What is the best way to stem the tsunami of attrition and increase your retention? If you think it’s compensation, keep reading!
Revenue and GTM leaders have a lot on their minds these days, with The Great Resignation, the volatility in the economy and the ripple effect on our businesses. What do these major shifts mean for year-end results, for growth, for our employees, and for the future of work?
The Great Resignation, also known as the Big Quit, the Great Reset, The Great Realization, and The Great Reimagination refers to the unprecedented wave of resignations we’ve all seen since last year. With 47.8 million workers in the US voluntarily leaving their jobs in 2021, turnover continues to stun leaders with a record 4.5M workers leaving their jobs in March alone, according to the Labor Department’s latest Job Openings and Labor Turnover report.
With so many people opting to leave, the impact on business is palpable. What can we be doing to control our own destiny?
This was the subject of a recent gathering of Edison portfolio Go-To-Market (GTM) executives where we discussed the most significant actions GTM leaders must take to stem the tide for retention. Take note of these powerful actions that you can take to propel your organization forward despite the tumult.
The stats are in and there’s no denying most companies are dealing with a huge spike in attrition—or at the very least, the threat of it. Just looking at social media, you get the sense this is top of mind for people. The term #greatresignation has over 185.3 million views on TikTok. The hashtag #quittingmyjob has 139 million views.
What does this mean for those of us on the revenue side of the house? Consider the following:
Source: SBI Growth research
The Impact on Business
At our Edison event, I was asked what keeps me up at night as a CRO. Although the prospect of 50% of my sales force being at risk is enough to kill any good night sleep, what has me even more wired up is the impact on the bottom line. Last week, Tomasz Tunguz of Redpoint Ventures in his 2022 Market Conditions Survey, revealed the following insights:
Your pipeline and your existing customer relationships are at risk when an internal advocate or champion moves on. That means churn. Ultimately, we’re looking at the loss of customers, loss of revenue, loss of customer relationships and loss of expected business outcomes, not to mention the productivity delay and cost in getting another salesperson up to speed.
Most studies suggest the cost per departed solution sales rep to be between 150-200% of an employee’s annual salary, effectively $500,000 to $1,000,000 depending upon their role, tenure and industry. And those shockingly high figures do not include the time and money you need to spend to recruit, interview and train their replacement. In a related post, how sales turnover impacts your top and bottom line, the HR firm HireValue demonstrated how a 20% turnover rate can cost your company millions of dollars in a short period of time.
The 7 Levers That Matter Most
In my coaching of CEOs, CROs and their teams on revenue growth initiatives, GTM strategy and execution, I have found that the best of plans falter from a lack of listening, lack of empathy or lack of focus on their people’s personal and professional growth.
As the pandemic persisted through 2021 and even now into 2022, the stories around the virtual water cooler are growing by the day about people feeling unheard, lack of growth opportunities and the thirst for meaningful work. Workers, especially Gen Z and Millennials, want new growth opportunities, but can’t always find them with their current employer. In fact, a recent poll by Monster found that 80% of respondents do not believe their current employer offers growth opportunities.
When is the last time you had an honest one-on-one when you asked about more than the seller’s pipeline? When was the last time you asked your sellers about their dreams and what you could do to help them get to their dreams? Have you put together a career development plan for people on your team? Believe it or not, some of the simplest things turn out to be some of the most powerful tools you have to retain your sales team.
So, listen up! Although an initial knee-jerk reaction to the threat of someone leaving might be to pony up additional compensation, pause for a second and listen to all the verbal and nonverbal cues from your seller. Revenue leaders from across the Edison portfolio have found that many things other than compensation matter, enough to retain the right people. Consensus is in -- here’s what truly matters in driving sales retention:
Sellers are drivers and, as drivers, they respond incredibly well to roadmaps, pathways, and anything and everything to help them get where they want to go. They want a relationship with a manager who cares about helping them succeed—not only for the short-term success in their territory, but also for long-term career advancement. “It all starts in the interview process,” says Brad McGinity, CRO at 15Five, an Edison portfolio company that provides performance management solutions. “We share the promotion path and what the timeline looks like for career progression. It’s a differentiator for us because candidates want to join an organization that makes it clear what the roadmap looks like, so they know what they have to do going in. It’s not vague; no guessing games.” 15Five also has a demonstrated strong track record of internal promotions, which not only produces great candidates, but also offers a recognition opportunity. The company celebrates everybody who interviewed for the job along with the person who got the job. Brad says, “everyone wants to know that their contribution is noticed, so the simple act of acknowledging them has an outsized impact on the person, especially when it's coming from a senior leader.”
Research backs this up: “what sales professionals truly value are companies committed to their short-and long-term success. When it comes to staying or leaving, sellers prioritize how well the company will advocate for, and help them succeed in the near term, and evolve long term as sales professionals.”
