Over the past year we have been busy writing our book, “My Worst Hire & What I Learned From It”. The concept and theme of the book was centred on the idea that most successful business professionals have made one or two (maybe a lot more) bad hires in their career. Not only have they made some costly hiring mistakes, they have learned some great hiring lessons that other business professionals could learn from. It is clear some of the worst hires are within sales teams and their individual salespeople. Getting the hiring right is one of the toughest jobs any Sales Manager has to do.
The sales department is all about revenue but expensive hiring costs eat up much of the bottom line. The cost of the bad hire(s) is significant. Some of the books stories show cost 10 to 20X the salary being paid to the sales person. An example is an $80,000 base salary and the cost of the hiring mistake being in the range of $800,000 to $1.6 million.
I interviewed over 20 key business professionals in a short time span, recorded the interviews and had my editor write up the draft for the first section of the book. All was going well until we had a serious health issue in our immediate family. I put the book on hold and never really got back to the project until now. I have decided to turn the book into a series of blog postings on our site and later compile the stories into an eBook format.
Read about some wild and crazy hiring mistakes and hopefully pick up a few valuable lessons (so you don’t make the mistakes yourself) from the short story. You will see the reasons that job simulations (aka. in-tray exercise, sales assessment, sales simulation) are so valuable and how these simulations can prevent you from making your own worst hires.
Tim is the EVP of a large staffing company that deals with technical personnel throughout North America. If there is anyone who would have a good understanding of a solid hiring process it would be Tim. Tim’s clients are some of the “Who’s Who” in the business community in North America. The companies’ mandate is to identify and screen candidates for their customers. They must be doing something right as they are one of the largest staffing companies in North America.
I have known Tim for the past few years and have been intrigued with the success he has brought to the company. For the past eight years Tim has managed to grow his business 35% year over year and as Tim puts it “I have hired tons of people since taking on this job”.
One of the key elements of Tim’s role is to ensure the right people are hired for the ever expanding team. In the past eight years he has directly been involved in over 100 hires. Since joining the company 15 years ago Tim believes he has directly hired more than 200 staff members. So if there is one person we want to listen to regarding hiring it would be Tim.
Tim and his management teams’ belief is that you hire smart at the front end (entry level) roles and then promote from within. The promotion stages in the company are to move staff members from entry level roles to account managers and then into leadership roles. Therefore, getting the hire right from the beginning will have a dramatic impact five and ten years later within the firm.
With so many of Tim’s entry hires having the chance for promotion, some of the costly hiring mistakes take place transitioning staff from one role to the next. This type of hiring error can have a costly ripple effect within the organization. Making wrong internal hires can sometimes be twice as costly as missing the mark with new employees.
The hiring mistake that is the focus of today’s story was the movement of a strong performing account manager into a leadership position (Branch Manager). As Tim recalls, this mistake triggered a series of challenges for the company with the effects still being felt 5 years later.
One of the company’s small regional offices was growing due to the local market expanding. Due to this growth a leader was required for the branch.
Tim is quick to point out that with their hiring model, the availability of qualified candidates for internal promotions can sometimes be limited.
The candidate in this story was an outstanding account manager who had risen through the ranks of the company. He had opened up some significant accounts, was well respected in the office and had demonstrated a number of skills that indicated he had the ability to develop and lead people. During this same time period however, management had noticed flaws in a few key competencies and characteristics. History had shown that this employee was a little close minded when feedback was given to him. He had a hard time receiving the information and learning from any form of constructive criticism.
This candidate took pride in his past accomplishments. In a team environment he brought some colour and uniqueness to the group. Moving from a one dimensional account manager role to a position where many different situations were taking place at the same time, proved to be an immediate concern. Everything from dealing with multi personalities, facing pressures from clients, dealing with head office politics, trying to develop and lead team members who were very different than himself, proved to be a real challenge for this candidate in his new management role.
Tim noted that this person’s past personality did not change. It came with him into this new role. The candidate just didn’t want to take other manager’s advice on how to handle the pressures he was feeling in this job. As in his last role, positive and constructive criticism from the management team fell on deaf ears.
Three months into this new internal promotion all of the senior management team were saying the same thing, “We have made a big mistake moving this person into this position”. Within six months this new manager’s team members were recognizing the same concerns. The team needed help but this new manager just could not cope with all the different activities taking place around him. As Tim spoke with some of the team members he found that this “confident” individual had now pulled back into his shell and was becoming more of a recluse, backing away from interacting with the team members. Now, rather than utilizing his selling skills with the team with “hands on” coaching he became more directive. Barking out orders rather than standing side by side and helping his team mates work through their challenges and opportunities.
Tim knew they had a big mess on their hands. The team was frustrated and management was not getting anywhere with coaching the new manager. Every time Tim visited the branch, expectations were given to this new manager and every time a follow up meeting was held the expectations were not met. Again, it all came back to the manager’s inability to listen to others and learn from what others were telling him.
Just less than two years into this bad hire Tim and his management team made a decision to ask this manager to step back into the account manager role and reclaim the all star status he once enjoyed. Reluctantly the manager stepped back into this old role and lasted 3 months. In those three months a recruiter call the individual and he was easily recruited to work with one of Tim’s competitors.
Not only did Tim lose a star sales person plus all the revenue he would have brought to the company over the past two years, but this person was now aggressively selling against Tim’s firm.
Tim looks back and realizes he had a feeling in his gut right from the start of discussing the original promotion with this manager. Tim was hoping that his candidate’s personality or attitudes would change when he was promoted into a manager’s role. Tim now knows that this rarely happens.
When Tim adds up the costs associated with this hiring mistake he calculates that the cost is well over $1,000,000 and this cost is still growing. Remember, not only did Tim’s company miss out on all the revenue this candidate did not produce in two years but also the reduced productivity of the whole team he managed over this time period due to poor coaching and leadership. The kicker to this story is that Tim’s team consistently faces this strong sales person in competitive selling bids throughout the territory.
Nugget: While internal promotions might be considered an easy hire, in many cases they are not. (See this article: Internal Recruiting or Hire External Candidates?) The problem is that you know the candidate’s ability to do well in their past role but you do not how they will perform in the new role. Tim tells us that you have to remember that each candidate has built in attributes that you will not change even if you try to retrain them. Remember the great old saying – “you can’t teach an old dog new tricks”. Well, this is true when promoting candidates. Traits and characteristics you see today will be the ones you see tomorrow. It may be a new job but it is the same person.