The Hidden Secrets Of Sales Compensation: Are You Being Cheated?

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Welcome to another episode of Chats with Jason. I am of course your host Jason Esprachel. And this is the show that helps you transform the experience to transform your business. Today's guest is Christopher Gough. Now he is a multi time bestselling author. He holds multiple certifications in the areas of sales and compensation and is also a Senior Director at LabCorp. Christopher, welcome to the show.

Thank you very much. Appreciate you having me.

Now it's quite the feat to publish a book. It's something even more special when you've published multiple books. They all seem to be in the same area of expertise. Sales and sales compensation help the audience understand what is it that you're passionate about and what are you trying to do through your work.

Yeah, thank you for that. It does make sense. I figure I'd stick it in the niche area that I have some expertise. What I really do is sales operations and compensation. And a lot of my focus is where those where like HR and sales comes together. And so I've written a number of books on compensating salespeople. My background growing up on sales operations, supporting commercial organizations naturally translated into familiarizing myself with how to compensate salespeople. When I moved to broad based compensation, I carried some of that business knowledge with me. So I've just been doing that for, ooh, about almost 19 years now.

It's definitely doubling down on your domain when you've done it for almost 20 years. Your latest book, if I'm not mistaken, is Hiring for Sales the Essential Guide to Navigating the Sales Talent Acquisition Process. So I'm a big believer that the employee experience starts with the recruitment process. And as leaders, the last thing that we want to do is get that wrong. Right? It takes us a long time to find someone. Making the wrong decision is never a great outcome for the business or the individual. What's your key tips, your top three tips for hiring the right talent?

So a lot of it starts with like pre work I would say. There's a lot of organizations that struggle in this process of identifying a person or saying I just need someone right, to get in there and sell. And the problem is not enough time has been spent on finding what is the real gap that you have internally to be able to find the right type of person that fits culturally, that fits in like the growth cycle that you're in and that you can genuinely afford. Because sustainability is a big part of this. Especially when you think about revenue being like the lifeblood of your organization and you're trying to Genuinely bring on a function like a person or a sales job that is going to be your business partner. They're going to be the ones who give you that avenue to scale, to grow, to really improve on revenue and financial outcomes. And so you need to find the right person who thinks about how they can assist you in that next cycle. Like right, because you're not going to be looking for a salesperson because you want to stay the same, you want to change and ideally change exponentially. So you need to be able to have that right person at the right time. And so I think it's really doing the pre work to know thyself in terms of your organization and to be able to select the right person.

Yeah, that makes a lot of sense. Doing the pre work, making sure that you know really what you're after and that you can sustain who you're employing. When I was in corporate, I would always have this conversation with HR around their desire for me to have a 55 page or certainly felt like a 55 page description of what the person's going to do, how many times each day they're going to scratch their nose. And in some organizations they wanted it to be quite granular and in other organizations it was more conceptual. And I'm wondering how important is it to really define the job that you're hiring someone for?

Yeah, excellent question and certainly can go to the point of overkill. And I like to call this job content. Spending the time and understanding what that person's going to do in terms of how they're interact with the customer, how they're going to pursue business, who they're going to negotiate with or influence, what market are they going to focus on and what kind of internal and external customers are they going to be working with. Like the concept of defining what success looks like, what does good mean, I think is probably sufficient. Obviously you have to get into some of the nuances of is it field based or inside based? Are they going to be traveling so that you get a lot of the job classification stuff worked out with HR and pay levels? Of course. Right. So we can pay competitively. So you do need some of those things, but that would mostly be a page of bullet points. That's about it. I think you can accomplish most everything by having a very clear understanding. If you could describe what is this person going to broadly do and how every Monday morning they get up and can clearly know how to execute or what they have to accomplish that day, then you've got most of it covered in my opinion.

Yeah, I love the point that you made around defining what success looks like. So some of the other stuff is tactical and necessary for fairness and whatnot, but really being able to articulate what success looks like for the individual, I think that's a key differentiator that you have in that hiring process to make sure that if a person wants to be successful by selling three cookies a week, and your definition of success is 10 cookies a week already there's a mismatch and perhaps you shouldn't move forward with them. You've mentioned compensation a couple of times and I think back to my corporate days being employed in corporate, I should say there was always this great divide, shall we say? And it didn't really matter whether where you worked in the organization or what industry the organization was at. There was always the great divide of the salespeople and not the salespeople. And you would see the salespeople having these things called incentive trips a week in Hawaii or the national sales conference that just happened to be at some ritzy resort and lots of free flowing adult drinks and all in the name of good business and generating a great year. Right? Or celebrating a great year. And then you'd have the other part of the organization going. That's all well and good for them, but we're the ones that take the calls at 1am in the morning when something they've promised hasn't been delivered. And why don't we get the parties? So it always does seem that there is this divide between the compensation package, what it looks like for someone's in sales versus someone in other parts of the business, who from a pure financial point of view, maybe the totals are the same, but the visible compensation packages seem very different. Why is it that we find so many organizations paying salespeople in such unique ways or incentivizing them in such unique ways?

