When to Talk Compensation in a Sales Interview

For a lot of VARs, discussing compensation can be one of the most difficult and tense aspects of interviewing a potential new seller. One wrong move, and you could either end up spending more than is necessary or alienating a well-qualified candidate with too low of an offer.

Timing can make a difference here, too. If you discuss compensation too early on in an interview, you might end up offering far more than is necessary. Discuss it too late, and there's a chance that you could lose the candidate because they might not feel as if you're a valid opportunity.

It's important to realize that there are two distinct conversations to be had regarding compensation during an interview: what the candidate's target income is, and what you're willing to pay. If you can differentiate the two from one another, you'll have a much better chance of getting the right candidate to sign on for a compensation agreement that won't have a negative effect on your business and will still feel like a win to the sales rep.

Discuss Target Income

The first discussion you'll want to have about compensation should focus on the candidate's desired target income. To come up with a reasonable offer (for both parties), you'll want to broach this early on in the interview process. The moment you have inkling that a sales candidate might be a good fit, ask them what target income they’d like to earn.

Discussing this up front will help to give you a better idea of whether the candidate is affordable. It also will give you a hint as to what base salary, commission and bonus structure you might need to offer should you decide the candidate is worth it.

If this is your first sales rep in this role, you may not know what compensation plan you want, or even if it’s competitive in the market. Or, you may tailor your sales compensation plans to the needs of each salesperson you hire. In these cases, waiting allows you to do more calculations and test them against what the candidate would like to earn.

Discuss What You'll Pay

As you go deeper into the interview process, take the time to discuss the candidate's prior salary history, commission structure and past earnings. This will give you the information you need to make necessary comparisons to what you’d like to pay.

While the candidate may press you to discuss what you’ll pay, unless you have an established compensation plan with no variance, keep your cards close to your vest, as they say in gambling. Offer a range of target income you’d expect a rep to earn at quota in year one.

Why do I suggest holding back on the compensation plan specifics? Sometimes you’ll discover that the base salary a candidate wants from you is actually $10,000 less than what he or she is accustomed to earning. Or, the target income the candidate would like to earn is only a dream but never achieved.

If the compensation plan you offer far exceeds the candidate's past earnings, you may actually demotivate a rep. The base salary may be comfortable enough that the rep doesn’t need the commissions earned on sales. Or, the target income at quota may be beyond what them rep needs to live happily.

As you move through the interview process, be honest about what you’ll pay, but don’t share all the details until you are ready. Hold off on discussing compensation details until you have a good idea what your sales candidate needs to earn and you know what you want to extend in an offer.

Kendra Lee is a top IT Seller, Prospect Attraction Expert, author of the newly released book, “The Sales Magnet,” and the award winning book, “Selling Against the Goal,” and president of KLA Group. Specializing in the IT industry, KLA Group works with companies to break in and exceed revenue objectives in the Small and Midmarket Business (SMB) segment.