Hiring the RIGHT Salesperson – Part 1
Over the past 40 years I’ve interviewed thousands of salespeople and sales managers for all selling channels: B2B (both inside and outside), B2C (both inside and outside), indirect, retail, and telesales. Today I advise client companies on how to do a better job attracting and selecting talent. Over the next six months I’ll share some lessons I’ve learned (many the hard way) on how to hire the right salesperson.
Question 1: What are the Top Four Mistakes Made When Hiring Salespeople? People who sell for a living are among the most effective people when it comes to candidating for a sales job. They earn their living by convincing others to buy what they are selling. The first sale to any customer is that of selling one’s self, which means salespeople come to the interview process having a leg up on people who don’t have a sales background.
Here are the Top Four areas where hiring mistakes are most often made:
1. A Lack of Specific Hiring Criteria. In order to fill any position (sales or non-sales), you must first start with identifying exactly what you are seeking. You need to identify the specific knowledge, skills, talent, and experience that describes your ideal candidate. The key here is s-p-e-c-i-f-i-c-s. What exactly should they know? What are the non-negotiable technical and soft skills that will assure success? What specific kinds of experience will they need? Are there any God-given talents they must possess? (By the way, you cannot teach a talent; someone either has it or they don’t. You can, however, help develop a talent). While it makes for a nice sound bite to say, “I can’t describe it but I’ll know it when I see it,” you’ll be two to three times more likely to make a bad hire than if you invest the time to map out very specific criteria prior to recruiting and interviewing people.
2. Hiring on Emotion. Customers rarely buy from someone they don’t like, so a candidate’s likeability is a legitimate hiring factor. The problem occurs when you allow yourself to fall in love with a candidate. Love, they say, blinds us. When it comes to hiring, falling in love with a candidate blinds you to everything that lies behind the person with whom you’ve fallen in love. Fast forward three months after hire and you’ll begin to discover all the things you dislike about them. But by then you’ve married them into your sales team. You’ll quickly learn that it is much more painful and costly to end a relationship, than to have entered it objectively.
3. Having a “Wrong” Compensation Plan. More than just about any other position, salespeople are incredibly talented when it comes to figuring out how to maximize their overall compensation. That’s a good thing…as long as their compensation program drives the behaviors and results which are good for your business. Compensation, especially variable compensation, should focus a salesperson’s efforts on selling business that represents a high return to an employer. I remember inheriting a sales team that was compensated for total dollars sold without considering the relative profitability of what was sold. $1,000 of sales of 20% gross margin items was compensated the same as $1,000 of sales of 60% gross margin items. Thus a million dollar salesperson who delivered $600,000 in gross margin was paid the same as the a million dollar salesperson bringing in just $200,000 in gross margin. Not good! Key takeaway: review the comp plan to make certain it drives sales behaviors that produce good results for your company.
4. Not Having a Well-Designed Onboarding Plan. Following their first morning on the job filling out their new hire paperwork and reviewing the company handbook, many salespeople complete their onboarding in the afternoon, with their manager giving them an impassioned speech ending with, “Welcome onboard…we are so glad to have you on the team! I’m here to help. Now go get ‘em!” That’s not onboarding! What IS onboarding is laying out the new hire’s first 90 days on the job with an intentional schedule of activities designed to bring him/her up to speed faster. Companies with a solid onboarding plan enjoy three advantages over companies with poor or no onboarding:
a. 33% Faster to Full Productivity. Properly onboarded salespeople begin providing a return on what you’ve invested in their hire a month or two earlier than someone who was not properly onboarded.
b. 25% Less Turnover. Sales positions are relatively high-turnover positions. Proper onboarding means you get to keep more of the good ones (and also lose more of the poor ones faster). This results in lowering your overall cost of hire.
c. 20% Higher Individual Productivity. Performance by properly onboarded people is at least 120% that of non-onboarded people.
Question 2: What is the Real Cost of Making a Bad Sales Hire? Depending on what expert source you believe, the cost of making a bad hire is between two and five times the position’s annual compensation. Read that again…between two and five times the position’s annual compensation! Those expert sources?
How about the Wall Street Journal, the American Management Association, and the Society of Human Resource Management, to name a few! Author Bradford Smart, PhD (Topgrading) says it might be as high as 25 times annual compensation.
Meet Rodney. Rodney is an inside salesperson with a base salary of $50,000. He’s also a bad hire. Before all is said and done, Rodney’s employer will shell out over $150,000 to fix the mistake of hiring Rodney. Here are five cost areas in which Rodney’s employer will pay for the pleasure of making a bad hire:
1. The Costs of Hiring the Wrong Person. This includes the fees associated with Rodney’s recruitment and search for the position; outside fees paid for background checks and testing; staff time used in screening, interviewing, and evaluating Rodney; and travel and relocation costs to bring Rodney on board.
2. Compensation Paid to Rodney. These costs consist of the compensation, bonuses, taxes, perks, and benefits paid to Rodney while he is employed, so multiply his base by 1.4 to estimate this cost.
3. Costs Paid to Maintain Rodney in the Job. These costs include the administrative, IT, payroll, and internal training costs paid on Rodney’s behalf; the costs for his travel, equipment, workspace, and communications during his tenure; and any reimbursement for his outside training.
4. The Disruption Cost of Rodney’s Mistakes and Failures. This area is made up of the costs of lost customers through his mistakes, poor service, and bad attitude; lost productivity through his inefficiency and indifference; and his negative impact on staff morale and productivity.
5. The Costs to Sever the Relationship with Rodney. This area includes severance and outplacement costs; legal costs of separation plus any costs the employer incurs to defend Rodney’s violation of laws or regulations; and the costs of bad press and damage to the employer’s reputation.
Bottom Line. So far we’ve covered just two aspects of making consistently good hiring decisions, which are the common hiring mistakes and the real costs associated with making a bad hiring decision. In future installments of Hiring the RIGHT Salesperson we’ll cover such topics as: how to plan for making consistently good hiring decisions, hiring requirements associated with different types of sales positions, and the best predictors of success when considering whether or not to hire a sales candidate.
The preceding was created from our webinar, Hiring the Right Salesperson, which is part of Boyer Management Group’s B2B Sales Essentials™ program, named a 2016 Top Sales Training Program.
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