Sales hiring is expensive and a poor hire can damage your brand.
Consider these stats [i]:
- In the U.S., average turnover in sales is between 20% to 30% annually. This means that for many firms, the equivalent of the entire sales team must be hired, trained, and socialized every 3 – 5 years.
- Depending upon the position, it now takes 3-4 months to hire a salesperson and, once hired, getting to full productivity takes more than 9 months. That is more than a year without a fully productive seller, and each hire becomes a sunk cost for a longer time while a bad hire is very costly.
Hiring in sales is often more expensive than many companies’ capex decisions, but typically treated with less rigour than purchasing software. How can you get better at this core task?
First, recognize the challenges inherent in sales hiring:
Unlike many other business functions, there is no easily identified resource pool or educational priors for sales positions.
If you’re looking for an engineer, you can go to an engineering school and find people who have studied engineering. For an accountant, finance person or software developer, you can find majors in those subjects. But few colleges and universities have sales programs or even a sales course. Yet, it’s estimated that more than 50% of graduates (in U.S. colleges) will work in sales at some point in their careers, regardless of their major.
Hence, most salespeople start with little preparation and must learn by doing on the job. And selling jobs vary greatly depending on the product or service sold, the customers a salesperson is responsible for, and the relative importance of technical knowledge during sales calls.
In dealing with these hiring challenges, here are two common mistakes to avoid:
(1) Hunters versus Farmers
Sales roles are far more diverse than that cliched dichotomy. Consider the difference between reps who sell direct to customers versus those who sell thru channel partners, those who work in highly automated inside sales models focused on SMB prospects versus those who call on enterprise accounts, those who sell individual products versus a bundled package solution, or those who sell multiyear software license agreements versus monthly SAAS contracts.
The Hunter/Farmer dichotomy is of little use in setting hiring criteria between those roles. In fact, hunters and farmers are, in my experience, usually used by managers as after-the-fact rationalisations for their hiring choices, not ex-ante hiring criteria. Make sure your managers have relevant criteria before they make an offer, not just when they try to justify the decision.
(2) Chasing Stars
Talent matters and differences in individual sales performance are typically very wide in most firms. The top 20% of salespeople often account for 60% of company revenues.
If 20% of your salespeople are making 60% of revenue, that’s a 3X multiplier; and since the remaining 80% bring in only 40% of revenue, the top sellers are 6X more productive than their peers. Sales is like other creative occupations where the stardom phenomenon is well documented. In areas like software programming, the arts, sports and others, the best are typically a lot better than the average. Performance profiles in those areas are (in statistics jargon) a “power distribution curve,” not a normal distribution bell curve.
However, stardom is not easily portable because it typically depends upon firm-specific qualities and resources—e.g., brand, training, team chemistry, and other factors—as well as individual capabilities. [ii] This is especially true in sales where tasks are determined by a firm’s business strategy and choices about which customers to focus on.
In turn, selling behaviours are affected by your control systems, culture and how you hire. Those are all firm-specific factors and, when you hire someone from another firm, they leave all of that behind. Talk to the corporation who hires the high performing star from a competitor and finds that she does not perform the same way she performed there. Or consider startups who bring in an experienced big company rep and he flounders in the early-stage firm. Those people didn’t suddenly get stupid or lose individual capabilities. In business, there’s no such thing as performance in the abstract. There is only performance in each context—here, not there—and much of selling depends upon the relationships, knowledge, and mutual trust that the rep establishes with others in his or her company.
Sales is a performance art and salespeople exhibit a wide range in performance outcomes. Those outcomes depend upon innate talent as well as the context in which that talent is nurtured and deployed. Further, the effects of talent management are cumulative as people learn from each other. Reps get better by watching how the best of their peers perform key tasks. They pick up lessons about how to pitch, answer objections, and other aspects of selling that product at that price in that market.
Here are 4 tips for screening and hiring high performing sales professionals:
(1) Hire for the Task
Effective hiring starts with knowing what you need. Sales tasks are determined by buying contexts which differ greatly by industry. In computers and electronics, channel management is a key capability, but not in metals and mining. In the former, the products are often part of a package that customers buy at one-stop-shop intermediaries; in the latter sectors, direct bulk buys are the norm. Account management skills are important in chemicals where managing a portfolio of specialty and commodity products is a key sales task, but not so much in electronics where channel partners often perform account management tasks.
Every sales job has implicit required behaviours. Take the time to clarify and make that explicit in your job postings. When companies focus on the tasks, not job titles, the relevant labour pool typically expands. Coding boot camps, for instance, are now an accepted source of software talent because after a few months of task focused work the participants have job relevant skills without (and often despite) previous formal degrees. The same is true in sales. Relevant talent comes in all shapes and sizes but is dependent upon the job to be done, not some abstract ideal of undifferentiated selling skills.
