search client discovery sessions always include a discussion about compensation and expectations. It’s often a difficult conversation, but it’s better to know you need to lower your expectations or raise your compensation before you waste a bunch of time interviewing and getting frustrated.