Everyone knows that a two-bedroom apartment in Manhattan doesn’t cost the same as a five-bedroom house in rural France. Even within the same city or neighborhood, size and functionality will always greatly influence the price of real estate.
When it comes to wages, there are many similarities but unfortunately, this is not always obvious to newcomers to the US. In the US, where salary variations are very important, this parallel with the real estate market is very valuable to better understand the topic of candidate compensation, especially in the field of sales. It is for these reasons that it is sometimes difficult to say with precision how much a regional sales director or manager — who covers territories of varying size, which could include ten states or even half of the US or anywhere in between– should earn.
Our European clients are often amazed at the salary levels they consider to be very high when compared directly to Europe.
Consider the size of the assigned sales territories. Few French companies would have a single sales representative cover the whole of France. However, France is approximately the size of Texas and the USA occupies an area approximately 17 times the size of France. And yet, we routinely work with clients in search of sales executives that will cover half of the US, if not the entire country. Additionally, it is often expected that these salespeople will have to travel anywhere from 60% to 80% of their time, again an expectation more in line with the geography of Europe than with the reality of the American continent, not to mention recent business practices adjustments created by COVID-19.
In regards to salaries, we are often initially asked to research those salespeople with an annual salary range of $70,000 to $80,000, with an added annual bonus of between $10,000 and $30,000. In addition to the wide scope of the territory covered and the extensive travel requirements, additional criteria are usually added in terms of experience and training. These salary levels are unrealistic and certainly do not take into account the current market conditions, where it’s a candidate’s market.
Many European companies often respond that these wages are already higher than those they afford their teams in France and that the company’s limited sales in the US do not allow them to increase them to meet American salary thresholds. While we understand the point of view of these companies, to use our real estate analogy, just as a buyer of a house or an apartment must adjust their search criteria according to their budget, we must apply the same approach to recruiting.
If the budget is truly limited, it becomes necessary to review the role expectations, the recruiting profile, and even the commercial approach (targeting, zones, etc.). Most commonly, the size of the prospecting territory must be reduced and companies need to be open to welcoming candidates from various industries.
However, companies should know that this strategy is likely to take time. This strategy can also run the risk of ultimately recruiting the wrong profiles, creating a vicious cycle of frustration for the company when results are not there.
A good alternative is to only set up an operation in the US when a certain level of investment is possible, even if it means waiting to be able to deploy a well-rounded team, including customer success and marketing resources, which are essential to truly succeed in the US.
Few would go in search of a two-bedroom apartment in perfect condition in a beautiful Parisian neighborhood for a budget of 100,000€. Unrealistic research never works.