What’s the Cost of Hiring the Wrong Salesperson?

It’s getting increasingly difficult to find the “right fit” when it comes to salespeople; and with mounting pressure to make sales, it’s tempting to settle for “good enough”. Often times a person at interview stage might seem “good enough”, however turn out to be the wrong person in practice, to the detriment of your business. But why do these people end up being hired in the first place and more crucially, what does this hiring decision actually cost your business?

How Does the Wrong Person Get Hired?

Sales Managers naturally do their best to get the right salesperson for their company, so how do the wrong ones get through? Sometimes it’s simply a case of hiring the right person for the wrong job; just because the interviewee fits in with the company’s culture doesn’t mean they’ll become your next sales superstar.

Interviewing salespeople can be a difficult task within itself. A good salesperson can sell anything, and a job interview is their chance to sell the product they are a true expert in: themselves. When interviewing salespeople, it pays to be extremely diligent, carefully looking into their background and checking references to ensure you don’t get carried away with a charismatic candidate. Having someone who is experienced in interviewing salespeople be part of your hiring process is a key advantage here, whether that’s an internal employee or a third party, such as a sales recruiter.

Another reason for a hire not working out is that someone is hired for the wrong reasons. For example, let’s say a company has hired a salesperson under the assumption that they would somehow fix their financial woes. While it might seem like a logical thought process – sales lead to a better financial position – the key here is that no one is going to fix your finances if you don’t have an effective sales process in place. A salesperson in this scenario is just a band-aid. It would be like hiring a top chef for a restaurant with no kitchen.

That said, as an employer it’s easy to also get blinded by proven success of a sales person with industry experience that matches your own industry. The assumption is that they’ll bring that success with them, but that may not be the case. While they may have the industry knowledge, they may not have the right attitude or personality for your company. It’s easier to spend time training a candidate with the right skills and attitude on the nuances of your industry, rather than hoping someone makes a drastic change to their personality and fits into your company. It’s easy to fall into the trap of trying to “fix” someone, but more often than not it’s significantly less cost effective than simply not hiring anybody at all. As any people manager knows, personality clashes or attitude problems can lead to poor performance and significant issues in the office, and usually aren’t worth dealing with even if the person is a skilled salesperson.

What Will Hiring the Wrong Salesperson Cost Me?

To run an effective business, you need to evaluate your financial losses and gains, and when dealing with the costs of a wrong hire it’s logical to focus on the fiscal damage, all of the separate elements can add up to hundreds of thousands of dollars:

• Hiring – in house or third party recruiting costs, background checks, travel costs
• Base compensation
• Commissions
• Benefits
• Travel and Expenses
• Training
• Overheads – desk, supplies, infrastructure, admin, etc.
• Severance – usually four week’s pay in addition to legal or HR costs
• Wasted leads or lost customers
• Lost margins

However, the financial set back is often just the first of your problems. When dealing with a problematic person, management will often put in additional hours to try and fix the situation. From guiding your new salesperson, to implementing strategies to improve performance, it’s incredibly frustrating to see little to no progress. This has the flow on effect of managers burning out after putting in extra time to help someone who shouldn’t have been hired in the first place. This puts companies at a very real risk of losing quality talent because of one bad egg. After all, it’s not just management who has to deal with the situation.

In addition, a sales team is only as strong as its weakest member. It’s demoralising for a team of salespeople to see lacklustre results across the board because of one person’s poor performance – no one wants to put in hours of hard work only to have it undone by someone else! It’s that kind of environment that makes retention incredibly difficult.

No matter what strategies you employ, low morale undermines it all. Your sales team represents your company in the market, so ensuring their morale (and thus, performance) can have a real impact on the perception of your brand. Bad news travels fast, in both the real and the virtual worlds.

Summary

Hiring the wrong salesperson is an easy, but costly mistake to make. The financial impacts alone should be a deterrent, let alone the impact it can have on the rest of your team and your reputation in the market. Thankfully, there are ways you can avoid the pitfalls that come with hiring the wrong person. Put a strong hiring process in place and ensure you have expert guidance along the way, so you can find the right salespeople for your business from the start.