Case Study: The Importance of Culture

by Visus Group Partner Don Jastrebski, Culture Consultant

The president of a $20-25 million education company, was told by his college buddy not to hire a particular candidate to replace himself.  He had taken over as president when the family hedge fund acquired the organization.  He was trying to set it up for the future.  The president ignored this advice, as is usually the case, and hired the candidate anyway.  6 months later he fired the candidate for dishonesty, and embarked on another search.

This time the president thought bigger.  With hedge fund backing, he had seemingly unlimited resources.  Now, he wanted to hire the superintendent of Dallas Public schools.  Again his college buddy told him to not hire this guy—he didn’t fit the culture.  But again he ignored this advice.  He was enamored with the superintendent’s pedigree, his contacts, his standing in the education industry.  He would bring prestige to the organization and put the company on the map.  He was totally focused on this candidate’s potential—which he envisioned in his own mind.  He really didn’t want to hear naysayers who were warning of the candidates lack of culture fit.  He hired him anyways.  Less than a year, and hundreds of thousands of dollars later, he fired him.  He kept him longer than he should have because he made such a large investment to persuade the candidate to leave Dallas and relocate to join a private sector company.

Not only did he waste hundreds of thousands of dollars in relocation cost, signing bonus, salary, termination settlement and outplacement for the failed hire—but he wasted hundreds of thousands of dollars in lost sales, productivity and executive salaries, while his team  invested hours in things that had little benefit to the company or its customers.  The former superintendent, upon his arrival, set about establishing a number of initiatives and programs that he thought important, but were superfluous.  They were totally unimportant to customers and staff and the company’s best people spent hours on initiatives the customer didn’t care about.  Different cultures worry about different things, and the superintendent’s preferences were of little importance to company customers, who primarily shared the company’s culture.   Finally, even the hedge fund had its cost limit and the president had to pull the plug.

Thereafter, every new hire had to take the culture profile, even though his college buddy told him it was really only necessary for employees with customer contact or decision-making responsibility.

The Story Continues

A few years later, this same company had difficulty retaining sales people after Federal ‘No Child Left Behind’ legislation revamped U.S. education and disrupted the industry.  Previously, customers were school principals, or on occasion, district superintendents.  Now they had to sell to state legislators trying to implement the Federal mandate.  Many on the sales staff could not make the transition from selling to local customers to selling at the state level.  The company had a dismal record replacing those who could not adjust.  The majority of sales’ new-hires left within the first year.  The situation was desperate.

This time the CAT (the same Culture Assessment Tool) was used to assess the sales force.  The company was amazed to discover that their few successful sales people all had the same culture profile—the same mindset.  Thus began the search to find candidates with their top sales performers’ culture profile.  They had a 30 to 35-person sales force with a supporting cadre of 40+ customer account representatives who trained and supported customers while maintaining the the relationship.  This group was assessed by the CAT to identify those with the same top sales performer mindset, thus representing at least potential for success.  These people were offered promotions into sales.  To the company’s amazement those who chose to accept the promotion were immediately successful with virtually no turnover—they knew the product, knew the key customer issues and thought like the customer.  Their mindset matched their customers’ mindset—in which the customers’ needs and expectations were embedded. Customers know they understood them, they trusted them, and sales followed.

Therefore:

  1. Assesses a candidate’s fit with the receiving culture
    • Discovers if a candidate’s past success was accomplished in the same or different culture
    • Foreshadow the candidate’s potential for long term success
    • Avoid the cost of a bad hire. Identify a candidate’s fit
  2. Use the Culture Assessment Tool (CAT) to select top candidates.
    • CAT provides the hard data and research to identify the culture type preferred by high performing individuals
    • The output provides the context for selecting candidates who prefer the same top performer mindset
    • These candidates have the appropriate thinking/decision bias that attracts the target mindset of external & internal customers.
  1. All other selection instruments measure a candidate’s strength in targeted traits found in a normative population across all culture types.
    • They measure specific traits generalized to all cultures. They do not measure a candidate’s fit with one specific organization culture—or their customers.
    • Other selection tests measure success traits, not culture fit.

As a staffing or recruitment firm leader, establishing excellent culture and ensuring there is culture fit should be one of your larger roles in the business. The impact is too important to miss! If Visus Group can provide any guidance, please let us know!

