Have you ever considered the cost of hiring? According to LinkedIn, the hiring time has nearly doubled since 2010. The notable changes we see are more scrutiny of candidates, more expert interviewing techniques required, and often candidates staying put once the negotiation of salary and employer counter-offers arrive.
It’s an employee’s market out there, choosing companies with good career plans, company profiles, and culture with the overriding income requirements. The management and mentors a significant part of their decision too. No longer can hirers demand speed in hiring if they are genuine about finding the right individual and seeking retention of employees. This increased time and effort to fill a position goes directly to the cost of hiring, with both direct and indirect costs escalating.
When we conducted a survey late last year to find out about the time sales managers spend to hire a new employee, we were surprised by some of the other interesting facts about methods of recruitment, internal processes and responsibilities, quality of candidates and time invested.
All sales managers reported they are challenged for time, and many pointed out they have (and are) putting up with lower performance in some team members due to the challenges of time and quality of candidates when they go to market. Better the devil, they know, a common phrase.
Looking at the different end-to-end recruitment processes applied by the sales managers, this shows a direct correlation between the quality of new hires and the cost of hiring. Let’s look at them individually.
The easy way
For some, reaching out to known people or their network within the industry was considered their hiring practice. There was little to no preparation for sales strategy contribution, skills review, competencies, and documentation. The emphasis of hiring was on relationships within the industry, and employee referrals more than performance believing sales will flow from the relationships.
Network hiring is the most effortless hire for them, combined with a perceived low onboarding requirement. The business views this as more of the same and has no positive impact or development of the sales team or business. Comfort and expediency are achieved in the process with the low-level effort required. Typically this process is applied by long-standing sales management in the company. Often the employee costs more to hire as they have a perceived higher value to the company.
The typical time invested is reported as 7 hours for sales managers. If you extrapolate out the cost of hiring, the direct cost is low, but the overall recruiting cost to the company is significantly high.
Working with human resource departments
For those going to market through their human resource management (HR), there was time taken in the internal processes of raising the vacancy in the recruiting software, and reviewing job advertisements written by HR that were often considered vanilla by the sales managers. On looking more deeply at the term vanilla, the meaning was that the ads were selling the company more than focusing on the type of candidate required.
The HR department was responsible for the first screening of candidate resumes saving time, but often the result was lower quality candidates presented; good company people but maybe not so good as salespeople capable of delivering growth. Many of the traits of good sellers out in the market go against what some HR departments deem as good employees. Some sales managers reported they accepted lesser candidates who were considered good company people by the other departments.
Some HR departments have a dedicated internal recruiter on staff, which can assist greatly in the process. Those recruiters operate by posting on job boards, operating referral programs, and reducing the cost of hiring an employee. They conduct due diligence on shortlisted candidates and conduct background checks.
Those companies without internal recruiters will draw on external recruiting services with a careful review of their terms and conditions. The average cost to hire escalates with fees of 10-20% for placements, and the bottom line is many companies just cannot afford the total cost of recruiters.
Time was saved with existing employment contracts, position descriptions, and company processes to extend offers and finalise candidates. The primary challenge was that the profile of other departments defined as good salespeople did not necessarily fit the profile that would deliver the results. Salespeople require different skill sets than internal personnel and have more diverse skills to review.
The typical time invested is reported as 10 to 20 hours for sales managers.
The sales manager is conducting the complete recruitment process and flying solo. Usually, companies have low churn rates within the sales team. They are challenged with the lack of documentation and support materials required to manage the hiring process.
These people were reluctant to fire poor performers and replace them with the known effort required ahead of them. Better the devil, you know and at the sacrifice of the top-line performance.
These sales managers have not developed the necessary end-to-end hiring process to ensure a quality candidate is secured. The tendency is for the engagement of several recruitment companies to present resumes as it resolved some issues of finding candidates.
But unnecessary time was lost as they interviewed more candidates than should have been necessary and people who were not capable of delivering results. They hoped something more came through in the face-to-face interviews. Others reported they met with candidates on the advice of recruiters presenting near-fit profiles.
Another challenge with multiple companies targeting individuals, often the same candidates, driving up the salary costs, which has a long-term effect on profitability.
This approach of interviewing easily frustrated sales managers in the process, and often, they find themselves cutting corners to fill the role. In hindsight wishing they had taken a different approach to secure better candidates that added more value to the business.
The typical time invested is reported as 30 to 35 hours for sales managers
Facing the big issues
The most significant problems for sales managers are the length of time it takes to find their ideal employees, the difficulty in screening through applications, and a general misconception of the process involved in recruitment. Good hiring comes from a robust process that you stick to, not missing any of the steps and being skilled and attuned to the hiring of salespeople. If you are not involved in the process regularly, it is easy to fall foul of the traps of bad hiring.
Unsurprisingly, each of the phases of end-to-end recruitment required a considerable investment of time. Let’s look at the typical experience in a robust hiring process.
- Profiling and preparation of documentation and advertising. 10 Hours
- Screening of resumes for first-round interviews and initial interviews. 10 hours
- Interviewing of potential candidates. 10-15 hours
- Second-round interviews, psychometrical testing, reference checking. 10 hours
- Finalising offers, contracts, and 5 hours
Surprisingly, a reported 40-50 hours per placement, no matter who is involved in the process. Now that is if all goes well and the candidate accepts your offer. If not, you can start back and point two, and another 40 hours must be invested. This is a very high cost of hiring when those hours of time are considered.
Also, this process is no mean feat when a sales manager has a full-time job to do that already takes them well outside the usual 40 hours a week.
What can Sales Managers do to cut down recruitment time?
Sales managers who lead top-performing sales teams must be actively recruiting at all times. The market has changed, and long-term sales employees who deliver results are becoming rarer each year.
Sales is a higher turnover function in a company with bright lights shining on an individual’s performance as they are responsible for bringing in the revenue. Employee turnover is considered the norm. Actively recruiting over time allows sales managers to performance manage underachievers without leaving a hole in their team and revenue results.
The recruitment time can diminish to as little as 6 hours with the right internal disciplines, significantly reducing your cost of hiring.
If you would like to discuss how to improve your recruitment processes, please reach out to our office.
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