The problem of performance-based hiring (when “risk free” isn’t really free)

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Canvassing in columbus
Canvassing in Columbus with a former hockey player -- a memorable experience. Undoubtedly, door-to-door sales (uninvited) is one of the most irritating strategies. Yes, it works for some businesses but how many would really want to do this routinely.

us opportunityLast fall, at our company’s annual business meeting, we decided to resume our quest to re-grow the U.S. side of our business. However, we’ve been tangling with a challenge, which is proving to be a rate-determining delay in the process. I welcome your suggestions on how to solve the problem.

While we compensate our Canadian sales representatives with salary plus benefits, in the U.S., we have elected to follow the advice several business gurus — using a commission-only model. This performance-based approach, in theory, reduces risk: We don’t risk digging ourselves into a hole. The commission representatives will certainly be treated fairly. They need not invest any money and reasonable business-related expenses will be reimbursed. We can also make progress payments ahead of receiving client payments, reflecting the sales cycle and the need to give the representatives an opportunity to prosper financially as their sales move through the business pipeline.

As well, at least in theory, our business model will work in any regional/local market with an overall population of 800,000 to one million or more. If you are in Arkansas or Alaska, the systems should work well — in fact, the smaller and more distant markets may be more lucrative than the big cities.

Fair enough. The next question is: How do we go about recruiting and finding qualified commission-based representatives? Here, we run up against some truly significant challenges.

In theory, we can advertise anywhere we like, but conventional job posting boards often charge $200 or more for a single listing, and confine that listing to a specific location. Craigslist is free — but if you advertise more than once, in a single city/community, the bots will stop you from trying again. State employment agencies free job listing services generally discourage commission-based opportunities, and, even if they accepted them, would require local business registration — something that is easy to justify once you have hired the right sales representative, but which creates an incredible paperwork burden if you aren’t currently doing business in the location.

If you think these are enough problems to daunt the most determined business owner, then you need to add the other level — the individuals who generally respond to commission-only opportunities are often the kinds of people you would never even contemplate hiring for any kind of salary. The really good commission representatives are either securely or happily employed or are truly “needles in the haystack” — out there, somewhere, but nowhere easy to find.

Not surprisingly, services and businesses exist to exploit this commission-search challenge. Agencies offer to help you find the reps, for a fee. Reps offer their services on a multi-line basis; of course skimming off the easy work, and expecting various “fees” to do anything more. If you willing to accept these work conditions, you might as well offer a salary, I expect.

Probably the ideal solution to this challenge is also the biggest part of the challenge. Commission reps will be attracted to an organization if they can be confident they will do well — and the best proof is successful results from others in the field, who can network/share their observations. We have some success in Canada, of course, and one representative in the U.S., but not enough (yet) traction to overplay the testimonials.

So . . . we are caught at step one. We know we can grow the business, and know to grow it, we need some creative people who will work for performance-based compensation. But I admit I haven’t yet discovered the magic formula to solve the commission-based recruitment challenge, and I welcome your observations if you know of anyone who has solved this problem.

You can learn more about the U.S. performance-based opportunity here.

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