By Lorna Heynike, Senior Vice President of Marketing, Callidus Software

The True Cost of the Wrong Sales Hire

Hiring sales superstars is at the top of every sales leader's priority list. What most of us quickly realize is that finding top sales talent is not so easy. Worse still, realizing you’ve made a hiring mistake can be equally difficult, taking multiple quarters and even up to a year depending on your sales cycle.

Sales Talent ManagementLet's examine the costs of a bad hire in the sales team. The Aberdeen Group reports that "the average estimated cost of replacing a sales rep is $30,420. Add the average time-to-hire and time-to-productivity, and you've lost almost a half-year of effort to replace a producing sales rep."1 A recent Harvard University study found that 80% of turnover can be blamed on mistakes made during the employee selection and hiring process. Aside from the hard-dollar costs and lost revenue associated with the "wrong" hire, consider the drain on resources while sales managers work on performance plans and training instead of staying in the field with the top players.

In the long run, it's far more expensive to replace a poor performer than it is to invest in recruiting quality candidates. But recruiting in today's market presents its own challenges. The sales candidate pool is large, geographically-dispersed, and spans a wide range of industry, technology, and selling style experience (farmer, hunter, telesales, etc.) Moreover, the top sales talent may not be actively searching for a new opportunity, and may not apply to traditional job postings and come through your HR pipeline.

The good news is that with today’s 2.0 technology, it's becoming increasingly easier to quickly capture the digital pulse of each sales person and correlate it to selling styles and results in your organization. So when evaluating your hiring process, pay attention to three aspects:

  • Start with effective recruiting: While you may be fortunate enough to have a high-talent database your company has built up over years, or a high value recruiting agency with years of experience building relevant candidates, having an effective recruiting process that generates a candidate pool based on applicants well as those candidates who are not actively seeking a position is critical to generating a high quality short list.
  • Establish effective screening: According to Fortune Magazine, only 66 percent of applicants actually tell the truth about their relevant experience, and two out of every three resumes are embellished.2 Having an effective screening and selection process that compares new candidates to your existing team and points to specific sales outcomes is critical to identifying the truly talented from the over-hyped.
  • Make it fast and mobile: The sales team has the most direct and immediate impact on the success of the company and every day lost in looking and traveling to dead-end interviews affects revenue and profits. Hiring managers need a way to screen candidates quickly, in the field, and minimize the time and cost impact of making a new hire.

In speaking with our customers over the years, we have heard these issues coming up over and over again. Stay tuned for an upcoming post where we discuss some of the tools we believe are transforming sales recruiting.

1 Sales Performance Management: Getting Everyone on the Same Page, Aberdeen Group, 2010
2 Fortune Magazine