First, consider building a high-performance sales team as an investment and not a cost. The Harvard Business Review claims that poor hires account for almost 80% of turnover rates in business. Sure, it will “cost” you upfront, but the investment yield (if you have got your hires right) should be closer to 10x the cost, so it is most definitely worthwhile considering how to recruit the best team.
Some quite startling statistics may encourage you to institutionalize your hiring process. There are many different figures when it comes to trying to understand the cost of getting it wrong. However, to try and shed some light on this topic, in the UK, it has been suggested that it may cost 50-75% of the annual salary of the individual is a good place to start. Annoying if that were the case but perhaps not the end of the world. However, there are other hidden costs associated with this bad hire:
- Commission (even under quota attained, they still attract commission which is often overlooked)
- Benefits (health insurance, dental, gym, etc.)
- Hiring costs (recruiters want to get paid!)
- Equipment (hardware and software)
- Training costs (trainers time, software used in process)
- Severance pay and HR expenses (the cost of getting rid of someone)
- Lost productivity (compare how much is a bad rep doing next to a good rep – that delta is your business lost!)
Hiring mistakes are always going to be made across a company’s lifetime, this is inevitable. However, perhaps try these 4 tips to avoid the mistakes:
- Make it a requirement for potential candidates to complete an assessment prior to inviting them for an interview assessing sales DNA
- Be specific about what you want this person to achieve, so make the interview process outcome-based, not just conceptual
- Invite more than 1 person from different departments into the process to get a different perspective
- Only submit an offer that you know will be accepted. In sales, we would call this a soft close. You don’t want to be the company that sends out offers to candidates only to be turned down.