• Hiring for commission-based roles: What to consider

    March 15, 2018 by

     

    If you are hiring for commission-based roles, you have probably encountered misconceptions about commission-based employment, especially among entry-level candidates. Good candidates for these roles possess different characteristics than those who you might consider for a non-commission role. Here I get into how to address those misconceptions, how to identify great candidates and how to set new hires up for success in a commission-based role.

    When should companies hire for commission-based jobs?

    Before you recruit anyone, it helps to understand what kinds of roles are typically commission-based and what type of person might make a good candidate for a job where compensation is largely based on performance.

    There are some industries where it makes sense to pay employees commission and many where it doesn’t. The two main criteria for a commission-based role are:

    • The employee’s performance can be easily tracked, and
    • The employee’s performance is directly related to their value to the company.

    Usually, commission-based employees create value by bringing money to the company through sales. Some industries where commission-based compensation is common include:

    • Real Estate Sales and Brokering
    • Software Sales
    • Mobile Phone or Internet Contract Sales
    • Insurance Sales
    • Automobile Sales

    Compensation packages: Compensation packages can be part-salary/part-commission, heavily commission-based, or salary-based with some commission. The balance you offer should depend on what other duties the employee has, in addition to their tracked sales performance. For example, a customer service representative at a cosmetics outlet might get a small commission for selling product during their shift, but it would make up less than 15% of their total compensation package. At the other end of the spectrum, real estate agents working for a brokerage are probably on 100% commission without any salary. A car salesman might be closer to fifty-fifty.

    Addressing misconceptions about commission-based employment

    Candidates will see your commission-based role with skepticismHiring for commission-based roles is one of the biggest challenges that recruiters face. You often have to sell the applicant on the role itself, even one that could see the candidate earning significantly more money than their salaried peers. When you find someone with the potential to succeed, remember that some people associate a negative stigma with commission jobs. If they think you’re pushing an illegal multi-level marketing job on them, or you’re just a shady recruiter running a scam, the interview process could potentially go smoothly but you’ll never see the candidate again. It’s important to overcome potential objections before they happen by asking the right questions – only then can you truly set up the candidate for success.

    Many job seekers, especially entry-level, will respond to a job posting with the title “Marketing Role – No Experience Needed,” only to find out that the advertisement was a “scam” – they were really recruiting for 100%-commission network marketing or MLM. The idea that commission-based jobs are scams is just one of the many objections you could encounter while discussing a role with candidates. Instead of skirting around objections, it’s best to address them directly before they come up. Acknowledging any preconceived notions or misconceptions on the part of the candidate shows that you are trustworthy and willing to be forthright about the opportunity.

    Get informed of the job seekers’ challenge: Guide to identifying and avoiding job scams

    Don’t wait for the candidate to bring up the objection on their own – remember to address these points during the interview. Here are some of the most common objections to commission-based roles and how you could answer them.

    Objection: This job is not prestigious because of the low entry barrier.

    Answer: “The best-paid workers are always on commission because they want the maximum benefit when they make a deal happen. Successful commission employees are loved by everyone at the company and they enjoy great perks.”

    Objection: Commission jobs are a scam.

    Answer: “Successful actors, musicians, and business people are all on commission. The best way to start making big money is to perform well in a commission-based role that offers you a great compensation package. Let’s figure out how much you could make this year.”

    Objection: I don’t know if I can do it.

    Answer: “I feel that you have all of the skills someone needs to be successful in a job like this. If I am wrong and this is not ultimately a fit, we will find you something else. As a first step, let’s figure out how much you’ll make this year when you are successful.”

    It’s worth mentioning that multi-level marketing companies have had a large negative impact on the perception of commission-based sales. It’s important to ensure that your prospect appreciates the legitimacy of the company, and of the opportunity that you are offering.

    What makes a good candidate for a commission-based role?

    Many people simply aren’t a good fit for a commission-based role. Whether they struggle with uncertainty, don’t like hearing “no” from potential sales targets, or can’t take the pressure, many people will reject commission-based outright. Here are some qualities and some red flags you can look for.

