Using Long-Term Incentives to Retain Top Sales Performers

As the economy turns, attention is shifting - more seriously now - to employee retention.  This is particularly true for top sales people, a group that is in demand through good times and bad but who may be particularly vulnerable to poaching in the coming months.

Knowing this, retention tips for top sales people increasing feature the suggestion to add a longer term element to their compensation package.  A few recent examples are worth sharing here:

A recent Alert on sales force retention "Are Your Sales Stars Ready to Bolt?" by Buck Consultants advocates using stock to recognize and retain star sales performers.

...if you’re in a position to use stock to reward performance, you should consider making restricted stock grants with continued employment vesting requirements to top performers. These grants will further distinguish your stars from other sales reps and will also efficiently raise the individual’s cost of voluntarily going elsewhere.

In their April Short "How to Use Compensation to Retain Top Sales Talent", Colletti-Fiss recommend adding a longer term cash element to boost retention.

Another way to make it obvious to top performing sales reps that staying with the company is financially worthwhile is to reward consistent long term performance. Three or five year long term incentive plans that provide the opportunity to earn a significant amount of incentive pay for compounded performance can be a powerful retention device. It is not unusual for top performing sales reps to earn an additional 25% to 50% of their three (or five) year incentive earnings at the end of the plan period for consistent performance achievement.

Have you considered adding a longer-term component to your sales compensation program ... or do you have one in place already?  Would love to hear about your thoughts and experience!

Comments

[Chris Young]

Intriguing post Ann! When it comes to sales, it is so easy to become focus on short term rewards that managers often forget to establish long term incentives to keep their top performers on board.

I've shared your post with my readers in my Rainmaker top five blog picks of the week (found here: http://www.maximizepossibility.com/employee_retention/2010/05/the-rainmaker-fab-five-blog-picks-of-the-week.html) to get my readers thinking about long term retention of their top sales pros as the economy picks up steam.

Be well!

[E. James (Jim) Brennan]

If you wait until the economy picks up steam to take steps to retain your top producers, they may be working for the competition by then, stoking THEIR firebox instead of yours. Your train may be left behind at the station.

[Ann Bares]

Chris:

Thanks for the comment - and for the feature in the Rainmaker Top Five. Much appreciated!

Jim:

Well said! I fear there might be lots of company left behind at that station.