Even in the midst of some serious fiscal problems in Chicago – the city is facing a budget crisis and so is the state – the outlook for job growth in Chicago is positive. Chicago is welcoming new Fortune 500 businesses as they bring their headquarters to the city. There is a boom in the technology sector and in health care. Unemployment is down, and wages maintain a healthy bump over the national average. While some sectors – particularly manufacturing – are experiencing economic challenges, there is a great deal of growth for jobs in general, which is good news for sales professionals and employers who want to locate themselves in a growth region with plenty of opportunity.
“Unlike New York, and its connection to the financial sector or Los Angeles with the entertainment sector, Chicago’s economy is built on its diversity. That allows us to be a world leader in many different areas all at once.” – Rahm Emanuel, Mayor of Chicago
The big picture in Chicago
This past May, Crain’s Chicago Business, the business journal of record in the city, reported in their article ‘Chicago Economic Growth Slowed in First Quarter‘, that “Chicago, like the rest of the country, hit some economic bumps in the first quarter but is still likely to be expanding its economy a year from now.” The article also noted that Chicago now ranks 18th of 20 large cities – up from 19th last quarter – in odds that its economy will be growing in a year. This prediction is echoed by the latest Chicago business analysis from the Regional Economic Applications Laboratory (REAL) at the University of Illinois at Urbana-Champaign which noted, “given Illinois’ economic performance of late, recovery to the prior peak (adjusted for changes in labor force participation and population growth) within five years would seem feasible.”
More recently, the Bureau of Labor Statistics, Midwest Region office reported in its Chicago Area Economic Summary, updated September 1, 2015, that “unemployment is down from 7.3 percent in 2014 to 5.9 percent in 2015 in the Chicago area, and trending down for the Greater Chicago area.”
A potential driver lowering the unemployment rate could be due to the fact that Chicago has a well-educated population that employers can draw from when recruiting. The University of Chicago, The University of Illinois, and Northwestern University serve as three of the city’s higher education anchors, along with institutions like DePaul, Loyola, the Illinois Institute of Technology and a host of mid-sized colleges and junior colleges.
Chicago is also a popular destination for recent graduates from all over the Midwest – Ohio University and the University of Michigan both report that Chicago is a primary destination for large numbers of alumni. It’s a great place for employers to find candidates with MBAs, with the Kellogg School of Management and the Booth School of Business offering executive MBA programs as well as internationally recognized executive leadership and training courses on an ongoing basis. Northwestern’s executive leadership programs, for example, offers several of study that zone in on specific skill sets for sales leaders such as how to accelerate sales force performance, how to lead high impact teams, and how to leverage customer insights to drive sales.
What is propelling the growth?
A mix of Fortune 500 companies choosing to locate their headquarters in the city combined with a tech and healthcare boom is spurring growth. The Metro Economic Outlook: Chicago report published by the Society for Human Resources Management (SHRM) in 2015 notes, “among the locally-headquartered members of the Fortune 500 list are aerospace interest Boeing, technology company Motorola, fast food restaurant giant McDonald’s, and agricultural processor Archer Daniels Midland, which moved to Chicago in 2014.” Other major names like Kraft Foods Group, The Allstate Corporation, and Baxter are also headquartered in Chicago. For a full list, visit World Business Chicago and download their curated list of Chicago-based companies on the Fortune list.
Rick Mattoon, Senior Economist and Economic Advisor for the Federal Reserve Bank of Chicago notes in his report, The U.S., Illinois, and Metro Chicago Economic Outlook for 2015, that Chicago is attracting more big companies. “Since 2011, 27 companies have chosen to locate headquarters in Chicago. Thirty-one Fortune 500 firms in the metropolitan statistical area (MSA) and eight in Chicago.” Google is also making waves by building new offices in the city’s West Loop neighborhood, and the business boom is attracting more real estate developers. “JLL (formerly Jones Lang LaSalle) ranked Chicago 8th in the world for commercial real estate investment in 2014 (9.1 billion),” Mattoon notes.
The SHRM report observes that technology jobs, in particular, are increasing in Chicago. “The local tech sector is anchored by Internet marketing company Groupon, which has more than 2,000 people working at its Chicago headquarters,” notes the report, adding, “San Francisco-based online review website Yelp is expanding locally throughout the remainder of 2015 and will bring 300 jobs to the city.”
Sources, including SHRM, credit Chicago’s strong commitment to technology as a harbinger of growth in the community. The city sponsors a technology incubator called 1871 that’s located in Chicago’s legendary – and gigantic – Merchandise Mart building. The incubator is now credited with being “the home to almost 400 startup companies, and 40 companies have graduated from 1871 to create 500 local jobs.”
In addition to technology, the Federal Reserve Report notes that “the Chicago (city) economy has expanded by an estimated 12,445 private-sector jobs since September 2013, mostly attributed to professional and business services, transportation and warehousing, and education and health services sectors.”
As the city builds on its reputation for innovation, investors are taking notice and earmarking funds for Chicago-based companies. According to the Federal Reserve report, “venture capital investment in the metro area increased to $210.2 million during the third quarter of 2014, a 42.2% improvement over the same time period last year.”
Some complain that there aren’t enough angel investors and venture capital funders looking at Chicago, but the city is attracting attention.
