The challenge is compounded by the fact that there is no easily identified resource pool for sales positions. According to Howard Stevens in Achieve Sales Excellence, more than 50% of college graduates in the USA, regardless of their majors, are likely to work in sales. But of the over 4 000 colleges in this country, less than 100 have sales programmes or even sales courses.
The situation in South Africa is not much different. And, even if companies are lucky enough to find qualified grads, the increased data and analytical tasks facing many sales forces mean that productivity ramp-up times have increased. Each hire is now a bigger sunk cost for a longer time.
Bottom line: companies typically spend more on hiring in sales than they do anywhere else in the firm. So how do you improve the returns on this investment?
Here are four places to start:
Hire for the task
In business, you hear so many opinions about what makes for a good sales person. But most are a bland summary, with traits like extroversion, assertiveness, empathy, modesty, and an ‘achievement orientation.’ These platitudes are often reflected in firms’ competency lists and are so broad that, at best, they simply remind us that people tend to do business with people they like.
At worst, these abstractions are irrelevant to the execution of business strategy, and they make hiring, in sales and other functions, a classic example of the cloning bias: managers use these slogans to hire in their own image.
Selling jobs vary greatly depending on the product or service sold, the customers a sales person is responsible for, the relative importance of technical knowledge, and the people contacted during sales calls. A review of hundreds of studies about sales productivity finds that “the results of this research have simply failed to identify behavioural predispositions or aptitudes that account for a large amount of variance in performance for sales people. In addition, the results of this research are quite inconsistent and, in some cases, even contradictory.”
Common stereotypes about a ‘good’ sales person (e.g. pleasing personality, hard-wired for sociability, and so on) obscure the realities you face.
Selling effectiveness is not a generalised trait. It’s a function of the sales tasks, which vary according to the market, your strategy, the stage of the business (i.e. start-up or later stage), the customers targeted by your strategy, and buying processes of those customers. This is true even for firms in the same industry. Think about the difference between sales tasks where personalised service and advice are integral to strategy execution versus a low price and high product availability environment that makes sales tasks less complex and variable.
The first step in smart hiring and productivity is understanding the relevant sales tasks in your market and strategy and then reflecting those tasks in hiring criteria and a disciplined hiring process.
Focus on behaviours
Research based on thousands of exit interviews shows that a primary cause of poor performance and turnover is poor job fit. People, especially sales people with a variable pay component, become frustrated when they’re hired for tasks that are a poor fit with their skills and preferences. Conversely, as the saying goes, “You hire your problems.” Zappos CEO Tony Hseih estimates that bad hires have cost his firm $100 million. Famously, Zappos will pay people to leave voluntarily after a few months on the job.
The key is to focus on the behaviours implied by the sales tasks. In many firms, this means upgrading assessment skills. Managers are excessively confident about their ability to evaluate candidates via interviews. In reality, studies indicate a low correlation (generally, less than 25%) between interview predictions and job success, and some indicate that interview processes actually hurt in hiring decisions: the firm would have done better with blind selection procedures!
The best results, by far, occur when those making hiring decisions can observe the potential hires’ job behaviours and use a recruitment process based on a combination of factors, as illustrated in the graphic on the previous page.
There are many ways to do this, including simulations, interviewing techniques, or (as at Zappos) providing an incentive for self-selection after recent hires experience the required behaviours.
Especially in expensive sales-hiring situations, many organisations could emulate the practice used by investment banks and consulting firms when hiring MBAs: the summer job is, in effect, an extended observation by multiple people at the firm of the candidate’s abilities before a full-time offer is extended.
Then, immerse reps in the tasks they will encounter in working with customers. At HubSpot, which provides web-based inbound marketing services to businesses, Mark Roberge has sales hires spend a month in classroom-style training but also doing what their customers do: creating a website from scratch and keeping that site populated with relevant content.
Roberge notes, “They experience the actual pains and successes of our primary customers: professional marketers who need to generate leads online. As a result, our sales people are able to connect on a far deeper level with our prospects and leads.”
Be clear about what you mean by relevant ‘experience’
Previous experience is the most common criterion used by sales managers in talent assessment. In one survey, over 50% of respondents cited “selling experience within the industry” as their key selection criterion, and another 33% cited “selling experience in another industry.” Driving this view is a perceived trade-off between hiring for experience and spending money on training. But because selling effectiveness depends upon a company’s sales tasks, ‘experience’ is an inherently multidimensional attribute.
Related: Proactive Recruiting
It may refer to experience with any (or any combination of) the following:
A customer group:
e.g. A banker or other financial services recruit hired by a software firm to call on financial firms; or, in health care, firms sell different products, but many sell to hospitals.
An engineer or field-service tech hired to sell a category of equipment.
Another part of the organisation:
A service rep moved to sales because internal cross-functional support is a key sales task and that rep ‘knows the people and the organisation.’
A geography or culture:
A member of a given nationality or ethnic group who knows, and has credibility within, the norms of the relevant customer’s culture.
An insurance agent or retail associate with experience in another sales context.
The relevance of each type varies with your sales tasks. So consider what type is, and is not relevant (see above), and require the people doing sales hiring to clarify what they mean by experience.
Ongoing talent assessments
Markets have no responsibility to be kind to your firm’s strategy and sales approach. It is leadership’s responsibility to adapt to markets and develop the competencies required today, not yesterday. As organisations confront new buying processes, required competencies are changing. The graphic above, based on an extensive database of company sales profiles, indicates the changing nature of sales competencies at many firms. Competencies that, only a decade ago, were considered essential are now lower in priority.
© 2016 Harvard Business School Publishing Corp.