Hiring Sales people is a risky business. It is interesting to observe how companies spend significant time and energy in managing risk in all parts of their business but neglect to do so in their sales department when hiring new talent.
Organizations today have risk management processes for everything. Try getting something approved within any company today that has a price tag of $50,000 or more. The hoops and processes each manager navigates to get a product or service purchased is an enormous feat – and so it should be.
Now, consider the often quick and haphazard when hiring sales people by these same managers. The impact of a good or bad hire within the sales department outweighs the $50,000 purchase by 10x to 20x’s yet the risk management process to ensure that the right hire is made is significantly undervalued. The cost of a bad hire can easily reach $500,000 to $1,000,000 in lost revenue over the lifespan of the salesperson.
Risk Management, when hiring sales people, does not mean one or two interviews. In fact, the risk of a bad hiring mistake goes up in proportion to the amount of interviews the team puts a candidate through. The interview is typically the main culprit to the bad hire. The manager mindset that the risk of a bad hire is eliminated though the traditional interview process must be revisited. Managers have to remember that a sales person is good at selling themselves – sometimes their best sales jobs are in interviews!
Sales managers need to sit-down with each other or others within their department and calculate a rough estimate of their final costs on a sales hire that does not work out. One of the best ways to do this is to simply look at the quota (expected revenue) and average results of a new sales employee who has failed. Assume a quota of $1,000,000 per year and an average result of a failed salesperson in the first 12 months being 60% of quota. This means the expected average cost of a bad hire would be in the range of $400,000 ($1,000,000 X .4). It is this number ($400,000) that sales managers need to realize is at risk when they hire their next salesperson.
If the Sales Manager, CFO or President were to view each sales hire from the viewpoint of potentially putting $400,000 (or whatever the number is) on the line, I am sure a more rigorous and results driven hiring process would be put in place – immediately!
The risk when hiring sales people is huge, and numerous studies have found that the best way to find the right sales people is through using job simulation software. This advancement in the hiring process has already saved companies millions, and reduced turnover. Follow this link to learn more about “How Job Simulation Works”
Craig Bissett is the President of Hire Results Ltd – the developers of the Hiring Simulation Assessment process.