(2) Avoid Behaviourally Useless Cliches
Ask sales managers what they’re looking for in candidates and you typically get lists of cliches like Sense of Urgency, Passion, Motivated by Money, Work Ethic, Coachability, Emotional Resilience, Communication Skills, Listening, Integrity, Humility, Efficiency, Commitment to Succeed, and so on.
These traits are behaviourally useless for doing what a hiring process must do: say yes or no to an individual applicant for a given job. When you’re speaking with someone at an interview, how do you unearth whether they have a “sense of urgency”? One author says, “Look for answers around impatience and 4th quarter comebacks.” Really? Confusing this stuff with job skills and evaluations is a waste of time and resources. In a job interview, who would not want to come across as hardworking, resourceful, efficient, and so on?
You’re hiring the person and not the interview version of the person. But only about a third of companies monitor whether their hiring practices lead to good employees or track cost per hire. Another problem with these lists is the assumption that a salesperson needs all of those qualities to be effective. However, it’s often advisable to shrink the span of sales activities. This requires understanding where the salesperson (versus marketing, service, or a customer success team) has the most influence. In many inside sales models, activities like lead generation and qualification are the jobs of Sales Development Reps (SDRs) and renewals are given to service personnel. This allows the firm to focus more precisely on recruiting for Account Executive roles where product demonstrations, pricing, and closing the sale with a multifunctional buying unit are the key tasks.
(3) Complement Interviews with Behavioural Assessments
Decades of research consistently show that managers overrate their ability to predict someone’s performance and fit for job tasks on the basis of a few interviews. Correlations between interview ratings and job success vary from about 0.1 to 0.4 — less than the 50/50 odds of a coin toss. [iii] In fact, some studies show a negative correlation between interview assessments and subsequent job performance: the firm would have been better-off selecting at random!
Judging a person’s fit for a sales job is, in most circumstances, a complex task. It involves evaluating the relevance of past experience, personality, fit with the culture, and so on. But people are inconsistent in making summary judgments of complex information, so always get multiple opinions and perspectives in evaluating candidates. Doing multiple assessments also often motivates people in your firm to discuss and communicate the tasks you’re hiring for and the questions and activities likely to elicit relevant skills. Conversely, this approach provides the interviewee with a better basis to judge fit.
Then, complement interviews with role plays, task assignments and, whenever possible, internship type hiring scenarios. Selling is about behaviour. Job performance from one time period to the next correlates at a much higher rate than interviews. So probationary periods are better predictors of actual performance. Meanwhile, technology is increasing options for behavioural assessments via game-like activities, video, and online media.
(4) Assume Mistakes Will Happen
Sales hiring requires judging people’s future performance in a changing market environment. Mistakes are inevitable, but the sunk cost fallacy—continuing to throw good money after bad—is not.
Consider Amazon’s policy of offering a voluntary severance package called “The Offer.” Annually, each service and warehouse employee are offered up to $5,000 to quit. The policy helps to deal with inevitable mistakes—by the hirer or the person hired—and with the reality that people change and their relationship to their work can change with marriage, divorce, sickness, the need to take care of an aging parent, or any of the other natural shocks that flesh is heir to. Amazon believes “The Offer” helps it shed less-committed employees while improving retention among others. [iv]
Sales reps represent your company to customers and prospects. A poor hire is not only costly but can also do collateral damage to your brand. It’s worth your time and effort to improve your sales hiring criteria and process.
Frank Cespedes teaches at Harvard Business School and is the author of six books. This article is adapted from Sales Management That Works: How to Sell in a World That Never Stops Changing. Published by Harvard Business Review Press.
[i] See Boris Groysberg, Chasing Stars: The Myth of Talent and the Portability of Performance (Princeton University Press).
[ii] For a review of this research, see Jason Dana, Robyn Dawes, and Nathaniel Peterson, “Belief in the Unstructured Interview: The Persistence of an Illusion,” Judgment and Decision Making 8, no. 5: 512-520.
[iii] For a review of this research, see Jason Dana, Robyn Dawes, and Nathaniel Peterson, “Belief in the Unstructured Interview: The Persistence of an Illusion,” Judgment and Decision Making 8, no. 5: 512-520.
[iv] Alana Samuels, “Why Amazon Pays Some of Its Workers to Quit,” The Atlantic: https://www.theatlantic.com/business/archive/2018/02/amazon-offer-pay-quit/553202/.
