Sales Force Turnover and Sales Compensation

Jeff Danes: Welcome everyone. Today, we’re discussing the findings from our COVID impact survey, specifically looking at salesforce turnover and compensation. We have Craig Ackerman, a principal and the leader of our health care practice. So Craig, what are the turnover expectations for 2022?

Craig Ackerman: So looking at 2021, turnover was in the 15% range. We’ve actually heard anecdotes that it’s higher, and there’s more and more companies that are reporting 20% plus turnover, which is really high. If you look at the height of the pandemic, turnover had gone down to about 6%. So we’ve rebounded. Now, commercial leaders also think this is where a survey sometimes can give you some interesting findings. So the commercial leaders we surveyed think turnover is actually going to go down in 2022. We don’t think that’s going to happen unless there’s some type of major economic event that causes it. That’s usually the driver of turnover. So it usually doesn’t go down by itself. I think the average was 11%. And coming in the pandemic, we’re up around 15% as well. So we believe turnover is going to stay high, which puts upward pressure on compensation.

So if we have a high turnover, relatively high turnover from the higher end of the turnover scale, which 15% is for this industry, and we’re having to replace 15 % of our sales force and by and large, we’re probably paying the new people more. It’s going to cause compensation costs to go up. What was an interesting find is it’s less the increases right now or less focused on base salary and more focused on the incentive side. But both are going up. And comp is interesting because when you look at compensation data and sales compensation data, the inflationary pressures get picked up a little bit later on. So when you’re looking at benchmarks, they’re always in arrears. So when you look at compensation data, if you’re at benchmark, you’re probably already behind. The industry in 2022 was a 3% increase. But again, we have inflation running north of 5%. So, you know, a 3% increase the last couple of years was running ahead of inflation. Now we’re behind inflation, and our employees and prospective employees are going to ask for more just to offset the inflationary pressures. So we believe that’s going to have an upward trajectory on comp, and people are going to seek opportunities with those that pay more money to at least maintain their standard of living, if not increase the standard of living.

Jeff Danes: That’s great insight. That’s all the time we have for today. Thanks for tuning in.