It's an excellent question. When it all comes down to it, or we look at this almost philosophically, why do we compensate sales the way we compensate sales? And some of it is a cultural expectation. When someone gets into sales and when executives pay for sales functions, there tends to be an expectation of a trip and recognition and then usually a considerable amount of upside. So if they're high performers, they get paid very well. In many cases does create a cultural divide, especially as I think these sales organizations get bigger and bigger. Like it's a sales versus ops type of for services. Or like you, as you said, they made a bunch of promises, we can't deliver on it. It's Always a conflict. Naturally that does occur. The other thing is that when it all boils down to it, there is a different type of person generally that is interested in pursuing a type of job that has a considerable higher percentage of pay at risk and that they are comfortable with being told no very often that they have to have challenged themselves with the discipline of going and pursuing new business in places where people may not like them. They close the door in their face. They have really terrible experiences. There is a little bit of historically terminology used that would say salespeople are coin operated. You may or may not have heard of that. But the concept there is we throw enough money and perks at them and make them feel good because it's a tough job. That's the thing that does happen and it has perpetuated itself. But it's not that all sales organizations are that way. It just tends to be that. I think as larger sales organizations exist in corporate settings, you have more of those things. The smaller the organization, the more they're like I would say more of a business partner in the process because of the nature of the different types of hats that they wear versus in larger, more of that traditional large corporate setting. The function of sales is an execution on one very specific thing. It's go and deliver this number and you'll get paid handsomely for achieving that. And if not, you're out the door very quick. And there is nothing in between. Right. There is not a lot of patience for underperformance in sales.

Yeah. I think also at least for me, it always begs the question just because you do it for sales doesn't mean you can't do it for others. Right. You should be celebrating success and achievement in the organization as a whole, not just sales. And it's also part of that risk reward conversation a lot of salespeople's base compensation people in ops may not wake up for. So it's about what are you willing to put on your line as well. I love in the book that you do take the time to talk about onboarding. I think onboarding is an important part, if not the most important in the employees experience in those early days of really getting them wedded to the organization and loyal. And you talk about the first night 90 days. Why is the first 90 days of a new salesperson's job so important?

It's a period of time that I think most people expect to be able to experience a win of some capacity what we want to be able to do. And I think this is true for every job so it's not even just a sales function, but people want to feel good about the work they do. And I'm a compensation professional, but in my opinion, compensation is not the most important thing for work. It's really putting your time and energy into something and getting something in return associated with it or like being part of something bigger than yourself. And so in that first 90 days, what we want to be able to do is make sure that anyone in just about any job experiences enough of a sufficient opportunity for win that they have access to things that can make them successful that they can know, okay, this is the learned experience that I will want to repeat and that can translate that into future successes. So 90 days, some jobs, it's much quicker. If somebody's really doing face to face sales at a store, they can experience that day one. But there is also a lot of learnings of how to do the job and how to be successful. I'd have some coaching that goes along with that. So ideally, depending on the sales cycle length and the amount of interactions with customers, depending on the product and solution that you sell, you may need that extended period of time. But ideally within that first window, if someone doesn't have access to an opportunity where they can see themselves being successful in the job, then you're probably going to come to an understanding, both the employee and the employer that it's not going to work out. So it feels like that's like your litmus test window of time.

Yeah, it makes a lot of sense. So what are some of the things that, that you can do to really help set up that success window? Because I'd imagine on the flip side, you also don't want to hand them just a pre done deal, right? Then they feel like it's not really their hard work that led to the success. So what's something that you can do to really set up for that success?

It depends on the organization, the sales organization. But I would say a lot of it is being able to have like ride alongs and coaching opportunities. And so like the ride alongs would be depending on how experienced or inexperienced the individual is to the function of the sales process that exists within this organization. It is observing and taking the opportunity to say, okay, that's how it's done, this is what I want to replicate or this is how I want to interact with potential customers in the decision making process or influencing or speaking to prospects in a particular way. That's like a big part right there. Coaching for management to help guide through the process of again, replication Because a lot of this is identifying the opportunities and being able to execute.

