Good Is the Enemy of Great
Not having a reason to not hire somebody is not a reason to hire them. The default is to keep talking or keep looking.
A regional manager I know once hired a guy and fired him within three months. When asked why we hired this person, he replied, “I couldn’t find a reason not to hire him, and he looked better than anyone else I’d seen.” (These are two bad principles that need to be removed.)
One time, one of my sales managers said to me, “We can’t have all ‘A’ players.”
“Why not?” I said. “That’s not true. That’s a bad principle. Throw it out. You can have all ‘A’ players. I’ve done it three times in my life.”
People tend to hire on hope and fire on faults — a very expensive habit.
But you have to be willing to wait for the star, and you have to be willing to spend more time recruiting than fixing problems for salespeople. Championship teams have no weak links. It’s pay me now or pay me later, and I’d rather invest in recruiting than in fixing lost sales.
While at SAP, one of our principals, Jack Barr, met with sales directors from all over the country. He would ask them each to rank their current sales teams—how many A, B, and C players they thought they had.
Their categorizations were always similar. They all defined their sales forces as having some A players, some B players, and some C’s. Their best performers were designated as “A players” even if they really weren’t. In many cases they didn’t really have any A players at all.
When Jack told them that they needed to hire some A’s, they would always say, “We can’t right now—we don’t have the headcount.”
“But if you have four C players right now, who you don’t think will ever be A players, you do have the headcount,” Jack would tell them. “You have room to hire four people.”
As a sales manager, you have to be candid with yourself about what level players you really have. You should constantly be recruiting. When you find an A player—or someone who has the potential to become an A player—hire them and replace your C’s.
You can only perform as well as the team you have behind you. If you spend all of your time coaching the C players, helping them sell, you can’t be an effective manager to the rest of your team.
It’s not what you pay a man, but what he costs you that counts.
One of the problems we have in business is that accounting systems don’t measure the cost of a bad hire. Our accounting systems don’t measure lost revenue because it never hit the books in the first place. But the cost is there; it’s just invisible. Not only is it an out-of-pocket cost from lost sales, but also there are huge non-monetary costs that have an impact on the manager.
One thing is sure: Whatever the gap is between what you hire and what you need, the manager pays for in the long run. The costs incurred from hiring mistakes include lost productivity, as well as lost time for the manager and the entire sales team—not only lost sales from the poor production of that one salesperson, but also lost manager’s time that was taken away from other people who could have benefited from good coaching—not to mention other losses such as angry customers, employee morale, and even missed opportunities.
Not having a reason not to hire someone is not a reason to hire them.
What did it cost you to settle for someone who was adequate if you missed the star who would have come along one month later and would have been a quota exceeder for the next 10 years? How much did it cost because you settled for someone who was adequate rather than someone who was exceptional? The principle is—if they aren’t exceptional, they aren’t acceptable.
Whatever the gap is between what you hire and what you need, the manager pays for in the long run. If your new hire is not exceptional, they are not acceptable.
Additionally, you have the out-of-pocket costs of recruiter fees, moving expenses, and training and travel to get someone new up to speed. What is the real cost? Most of the sales managers I talk with estimate the cost of a bad hire at — when they add it all up — a minimum of one to two year’s sales quota. It takes three to six months to figure out if the new hire can do the job; then you may have to give them a probation period of another 90 days; and then it takes another three to six months to hire someone else and get them up to speed again.
Here is an example based on a salesperson with a $1.5 million quota:
| Range | Average | |
| Initial hire period | 1-3 months | 2 months |
| Ramp-up and training time | 3-6 months | 3 months |
| Time to realize poor performance | 6 months | 6 months |
| Time to review and fire | 3-6 months | 5 months |
| Time to hire new rep | 1-3 months | 2 months |
| Total | 18 months | |
| Additional costs | ||
| 18-month sales quota x $1.5 million | $2.25 million | |
| Recruiting fees | $25,000 | |
| Training | $50,000 | |
| Total | $2.325 million |
If our accounting practices required us to take a writeoff or write a check for this amount every time an employee went out the door, this would stop.
In addition to money, the other costs of a bad hire include
• Lost productivity.
• Time and stress.
• Error correction.
• Angry customers.
• Employee morale.
• Wasted support resources.
• Missed opportunities.
• Management reputation.
However, a very successful rep could produce quota for 10 years or more. How much time would you spend on a prospect that size? Why would you spend less time on a rep?
The next best thing is to figure out how much your real costs are so that you can figure out where your time is best spent. It's not only pay me now or pay me later—paying me later is several multiples of the time invested now.
Recruiting and interviewing are two of the most valuable investments sales managers can make of their time. But it has to be proactive, and it has to be in advance of an open territory or you will end up settling for someone who is adequate rather than being able to wait for somebody who is exceptional.
A colleague of ours, Rob Jeppsen, tells a story of when he was the CEO of a young technology company:
“You may only get one good shot at a particular client, and the wrong rep can blow this shot. You could lose the opportunity to do business with the client for years—if ever.
Our firm needed to hire two reps. I had the board putting all kinds of pressure on me to fill the territories ASAP. As important as these territories were to the company, we were unwilling to pay market rates.
I was told that 'good would be good enough. As a result, I hired the best two guys I could find for the right price.
As it turned out, the two I chose were not people I would have hired if I had the option of waiting.These guys could not speak the language of our customers and drove away far more customers than they attracted.