Sellers want companies that help them understand how they can succeed and give them the resources to do so. If your company doesn’t invest in good onboarding and training, tools to improve productivity, and good sales process and culture, your top sellers may wander. If you don’t have the resources or cash during this recession-prone economic environment to provide all the best tools and training for your reps, at a bare minimum you need to lead with the personal touch of an excellent frontline manager, who can provide the care, the coaching, and the training one-on-one.
Another critical component in developing your people is to offer them key projects or leadership opportunities outside their role, in the interest of advancing company initiatives. This elevates the seller’s role, sense of purpose and alignment with the company as well as develops their leadership skills, a new perspective and greater confidence.
Listening to your customer, listening to your people—these are two sides of the same coin. If your company doesn’t do either very well, you will lose either your customers or your people. It all goes back to empathy, understanding, caring, alignment of purpose and values and creating an inextricable bond between the seller and the company he/she works for. We must pay attention to being empathetic and create effective pathways for listening and communication.
Help your executives and frontline managers get coaching on how to do a better one-on- one. Find ways to spend more quality time together communicating about what your sellers care about. This may mean getting creative about virtual or in-person coffee breaks, walks, lunches, or dinners.
Creating greater communication pathways goes beyond building a strong relationship with the frontline manager alone. Show your sellers that your cross-functional leadership team advocates for them at the executive level. SBI Growth research says that providing open channels of communication to the executive team, “constitutes another hallmark of companies with relatively lower sales attrition.”
As mentioned above, great frontline management is the lynchpin to great success. Invest in your frontline management. They are a force multiplier. They can be the key link to building a strong relationship with your employees; the glue that makes the employee stick. The frontline manager is the secret ingredient you have to build that bond and demystify for the rep what it takes to advance and win in their territory. Rob Patrick, CSO at ComplySci, a regulatory technology solutions company, shares that a focus on a strong frontline management team has been critical to their success. “The difference between those who stay and those who leave comes down to having a clear career path, guided and coached by a frontline manager who has built strong relationships with their team.” That said, no one—not even your best managers--is immune from attrition. Their great skills as a frontline manager, however, will ensure a successful exit experience for that employee, which will be supported and respected by those who stay.
Don’t forget, your frontline managers want the same things your sellers want: design career pathing with them and invest in their personal and professional development.
Compensation matters. We have entered into a period of what may seem like massive insanity. Many sales managers report “vultures” preying on their people offering as much as 15% to sometimes 200% higher pay packages! When this happens, be careful about being drawn into a compensation war. Vying for top talent doesn’t mean you should compete at all costs. Would you really pay 200% for the person receiving that offer from another company? Are they that good, or is it better to use this moment to re-evaluate what you truly need and re-adjust your resource plan and seller persona accordingly? Instead of thinking you have to throw money at trying to keep someone, listen, make sure your compensation plans are fair and attractive; give your sellers a reasonable opportunity to earn their expected OTE, form a point of view on compensation and commit to it. 15Five does a nice job framing their compensation philosophy for their employees. Brad points out, “It's important for companies to have a point of view. If you’re a year and a half down the road and your employees are being approached by others for bigger pay packages, they know, ‘that’s not why you joined 15Five’. Having a strong employee value proposition (that includes, but is not limited to a compensation point of view) and applying it consistently ensures you have people joining and staying for the right reasons. We feel like we have the right people and less pressure to get in the compensation arms race as a result.”
If you have a good plan, know that it’s not the compensation plan alone that causes people to stay or leave. Understand your employee value proposition: what is the true value of working with your company? Marry the employee value proposition with a competitive compensation strategy to present a holistic and compelling case for wanting to join and stay with the organization.
Culture is your greatest tool to attract and retain good people. A great culture is built around a well-defined and aligned purpose, value system and norms that become part of the fabric of the organization, and to which the entire employee base is held accountable. Culture is not just words on a wall; each employee lives and breathes it as part of the DNA of the company.
Make sure you work closely with HR, Marketing, and the entire cross-functional leadership team to develop the kind of culture that makes people feel they belong to something special, a culture that makes it sticky to stay.
Edison GTM leaders all agreed that although many are still living in a primarily remote-workforce world people crave connection--getting to see one another periodically to feel like they belong to a cohesive community that values them as members. The key takeaway: host in-person connection opportunities, e.g., quarterly team and/or peer-to-peer, in-person meetings--events designed to build camaraderie and a sense of belonging.
Attracting, developing, engaging, and retaining high performing sales reps can make or break an organization seeking high growth. To succeed, make sure you’re pulling on these levers. And stay tuned for deeper dives into these and related topics to help you weather the storm and power your growth in 2022 and beyond.