    Candidates need a drive for resultsQualities to look for in candidates

    • Drive for results – A drive for results means always wanting more. A successful salesperson doesn’t just want to hit targets, they want to crush targets. They’re the kind of person who sees the big picture and can wake up every morning and go into work with the intention of kicking butt for eight hours. They’re the kind of person that views time wasted as an opportunity wasted. They’re goal-oriented, activity driven, and have a strong work ethic.
    • Excellent soft skills – Most commission-based roles are sales-focused, so your candidate will need to develop the soft skills needed to function in that environment. If they can handle rejection well, assert themselves well when appropriate, and possess good interpersonal skills, they’ll shine in most commission jobs.
    • Positive attitude – Self-belief is something that people learn, but if your ideal candidate is missing that can-do attitude, it can be a serious red flag. To succeed in sales, you have to believe in the process and the link between activity and success. Skepticism is a much-less-than-ideal starting point.

    Red flags to watch for in candidates

    • Sense of Entitlement – A recent survey on time-wasting in the workplace found that 69% of employees waste an hour or more each day and 10% waste more than three hours. Some entry-level candidates may think that because they are studying a related discipline, that they are entitled to a paycheck despite doing very little. While knowledge and experience are valued assets, commission-based roles are activity-focused. It’s a red flag if you sense that a candidate doesn’t realize the importance of working hard for the next dollar.
    • Doesn’t ask questions – Sales is an asking business, and if your candidate sits through a full interview without asking any questions, that’s one of the biggest signs that a commission-based role might not be a good fit. Think about everything you would need to understand before stepping into a commission-based role: hours, commission and pay structure, earning potential, the sales process itself, customer profile. If you’re not hearing questions or objections, the prospect either isn’t ready or isn’t interested.

    3 keys to setting up a new hire for success in a commission-based role

    When you hire someone for an entry-level commission-based role, ensure that person is equipped to succeed. The high turnover you see in sales jobs is often because employees are inadequately prepared to handle the demands of the job. Here are three things you can do to make it easier for your newest hire:

    1. Get buy-in from the beginning– A new hire who doubts the system and their ability to succeed is doomed to fail. We’ve said it already, but it’s worth repeating that skepticism is a less-than-ideal starting point for a new employee in a commission-based role. If the candidate believes they can make the role work for them, they’re more likely to stick it out through the first three months – the most difficult period of starting a new sales job. Having an engaging and efficient onboarding process will help get the new hire up to speed and understanding how to be successful.

    Related: Onboarding best practices from pre-boarding to the bottom line

    1. Manage expectations – New employees in these roles need time to build up their industry knowledge, on-the-job experience, and an arsenal of skills for successfully performing in their role. They’ll also need to determine how to manage their daily activity to optimize results. Entry-level recruits need to know that they might not be making big money as they train. Still, they need to understand that with proper training and some time to get things moving, good things are going to happen for them.
    2. Emphasize the benefits – Focus on the benefits of the new commission-based role to get your prospect excited about doing their best work. Commission-based roles have a high earning potential, and the new employee will be excited to learn about how much they can make. Successful salespeople are in high demand everywhere, and you can point out that just a year or two of effort could see that person in a leadership role where they manage their own team of sales representatives. Finally, for recruits that value personal growth, commission-based roles offer a constant challenge and growth process. The employee will develop self-management, a strong sense of accountability, and the capacity to really get things done. Commission-based roles can be transformative for those motivated in this way.

    Filling a commission-based entry-level role can be a major challenge, and you may have to conduct multiple interviews. However, by addressing the misconceptions and watching for the right characteristics, you can identify a candidate with a real desire to succeed in a challenging role and enjoy the career and financial benefits that follow.

    Sara Pollock at ClearCompanyAbout the author: As the Head of Marketing at ClearCompany, Sara Pollock has spent hundreds of hours interviewing, hiring, onboarding and assessing employees and candidates. She is passionate about sharing the best practices she has learned from both successes and failures in talent acquisition and management.

     

     

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