Compensation on Steroids: The Top 3 Sales Levers that Need to Pop in a Strong Commission Plan

Given everything that has happened in 2020, the COVID-19 pandemic may have flipped your business upside down, but one thing is certain – you need a simple and compelling commission plan that incentivizes your employees to produce in a way that grows with the business. The considerations that need to be addressed along with trying to account for continued uncertainty with the pandemic is still top of mind. This time of year provides a great opportunity to assess and address your top sales driver – your commission plan – as you look to grow or recapture some of your lost business.  

A quick reminder…your staffing firm is a sales organization.  And because you are a sales organization, your sales commission structure is critical to your success.  Compelling, engaging, motivating commission plans are not easy to craft.  Such plans really need, first and foremost, to fit into a financial model.  And the best plans utilize multiple sales levers to account for the ever-changing environment.  When I speak with clients, here are my top areas to consider when creating a competitive commission structure:         

Salaries: No secret here that salaries have crept up over the past few years.  For years the staffing industry has enjoyed very reasonable base salary levels with aggressive commissions.  It is safe to say that these days are over.  New graduates coming out of college are straddled with debt.  Their appetite for low base salary and high commission jobs is close to non-existent.  Two quick scenarios that I would like to outline that I’ve seen staffing companies dealing with throughout the years:  

    1. Step-down salary management – Think about building a plan where the salary decreases as commissions increase in the first year of employment.  For example, the target salary may be 40K.  But to attract promising reps and recruiters the company starts an employee out at a 60K salary level.  After three months, the salary decreases 2K a month for the next nine months.  
    2. Performance management –  A Manager should have a sense after 3 months if a sales rep or a recruiter is not going to work out.  After 6 months, the manager has the performance data.  Getting this decision down protects the financial investment.  For example, the company offers an employee a 50K salary, add 20% for taxes and benefits and the real cost is 60K.  An employee that does not make the cut in 6 months, is in this example, only a 30K investment.  

Gross Profit Production:  Clearly, for a staffing firm, gross profit production is king.  This should be the central in any commission structure for a staffing firm.  Several thoughts here to consider: 

One, think about a threshold.  Namely, the employee must generate 5K of gross profit prior to receiving commissions.  

Two, have a graduated scale.  For example, 2% for the first 10K of gross profit generated for the month, 4% for the next 10K of gross profit generated, 6% for the next 10K of gross profit generated, and so on.  This component of a commission structure rewards and motivates getting into the upper buckets of a commission plan.  

Three, the closer the reward is to the behavior the stronger the reward will be.  Paying a gross profit production commission on a quarterly basis rather than a monthly basis is a mistake.  

Four, never, ever, have a retroactive component.  For example, once an employee hits 50K in gross profit production they receive the higher percentage commission reward on the entire 50K of gross profit.  

Five, add an individual monthly component specific to the rep or recruiter.  For example, a company that hires a new rep, just starting out, needing accounts, pay a 2K bonus for hitting a quarterly new account target.  With this component, a staffing firm can individualize its commission structure.  There are so many more ideas for this component of the commission structure.

Performance Drivers: The achilles heel of commission structures in the staffing industry is that so few firms reward performance drivers.  Any staffing firm worth its salt knows the three to five activities that drive business, gross profit growth and revenue growth.  These are called “leading” indicators.  Gross profit, by the way, is a “lagging” indicator.  The goal here is to have some component of the commission plan that rewards the few things that drive growth.  For sales reps, these are client visits, attending networking events, and following up on job orders and leads from recruiters.  For recruiters, it is submittals into hiring managers, candidate interviews and delivering leads to the sales team.  A performance quota component of the commission plan rewards an employee for hitting certain targets on a monthly basis.  For example, a staffing firm could have 2K a month activity bonus.  If a rep hits 100% of their target they receive 100% of the 2K.   If the rep hits 90% they receive 90% of the 2K.  If the rep hits 80% they receive 80% of 2K, and so on.  Anything below 70% is zero.  

As in any sales plan, these ideas are just the tip of the iceberg. There are so many factors to consider in developing a strong commission plan for keeping your sales team engaged and motivated to win.  Developing the right one can be a daunting task as you look at every facet of your business during your budgeting season. 

We’ve been helping staffing companies solve these types of challenges for over 25 years. That’s why we’re your hub for any compensation plan discussions you think you will need during this time. Contact us and let’s connect. We’ve been working with staffing and sales leaders for decades developing the right plans to grow their firm. 

At the end of the day, it’s about growth and the winning commission plans utilize a combination of best practices, multiple sales levers, and timely rewards to instill the behavior you are seeking that will lead to your firm’s success. One last thought, keep your plans as simple and scalable as possible!