The cost of bad hire in sales

cost of bad hire in sales
Picture credit: Morgue files and Frank Zappa (RIP)

How you can protect your investment

Jim is a Senior Account Manager in the Finance Industry. He sells IT Outsourcing. Only the big fishes.

Jim still remembers the day when he occupied his first BMW. The particular smell of a new car. Every car brand has a distinctive smell and the smell of this BMW ... Oh, Jim was digging it.

He was a guy with confident expectations. Each forecast looked promising and rosy. Only A-prospects. Massive deals.

Life is great.

As the months went by, some of Jim's clients decided that outsourcing their IT would be too much of a risk and they kept it in-house. Others bought from the competition.

A few of his colleagues mocked Jim, but his boss still believed in him. Everyone knows these deals don't happen overnight.

But after the first year, he had to sit down with his boss. It was not nice. His boss clarified that he needs to see results from Jim now.

Jim had cost the company 220 K in salary. Not to mention the costs for the car, gas, training, travel expenses, marketing costs and all the other expenses and overhead costs.

Early in his second year, Jim felt that the air was getting thinner. In IT sales, headhunters are tailgating you all the time. Time to move on. 

Every market is full of Jims.

True cost of bad hire in Sales

The U.S. Department of Labor quantifies the cost of a bad hire with at least 30% of the first year earnings.

In high-priced complex solutions sales, the time to competence is can be as long as 18 - 20 months. For a start-up or small biz the wrong hiring decision can be fatal and a serious threat to the business.

But even for larger and established companies, these costs can be hard to digest.

The monetary cost of a bad hire can easily be quantified. How about the impact on moral and productivity?

Only hire the best, or no?

Common wisdom suggests that you hire only the 20% of top performing salespeople. But how realistic is that? What happens to all the other salespeople and who is filling the remaining vacancies?

Not only would fighting for 20% of the players on the market become expensive - how do you know you hired one of the best?

Protecting your investment

Salespeople are not at the bottom because they lack technical skills, product knowledge, motivation or bite. They are unsuccessful when they lack social competence and the ability to create emotional connections with buyers.

40% of salespeople get fired each year. That creates not only costs but also unnecessary suffering.

Here are two simple and cost-saving scenarios that allow you to protect your investment, minimize the cost of bad hire ins sales,  and get the best ROS (Return On Salesperson):

  1. Put your hiring people through our Project Empathy Training. It allows them to get a clear understanding of the temperament of applicants.
  2. When you realize that you hired a salesperson in need of support: Send them to our training and allow them to gain the soft skills that will help them succeed.