{"id":1629,"date":"2020-01-22T09:00:32","date_gmt":"2020-01-22T14:00:32","guid":{"rendered":"https:\/\/www.peaksalesrecruiting.comblog\/the-state-of-sales-staffing-2020\/"},"modified":"2023-03-08T19:38:35","modified_gmt":"2023-03-08T19:38:35","slug":"the-state-of-sales-staffing-2020","status":"publish","type":"post","link":"https:\/\/www.peaksalesrecruiting.com\/blog\/the-state-of-sales-staffing-2020\/","title":{"rendered":"The State of Sales Staffing in 2020:Hiring, Training, and Retention"},"content":{"rendered":"\n<\/picture>\n\n

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Sales talent has always been hard to find and keep, but now it\u2019s tougher than ever. Sales reps are the second most in-demand candidates across all job functions globally, according to <\/span>The Manpower Group<\/span><\/a>. <\/span>LinkedIn<\/span><\/a> names \u201cEnterprise Account Executive\u201d as its second-most-recruited role in all industries, and in the tech industry, it has even ousted engineers for the #1 spot, with \u201cSDR\u201d at #3.\u00a0<\/span><\/p>\n

This sales talent shortage will only get worse in the coming years, as the US labor market tightens and the growing tech industry gobbles up all the great salespeople from traditional industries like manufacturing. However, there are several effective hiring, retention, and succession planning strategies that companies can adopt to withstand the challenging sales staffing climate in 2020.<\/span><\/p>\n

At our sales recruiting firm, we work with companies searching for salespeople, while evaluating thousands of candidates and what they\u2019re looking for in an employer. We\u2019ve seen that sales positions are remaining vacant for longer while the cost of sales talent continues to rise; companies are lowering the experience bar to boost their headcount, only to struggle with churn a few months later. We also see competitors poach sales talent from one another, which increases the cost of each hire.<\/span><\/p>\n

But before discussing the protective measures companies can take, let\u2019s examine the broader issues that are making 2020 a candidate\u2019s market.\u00a0<\/span><\/p>\n

The tightest labor market Alan Greenspan has ever seen<\/b><\/h2>\n

Salespeople may be some of the most difficult people to hire right now, but it\u2019s no cakewalk to hire for most positions.<\/span><\/p>\n\n<\/picture>\n\n

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For context, the US unemployment rate officially hit a <\/strong><\/span>50-year low<\/strong> of 3.5% in September 2019<\/strong>, and at the end of 2018, the unemployment rate for white-collar workers\u2014those with a bachelor\u2019s degree or above\u2014<\/span><\/p>\n

stood at 2.1%. Former Federal Reserve Chairman Alan Greenspan has noted that this is the <\/span>tightest labor market<\/span><\/a> he\u2019s ever seen.<\/span><\/p>\n

Unfortunately, the labor force currently isn\u2019t growing quickly enough to keep up with demand;\u00a0 it is predicted to grow by just 0.4% per year through 2020 and <\/span>level off<\/span><\/a> in the long term. Compare this to the annual growth of 2.6% seen in the 1970s.\u00a0<\/span><\/p>\n

Furthermore, a generation of sales professionals is preparing for retirement. Baby Boomers began retiring in 2011, and for the following 19 years, <\/span>10,000 Baby Boomers<\/span><\/a> will retire each day. Companies need to prepare for retirement events in their sales force and key sales leadership roles.<\/span><\/p>\n

The forecast is even harsher for sales hiring<\/b><\/h2>\n

In this context, sales positions are difficult to fill. But to understand the full challenge that employers face, it\u2019s also important to note that retention in sales is difficult as well.\u00a0<\/span><\/p>\n

In 2018, the average tenure of an SDR at a B2B company was just 1.5 years, which is <\/span>half<\/span><\/i> of what it was in 2010, according to a <\/span>Bridge Group study<\/span><\/a> of 434 B2B companies. These companies saw a 39% attrition rate among their SDRs. One-third of that turnover was voluntary but two-thirds was involuntary (for example, via termination).<\/span><\/p>\n

This data suggests that junior B2B sales roles experience significant turmoil and team attrition, possibly due to underperformance, which is expensive for companies to manage and backfill. Additionally, the Bridge Group study found that companies seem to be hiring increasingly inexperienced SDRs\u2014the average required experience was just 1.4 years, a 45% fall since 2010. Companies may be lowering their bar in response to the demands of scaling and the restricted supply of talent, but the study suggests that more churn can result.<\/span><\/p>\n

Regardless, we\u2019ve noted that sales professionals tend to switch jobs every few years, with salary increase being a top driver. <\/span>Studies show<\/span><\/a> that:<\/span><\/p>\n

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The average job-switch salary increase is <\/span>between 10% and 20%<\/span><\/a>\u2014significantly above the annual US <\/span>median base salary increase<\/span><\/a> of 3%.<\/span><\/p>\n\n<\/picture>\n\n

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Compensation in general is an important factor in the recruitment and retention of salespeople. <\/span>We surveyed over 1,000 sales professionals<\/span><\/a> from across North America and found that 38% of respondents felt that their\u00a0<\/span>compensation was below their industry average. Such poor perceptions doesn\u2019t support retention, and when we zeroed in on the top performers\u2014salespeople who met or exceeded their quota in recent quarters\u2014we found that 29% were not satisfied with their current compensation and 54% were dissatisfied with their employer overall. Companies need to address these perceptions if they want to retain their best salespeople.<\/span><\/p>\n