Yeah.

When it all boils down to it.

Yeah. We've talked a bit about the need for coaching and guidance through that first 90 days. After that, do we just let them float and hope they'll continue to succeed?

I. Ideally not. I would say a lot of organizations essentially do that. It's okay, we'll throw you into the deep end. If you survive, great, you learned. But it doesn't mean that you've picked up on any best practices. We want to be able to have a commercial support or commercial enablement type of functions that help with processes. Best practices, communication skills, networking, negotiation, and on and on and on in terms of the soft skills. But also navigating inside of your organization and navigating through your customers. Organizations are some of the key points for a salesperson to be successful. Right. This is how we do business. And like many companies, the bigger you are, the more complicated, more difficult you are to do business with. And guess what? You probably sell them to somebody who's just as complicated to do business with. You need to know how to make those things happen.

Yeah. I think it's important that we continue to coach and upskill our team members because it's got to help for retention, Right?

Always. Yeah.

There's some interesting notes there now talking about retaining employees. I think you actually have a hierarchy of needs that you talk about in your book. So what is that hierarchy of needs that a salesperson needs to be able to retain them?

I give a lot of credit to Maslow on that one for that hierarchy and needs. But the conceptual framework is, if we think about it like any job, you gotta have enough money to pay the bills. You have to have the basics covered. Right. With it's like shelter and food. But then we grow to points of security. So do I have enough to not have the stressors so that I can be successful during the day? So that I can have an opportunity for growth and development and it grows beyond there. It's education, it's fulfillment in the work itself. Right. Ideally, this is where a true and a long term professional salesperson shifts from needing to pay rent to enjoying the act. Right. The profession of. And the mastery associated with the exercise of selling. And so it's an act and the proficiency for its own sake and greater, higher levels of enlightenment and fulfillment that come along with that. That sort of level of proficiency and mastery is then acting on something greater than yourself. And so I think it also naturally lines up with the maturity of A person in their job that when they stop being, let's say, afraid of losing their job and shifting more towards a focus on being excellent in, in their profession, not the job and being a salesperson, and they have a higher calling. They also are collecting the money, the commissions or the incentives to do things that are extend beyond themselves. And that at that point of maturity also may be more of you're doing stuff for your grandkids, you're doing stuff for retirement, you're doing stuff. That's a different story than having to simply fulfill the needs of living paycheck to paycheck. So I think these two things are not independent. They just naturally also progress through the profession and that pursuit of meeting the needs in work and a mindset related to how you think about work and the fulfillment you receive from the act of pursuing that sort of profession.

Yeah, that makes, it makes lots of sense. Now, I mentioned at the top of the show that you've written a number of books. Which of your babies, if we can call your books that, which of your babies is your favorite?

I would say that the first one probably is just naturally the case. And that one's called Starting Simple Sales Compensation because how I wrote it was simply a introduction for the layman. So if you need to hire a salesperson in your organization and you know nothing about sales comp, that's the book for you. That's the one where it's really just a high level overview. It tells you about the basics for understanding why sales comp. What do you need to know? How do you need to prepare? And my emphasis is in the first couple chapters is about culture. It's about affordability. And then I get into the nitty gritty of the nuances of pay curve and the performance measures and setting quotas and all of that sort of stuff. But a lot of it is heavily emphasizing whether or not the time is right and that what you may think is really tested and checked. So that's why I like that one probably the most.

Yeah, I do love how in that book get straight out of the gate, you bring us back to that importance of culture and how you really do need to hire for that match because even the most successful salesperson in the wrong culture won't be successful.

Yeah, and I see that all the time with different leaders who said, oh, this person was good where I worked before. Just like they do the same thing with the. Oh, we had an old plan that was from like a company tour ago. We used this seven or eight years ago. The Compensation plan itself also has to fit your culture, your strategy at this moment in time and the underlying mechanics of what's most important for your organization right now. So one of the things, just like the people this is what I teach in those books, is understanding that little piece of paper that you let you end up with needs to fit for right now where your company currently is. And it's never intended to be something that lasts forever. It's not a set it and forget it approach. It is something that is intended to fit with this particular life cycle that you're currently in of growth and strategy and alignment. And when you grow out of that, the things that we're saying is we're positively incentivizing a salesperson to act right on your behalf for the organization and execute on a specific strategy as soon as the strategy changes. You don't want to be paying them for them to do the wrong thing inadvertently because you kept it the same. Those are things that need to be revisited regularly.

