What Are the Costs of a Bad Sales Hire?

Sales positions are critical within any organization. Sales brings in business, builds relationships with clients, fosters strong morale, and when done right, sets up you and your employees for success.

That means that making the right sales hire is also supremely important. Every company needs the right people in the right sales seats, and the hope is that those hires will work out perfectly. However, the occasional bad hire can be crippling to any organization — especially when you look at the hard and soft costs.

Our Chief Science Officer Dr. David Solot joined us on a recent episode of the Disruptors & Innovators podcast to identify many of those hard and soft costs as well as ways organizations can mitigate some of those situations moving forward.

Hard Costs vs. Soft Costs

Hard costs are expenses your organization cannot avoid in the hiring process, many of them manifesting before you get candidates to apply and schedule an interview.

• Advertising — You have to list a position on various different job boards.
• Paying recruiters — This is true if you have someone helping you with your search.
• Objective assessments — Many of these are pay-per-use.
• Travel expenses — Not every candidate lives locally (plane flights, hotel stays, food, etc.).
• Background checks — These are an unavoidable cost with any new hire.

The hard costs add up pretty quickly, and then you jump into the soft costs. These are the intangibles — the internal costs typically associated with the planning and financing of getting a new person on board.

• Time — You have to invest time in your schedule and your existing personnel’s schedule.
• Human Resources — HR reps and managers must open up job requisitions, managing ads, communicating with recruiters, etc.
• Applications — A lot of work is involved here, including phone screenings, filtering, etc.
• Getting other leaders involved — You, the senior vice president, president of sales, senior leaders, etc. all need or want to meet with the person you are bringing in for an interview.
• Internal stress — You’ve got managers taking over as account managers, salespeople covering someone else’s book of business, customer service employees working outside their normal duties, etc., all to keep things moving.
• Training — Once you get a new hire on board, you need to rally employees to help train.

There is cost, time, and materials involved in getting someone fully up to speed. You’re putting a lot of resources behind the expectation that this new sales hire is going to be the next great salesperson for your company. And when they are not, it can be particularly frustrating when they don’t make it.

What’s the Fallout from a Bad Sales Hire?

Not all bad sales hires are because of a problem with the person you hired. There may be a culture misfit, where this person isn’t geared for success in your type of organization. It may also be that the types of customers weren’t the kind of customers this person excels with, or the sales process is slightly different. There could even be inefficient processes and dysfunction within your organization that contributed to the overall failure of the hiring process.

The fallout from a bad sales hire can include a loss of credibility, where the new hire says, “You know what. I have lots of other opportunities here. This is not the job I thought it was going to be. I’m going to give my notice and just say it didn’t work out.” So now you’ve got a great salesperson in your industry who has a very bad taste in their mouth about your company and could share that information with colleagues and other business partners. On top of that, you’ve paid them, and now they’re leaving.

In the worst case scenario, a bad sales hire could cause your business to lose revenue from new bookings or could even scare away your existing business. Truly, a misstep in the hiring process has far-reaching, organization-wide consequences.

The fallout is larger than we think, and it can linger for a long time.

How to Mitigate Some of These Situations

1. Be speedy and efficient — Spend the most time with your most qualified candidates, the ones to whom you’re most likely to make an offer, and the least amount of time and money on folks who you barely know.
2. Use objective hiring tools — You need good assessments that look at performance and potential and are free from bias to ensure the person you are interested in has the drive, ability, and performance necessary to be a great sales rep.
3. Use predictive simulations — The newest tool in the hiring manager’s toolkit, predictive simulations allow you to put a new hire through virtual selling scenarios that predict how well the candidate will perform in key situations.
4. Pay attention to the candidate experience — Candidates have lots of choices. They can go many different ways, and they aren’t always reliant on your company to hire them. Don’t waste their time, and be efficient in your processes.
5. Have a great onboarding process — Many companies have a great hiring process, but they don’t have a great onboarding process. Take the time to think about what it’s going to take to get this person up to speed and stay in close contact with your new hire to provide coaching and review their book of business.

If you’d like to learn more, please listen to our Disruptors & Innovators podcast. We are revolutionizing the way organizations hire, onboard, and develop talent. Predictive simulations are the latest enhancement we’re adding to that arsenal of products.  We guarantee you won’t be disappointed.