Attracting and Retaining Top-Notch Pricing Talent
Hiring the wrong talent comes at a high cost for businesses. A study from McKinsey, for example, shows that top talent is up to eight times more productive than average ones in highly complex occupations. Even if you get the hiring decision right, however, but are unable to retain it, the loss in productivity from high turnover is tremendous. This is particularly true for Pricing function, where talent is in high demand, but talent pool is in short supply.
Evolution of the pricing profession
The pricing profession is a relatively new field that has evolved over the past decades from being a tactical function to a strategic one that requires ongoing education and professional development. Consider, for example, that for most of the human history, pricing was largely determined through bargaining and negotiation. The first encounter of a price tag – fixed price for a product – is credited to John Wanamaker in 1861, a Philadelphia merchant who believed that everyone should be charged the same price. The practice of haggling, thus, started to dissipate in the 19th century when store owners began applying cost-based pricing. And it is really over the last few decades that sophisticated pricing strategies and tools have evolved, and that pricing as a function has started to attract some C-level attention.
Top performing companies over time have understood that pricing is not just a number – it is a powerful tool that can make or break a business. Multiple studies have shown how price improvements have a much bigger impact on profitability than equivalent improvements in volume or costs – even though the latter get disproportionate attention from average companies.
Best practices to attract & retain pricing talent
1) Consider the skills that are truly critical for the role you are hiring!
Pricing related roles typically require a combination of pricing domain expertise, people/ communications skills, technology skills, and business acumen. Finding the talent that exactly meets your needs is very hard as pricing talent is scarce and unique, and former industry experts or pricing consultants also tend to be pricey. Depending on the role that you are hiring for, consider the skills that are truly necessary for success in that role, do appropriate vetting for those skills, and provide resources to help them build the skills that they lack. Ironically, recruiting a pricing professional sometimes means foregoing previous pricing experience – especially in more junior roles.
A survey by Deloitte, for example, shows that only 3% of the pricing professionals have always been in pricing. Top five functions prior to coming into pricing profession include finance, marketing, operations, sales, and consulting.
2) Reduce time to productivity through tailored onboarding and continuous development!
Best companies not only do a great job with onboarding their talent, but also in providing ongoing development opportunities. Pricing is by and large not taught as a distinct field in universities. Even an organization such as Pricing Professional Society, which provides a great forum for developing your pricing talent, was founded only recently in 1983. At best, some of us were exposed to basic principles on pricing as part of a business or a marketing course.
A survey conducted by Bain & Company found that companies with strong pricing outcomes and increased market share over the past two years emphasize trainings and forums in pricing. In simpler terms, companies that have done well in pricing have focused on training their employees in how to set and get the right price and have created forums to discuss pricing strategies. Other options to consider are sending the pricing talent to conferences, engaging vendors that do pricing specific onboarding/ training, or offering tuition assistance programs for employees.
3) Consider the Employee Value Proposition (EVP)
Lastly, attracting the right candidate requires not just looking externally but also looking at yourself in the mirror. When you are evaluating a candidate, a candidate is also evaluating you. Have you considered what you offer in terms of compensation, benefits, culture, development, and recognition? A good way to refine your EVP is to consider what you offer compared to competitors out there.