Yeah, I think that's a really key point because so often you have a conversation with well meaning HR professionals. I'm certainly not having a dig at them because it's not an easy job that they have. But you'll often have the conversation of this is the way the industry recruits or this is the way the industry pays. And my argument is always, do we want the average result of the industry or do we want to achieve what we've set out to do?

Right? Yeah, yeah. When we always look at the median, is that good enough? Right. Is that what we aspire to is just above mediocrity? Right. Is that what we're shooting for? And we may get those results.

Yeah. Might not get them as well. It's a slippery slope. One of your books, the title actually makes my heart beat a little bit and not necessarily for the good reason Pay transparency, readying your organization for pay equity legislation. Now I definitely think that equal pay for equal job, equal performance is one thing, but. And I'm fully for that, but pay transparency. Are you suggesting everyone in the organization should know what everyone gets paid?

Yeah. So that particular book is a response to legislation that is really popular internationally and specifically actions that the state of California and New York City took. But it's also similarly being pushed by the EU directives is essentially making sure that there is greater transparency of pay when people request pay activity. Certain things that you can't ask of people in the interview process, kind of what have you historically made and a lot of other components that an organization has to ready themselves for what is culturally coming our way, regardless of whether we like it or not. So some of it is simply how does an organization adapt to what is a kind of popular legislation? That's how the book is written is as a small organization, what do you do, how do you react? And a lot of it is very tactical. Basically first you actually have to build a compensation structure because you can't have a response to something like that without building something that is defensible. So some of it's simply that. Now to your question more specifically, I think that culturally we're seeing an expectation of greater visibility and transparency which is a double edged sword in my opinion in terms of privacy and personal negotiation capabilities for your own pay, but also that of the organization's capability of actually positively rewarding people for performance. And so I think there are some genuine challenges that, that we're going to have to live through probably over the next decade to work our way through it.

Yeah, it's certainly an interesting area and a topic with many minefields I think that you need to be careful of. I know in every employment contract I've ever had and most that I've issued have all had confidentiality clauses in them. In fact about you can't talk about your comp plan yet. There's always been this conflict of this growing desire for transparency. Maybe not around the number, but at least around how the number is calculated. Which in essence gives people a fairly decent chance of working out what your compl plan is. Usually the people complaining about someone's comp also don't take into account that that person's up at 2am and dealing with all the stresses that perhaps some of the other roles don't get.

But yeah, there and there is, I would say some of it's generational is an expectation of having greater transparency in comp. I always say it's the worst kept secret is everybody. For whatever reason. This is why I say it's generational. Some people, and I think a growing number of people like to talk about comp amongst their peers. But I would say, I would imagine that's mostly because I'm not one of those people. I would imagine that's really just a zero sum sort of experience. No one feels good about it when they're done talking about it, but for some reason they want to talk about it. Yeah, it's going to happen. So how is an organization going to defend itself against claims of pay equity or pay disparity problems?

Yeah, it's an interesting topic. I think there's nothing but angst that comes from a lot of those conversations. As we come to wrap up the show today, what's one thing that the person watching us today on YouTube or perhaps listening on their favorite podcast app should start doing? And it doesn't have to be something big, but what should they start doing as soon as they finish listening to this episode?

Yeah, I would say selfishly you need to go to sales comp guy.com s a l e S C O M P G U Y and join the newsletter. So I'll probably start there. But I would also say that one of the most important things is if you work in an organization and you don't know how your salespeople are aligned to support your strategy to help execute on those financial outcomes, spend the time invest in yourself and really knowing more about how your business works because that's the key, that's really the key about it. And it doesn't matter what job you have, it's important to know what is it that is supposed to be executed on, what is it that the organization is defining as successful so that you can figure out your place in that organization and whole. Now I believe that my resources and you can find a lot of my books on Amazon. Com but I believe that they help people understand those sorts of things. But of course I'm biased but I think it's also a really good opportunity for you to get more in tune with the way your business what it does and that you have a better appreciation for the execution and the alignment of staff to support and execute in very optimal ways for like better business outcomes.

Yeah, that makes a lot of sense. And of course in the show notes we'll have links to not only your books but to your newsletter as well. Christopher, it's been absolutely great having you share your thoughts with us today and helping our listeners transform the experience that they have for their team members when it comes to sales and their sales attraction, retention and compensation. Thanks for your time Christopher.

Thank you very much. Appreciate it very much.

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