“The missing link has always been venture capital, a problem that in the past not only forced companies but individuals to chase capital to the East and West Coasts. We have reversed that direction and today, money is chasing companies here to the Third Coast.” – Rahm Emanuel, Mayor of Chicago
The ChicagoInno blog keeps tabs on the startup community in the Greater Chicago area, and reports on events such as The Chicago Venture Summit. Anchored by venture capitalist and Chicagoan J.B. Prtizker, this event is meant to draw the attention of investors everywhere to showcase what’s happening in Chicago. And more recently, the Venture Capital Post predicted that Chicago is in the lead to become the next Silicon Valley. “Chicago is considered to be a haven for VC funding,” notes the publication. “The average salary in Chicago technology sector is over 65 percent higher than other industry verticals. The real estate sector is also huge and affordable for the industry as the price is increasing over 10 percent annually. All these positive factors put together make the Affordability Index of 182.3 for Chicago city on ULI report.”
Opportunities for employers targeting sales professionals
The kind of news being reported about Chicago by economists impacts employers looking to grow their sales force. The city is experiencing growth in high-earning-potential sectors such as technology and healthcare, with a mix of enterprise companies and innovative startups, which is driving demand and increasing the competition over rare, top performing salespeople, which represent only 10-15% of the entire sales population.
“(A bad hire) to me is what’s most risky.” If you even get a few people that are wrong for any number of reasons, be it they are just not great people, they’re political, they’re bureaucratic, they’re not good at their job, yet they advance. It cascades dow very quickly.” – Al Goldstein, CEO of AVANT
REAL reports that “Chicago’s employment rate in May 2015 was 103.21 of its pre-recession level,” and adds, “the 12-month forecast shows that Illinois is likely to experience an employment growth between 26,600 and 44,200. The greatest increase is likely to occur in professional and business services (23,100 more jobs) while the largest decline will happen for manufacturing (5,800 less jobs).” Peak Sales Recruiting CSO, Brent Thomson, notes that demand in the region has skyrocketed over the past 2 years, particularly in the technology and professional service verticals.
“The biggest challenge Chicago tech should tackle is finding ways to drive large, scaled and sustainable revenue streams. And this is no easy task. If I were to make a recommendation to all tech entrepreneurs for 2015 it would be to start consuming books on selling and marketing.” – Shawn Riegsecker, CEO & founder of Centro
Naysayers will caution that the fiscal problems at the city and state level threaten long-term growth. The State of Illinois Economic Forecast, January 2015 published by State of Illinois Commission on Government Forecasting & Accountability, Moody’s Analytics, Economic and Consumer Credit Analytics noted in its summary that “Illinois’ economy has improved over the last year, but progress has been slow and the state has underperformed the region and nation in key gauges such as jobs, income, and output.” The report adds, however, that over the “longer term, Illinois has a lot of what businesses need to thrive — talent, access to customers and capital, transportation — but painful fiscal reforms are needed before it can fully capitalize on these strengths.”
Employers in the manufacturing sector should approach expanding its Chicago sales force with caution. Each of the major reporting bureaus noted some real problems in the manufacturing sector. The State of Illinois Economic Forecast, notes “a dramatic weakening of sales concentrated in the resources segment, and mining in particular, has led to significant downsizing that has spilled over into other parts of these economies.”
The impact on sales salaries
Companies looking at Chicago should note that the upturn in the economy is having an effect on wages. “The mean wage for sales and related jobs is 14 percent higher in Chicago than the national average,” notes the Bureau of Labor Statistics, Midwest Division. Over the past 3 years, we have seen the median base salary for senior technology sales representatives, those with 5+ years experience selling SaaS, Software, and/or Hardware, rise 8%, from $75,800.00 in 2012 to $82,000.00 in 2015. Similarly, the base salary for territory managers in the software vertical has risen 9%, from $125,000 in 2012 to $139,000 in 2015. Compensation plans have remained steady with a 50/50 base commission split, however, technology start-ups in the Greater Chicago Area have introduced more lucrative draws – up approximately 10% from the past two years – in an attempt to reduce the impact that long sales cycles have on first year earning potential.
High-growth companies looking to hire top performers in the Chicago market should therefore be prepared to find ways to economize on the higher-priced labor. Introducing new technology that can reduce rep travel requirements or administrative functions, for example, can mitigate the impact on rising wages over the long term. Firms can also pass on the cost increases to their customers by raising the product/service price. This outcome, however, is more likely in industries where demand for the product or service is relatively insensitive to price increases.
Chicago’s a smart choice for employers
Good wages and lots of opportunity are important, but top performers like to lead the charge for a company from a perch in one of the world’s leading metropolitan areas. If you’re considering opening an satellite office or a new headquarters, consider that Chicago is big enough to offer the sales challenge that top performers demand while delivering a lifestyle that’s family-friendly. It’s also centrally located so that sales people with significant travel requirements can navigate distance and time zones with more ease than those on one or the other coasts. A growing job base, a good economic outlook, and all the trappings of big city life with a dose of Midwestern charm makes Chicago a top choice for employers looking to expand their sales force.
If your organization requires Chicago’s top sales and sales management professionals, contact Peak’s Chicago recruiters today.