We held one standard base for every account executive, and a strong candidate who wanted fifteen thousand dollars more walked. We called it discipline. It was a hedge against not knowing who was good.
Every account executive started on the same base. A candidate we liked a great deal asked for fifteen thousand dollars above it. We passed, and they went somewhere that would pay it.
We had two reasons at the time, and we said them out loud. Only one of them was the real one.
“We ran the numbers and it does not fit the budget.”
“We keep one standard base for every AE. If we break it for one, we break it for all.”
“Anyone good will make it up on commission.”
The cost analysis was real, and it was secondary. The band sounded like integrity. The actual reason was that our hiring process was not dialled in, and we were worried about paying a base we could not afford for someone we were not sure was a high performer.
And under that condition it is the correct policy. You cannot pay a premium for a quality you cannot identify, so a company with a weak interview process is right to hold one band.
Which is why “pay up for talent” is useless advice on its own. Nobody should pay a premium on a hunch. The premium becomes the right call only once the interview produces evidence you would put your name to.
No reliable way to identify a high performer, so a flat band is prudent. High performers decline the offer. The team fills with average. And then there is no high performer on the team to calibrate the interview against, so the process never improves, so the band stays flat.
Every step looks like sound judgement. That is what makes it hard to see from inside.
One extra deal a year pays for fifteen thousand dollars of base. A high performer does that several times over.
| Worked figures | |
|---|---|
| The base premium fully loaded at 1.3× | $19,500 |
| Revenue that pays for it at a 40% gross margin | $48,750 |
| Revenue per ramped rep a year | $1,200,000 |
| How much better they have to be than your average rep | 4.06% |
A model, not measured actuals. Put your own revenue per rep and margin in and the percentage moves, but it rarely leaves single digits.
It is “am I confident this person is four percent better than my average rep?” If the answer is no, do not hire them at any salary. If it is yes, the premium is the cheapest thing in the decision.
A team with a handful of high performers and everyone else average. The average tier ran at fifty to sixty percent of quota and ramped slowly. The low end went onto improvement plans, and some of them were let go.
That is not a coaching outcome. A whole tier at fifty to sixty percent is a hiring outcome, and no amount of performance management recovers it, because a team of average performers cannot be re-hired. It can only be replaced, one seat at a time, over years.
The decision is made early. The bill arrives later, once hiring runs at volume and the team is already built.
1 · A much better interview process, first. Locked questions, a required quote behind every score, scorers who cannot see each other’s numbers until they have committed their own, a role play on the company’s own business, and references asked questions that make a polite person say something real. Without this you are still guessing, and the pay change does not work.
2 · Sourcing people who are already employed. The best sellers are not on the market. Nobody willingly loses an A-player, so an applicant pool is, by definition, the people whose employer was willing to let them go.
3 · Two bands, not one. A standard base, and a top base the company is allowed to reach when the evidence supports it.
A single band cannot express confidence. Two bands can, and the second one is only usable because the interview now produces the evidence to justify reaching it. Like in sports: you pay for your first-line players.
We hired several seasoned, well-connected sellers. They opened top-scored accounts and bring in steady revenue.
If not, your band is doing exactly what ours did. Start with the arithmetic: the model is free and puts a number on what one productive seat is worth, which is the number a premium should be measured against.
Run the model, free No account. Your numbers stay in the link.