How to prepare for sales hiring in 2020 and beyond<\/b><\/h2>\n

Luckily, companies <\/span>can<\/span><\/i> buffer against sales talent shortage with a few strategic shifts in their hiring, retention, and succession planning.<\/span><\/p>\n

These are particularly important for traditional industries like manufacturing and industrial businesses, which need to make their workplaces appealing for a whole new generation of talent as Baby Boomers retire and tech companies create attractive working environments with high compensation.\u00a0<\/span><\/p>\n\n<\/picture>\n\n

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Craft strategy around top performers<\/b><\/h3>\n

It\u00a0<\/span>may be tempting<\/span>\u00a0to quickly staff up a sales force by lowering the bar to entry. But we\u2019ve seen that it\u2019s more lucrative in the long term when companies set their sights on A-players and adapt their recruiting and compensation strategies to the requirements of top performers. Unsurprisingly, for each additional year of a salesperson\u2019s experience, their on-target earnings increase (<\/span>Bridge Group<\/span><\/a>), and companie<\/span>s that hire less-experienced reps are more likely to see higher turnover.<\/span><\/p>\n

Recruit passive candidates<\/b><\/h3>\n

To craft a strategy around top performers, companies need to recruit <\/span>passive<\/span><\/i> candidates\u2014salespeople who aren\u2019t actively job-hunting because they are already busy meeting their quotas. Simply posting a job opening and waiting for candidates to apply is no longer enough, because top performers won\u2019t be the ones engaging. Companies need to assume an active role and go after top talent directly.<\/span><\/p>\n

Create a candidate pipeline<\/b><\/h3>\n

The best approach for directly seeking top talent is to design and fill a candidate pipeline. This is similar to a customer funnel\u2014prospects are found and nurtured as they move through the funnel, eventually becoming buyers. It\u2019s the same for hiring. Companies must fill a pipeline and give candidates a long runway, because it can take months or years to woo a top performer away from their current job.\u00a0<\/span><\/p>\n

The candidate funnel should include an initial sourcing or \u201cprospect identification\u201d stage, then have regular touchpoints of online or in-person communications, to familiarize a candidate with the company, convey the employer brand, and build a trusting relationship over time. Notice again how this is different from the old paradigm of posting a job and waiting for responses. Instead, it takes advance work and planning so that when a position becomes available, good candidates have already been primed.<\/span><\/p>\n

Improve compensation packages<\/b><\/h3>\n\n<\/picture>\n\n

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It is imperative that compensation is slightly above industry standards to successfully attract top-performing candidates. Companies should use compensation studies to benchmark their base salary and OTE (<\/span>2019 Sales Compensation Report<\/span><\/a>). It\u2019s also about the broader package, such as sales incentives (like bonuses and no-cap commission) and workplace perks. Employer branding is part of the non-monetary benefits and companies should review their online presence to see if it appeals to top performers\u2014does it reflect a positive work environment, a culture of success, and showcase opportunities for long-term career growth?<\/span><\/p>\n

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Consider recruiting from adjacent industries<\/b><\/h3>\n

If a company is experiencing a severe shortage of qualified talent in their own industry, one tactic we successfully use in our recruiting work is to explore <\/span>similar<\/span><\/i> industries. Companies in unrelated industries may share aspects of their business models. So we have found it is less important that a sales candidate has industry-specific experience, and much more important that they have the specific skills and aptitudes needed to succeed in a certain function. These skills tend to generalize, and they are more valuable than if a hire were to enter a new job with a Rolodex of contacts from the same industry.<\/span><\/p>\n

Make use of recruitment process outsourcing (RPO)\u00a0<\/b><\/h3>\n\n<\/picture>\n\n

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If a company is struggling with a talent shortage, they can transfer their sales recruiting efforts to RPOs. This is different than hiring traditional recruiters, because RPOs specifically take ownership of the design of the entire recruiting pr<\/span>ocess, tracking metrics and taking responsibility for the results. These services can include unique candidate sourcing methodologies, such as sourcing through social media, and introducing quantitative applicant screening through aptitude tests. This can assist companies when they begin to search for sales talent in adjacent industries, because good RPOs will have a birds-eye view of candidates in many firms and verticals.<\/span><\/p>\n

Gear up more training for an existing sales force<\/b><\/h3>\n

We see many companies that are overdue on providing sales training. Such training should be ongoing as a company grows and adapts to new challenges. We also see opportunities to introduce leadership training programs, coaching, and mentorship. Investing in an existing sales force not only uplevels their skills, it also helps with retention by demonstrating the potential for career growth with their current employer\u2014reducing the need to move jobs for that growth.<\/span><\/p>\n

Make a rigorous sales succession plan<\/b><\/h3>\n

Companies need to consider their sales leadership as well. Are they ready to fill executive positions quickly after a retirement or other succession event? Many of the companies we work with have an inadequate plan and plenty don\u2019t have one at all. Succession plans are most effective when they are formal. They should use frameworks to evaluate current employees for their management potential, then provide adequate training, development, and mentorship when a transition takes place.\u00a0<\/span><\/p>\n

A critical part of a succession plan is the tracking of key metrics, such as:<\/span><\/p>\n