I hope you’ve wrapped up a wonderful holiday weekend with family and friends. Assuming that you got everything you wanted for Christmas and you’re not out exploring the after-Christmas sales, you’re probably starting to think about the year ahead.
The job of any leader is to help those on their team to see and understand the business trends and opportunities that will affect their future. Just as an airline pilot lets his passengers know when he sees turbulence on the radar, it will help your teammates feel more safe and be more productive if you can help them interpret the events going on around them.
We’ll take the next few posts to relay some of the trends and opportunities we see for 2011. The purpose of these discussions is not to provide an exhaustive list of things that we think will happen in the future, rather it is to help get you in the mode of recognizing how the things going on around you will potentially affect those on your team and your recruiting efforts.
The first topic I’ll address is the future of full commission jobs. As we mentioned in a WorkPuzzle discussion last summer, there is a lot of economic pressure being put on the traditional “job with benefits.” At the time, I made the point that more and more companies are moving toward independent contractor employment models.
A recent article in Business Week conveys how this trend is not only continuing, but may be growing in the coming years:
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You can't buy Dallas clothier J. Hilburn's shirts in a retail store or online. Nonetheless, the company expects to sell 60,000 of them this year by dispatching salespeople to customers' homes or offices to take measurements and suggest fabrics and styles. They send their orders to a factory near Macau, China, where shirts are cut and sewn from Italian fabric. Buyers receive them in two to three weeks and pay between $80 and $150, less than half the price of similar shirts sold in some high-end stores….
Some 30,000 people have bought clothing or accessories from Hilburn, the company says. And 93 percent of its customers return for a second purchase, says Davis. Since Hilburn was founded in 2007, its sales have tripled each year and are on track to top $9 million in 2010, driven by growing demand for its shirts as well as newer products such as trousers, cuff links, and cashmere sweaters. "Customers are basically saying, 'You've become my solution, now offer me more products,' " says Davis, 38.
While new customers can find sales reps through Hilburn's website, most come through referrals. The company has 650 "style advisers" who earn commissions of up to 25 percent on clothing they sell after paying $399 for fabric samples, sales materials, and training…
Amy Mancini started selling Hilburn shirts in 2008. A mother of three in West Boylston, Mass., the former nurse says she earns about $60,000 annually, spending between 20 and 25 hours a week managing other reps and visiting customers. "I have clients anywhere from college students all the way up to presidents and CEOs," she says. The sales calls are crucial to getting measurements right and making customers feel comfortable about buying a garment they can't try on. Clients' measurements are stored in a database, and the company plans to launch an online store next year where customers can order new shirts once they've been fitted….
The model removes some traditional up-front costs of retailing. "You've got a sales force you're not paying until they sell things. You're not paying to make the shirt until the shirt is sold," says Brian O'Malley, a Hilburn board member and partner at Battery Ventures.
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Notice the last statement in the article… Isn’t this what the real estate industry has been saying for several decades? Of course, it is. What’s changing is that traditional industries, such as retail, are starting to use the same methodologies.
If you’re trying to attract talent into the real estate industry, this is exciting stuff. It is always difficult to get someone to consider something new. But when the value proposition is completely different (full commission) than what most people are used to, the jump can seem insurmountable. As the independent contractor becomes more common, the gap in someone’s perception of what’s “normal” is diminished. This should make the recruiting process easier.
The potential downside of this trend is that it may force you to compete with other businesses who will be continually trying to perfect the independent contractor employment model. If someone can earn $60K working 20 hours per week measuring people for shirts, you may have to sharpen your value proposition in order to compete when it comes to recruiting.
Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.
