Beware the Cost of Late Hires

Robert McLaws
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You’ve probably seen countless articles on who to hire, how to interview and onboard, and how to build an effective sales culture at your company.

But how often do you read or hear about WHEN to hire?

That is as important (if not more important) than the rest of the hiring process. And every eight reps in a Series A phase can cost you as much as a million dollars in revenue. You can use this simple calculator to get a better sense of the value of hiring decisions -- and the impact of delays.

Hiring velocity is at least half of hitting your goals. Having the right reps AT THE RIGHT TIME is critical.

You can’t rely exclusively on HR and your CFO to keep the momentum going. You, as a sales leader or CEO, need to thoroughly understand the cost of late hires and beat the drum continuously, so you can “hit the gong” more quickly and more often.

Why Companies Hire Late

The reasons for not hiring sales reps are varied and complex. CEOs may erroneously believe that by delaying hires they are improving cash flow. But they don’t necessarily understand that the ramp-up time for new reps can be as long as 90 days, so every day you delay a hire is pushing results back by three months. You may never be able to make-up for that lost time.

Other reasons for delayed hiring are:

  • Lack of clarity about what level of sales professional you need to hire. If you’re like about half the start-ups today (a whopping 42%), you lack a cohesive and strategic hiring process. But, even if you have that in place, human factors may slow down the execution. Some of these factors follow.
  • A protracted interviewing process, often led by HR and other functions that don’t necessarily have bottom-line responsibility has a huge financial impact. But remember, if you miss your sales goals, HR probably won’t be taking responsibility at your next board meeting or investor call. Own the process. After all, you own the KPIs!
  • You hire junior-level people before you hire a Sales VP and, as a result, you are squeezing in day-to-day sales management responsibilities along with your other roles.
  • Your hiring managers are unconsciously biased about what types of people to hire. For example, women are currently under-represented in sales roles in the B2B space.
  • The cost of a mis-hire can be as $240K, so move quickly but not sloppily in filling roles. Go with your gut and engage the rest of the team in evaluating candidates.
  • When you are faced with an underperforming rep, you may be slow to take action (or aren’t sure what action to take). Even if you have a warm body with a headset sitting in a chair, you’ll find that someone who isn’t pulling their weight can drag the rest of the team down. Of course, you should devote time to training and coaching, but when you truly believe someone may not have the right stuff for your organization’s success.
  • You haven’t adjusted your hiring plan (if you have one) based on the stage of your company’s evolution. As a company scales, its needs can change dramatically. As you go after bigger prospects, you may need a different skill set within your organization.

When you hire late, the impact has a ripple effect on the rest of your organization. Not only do you miss your performance goals, but the people who are currently selling will ultimately burn out by picking up the slack for people who haven’t yet been hired (or under-performers). That can lead to a massive morale slump for the sales organization and the rest of the team.

Finger-pointing and blame-placing can ensue and that ultimately doesn’t benefit anyone in your organization -- especially during your start-up years.

Stop the Procrastination… Boost the Revenue!

So, now that we’ve established the many reasons for late hiring and the impact it can have on your organization, what do you do about it?

  1. Know the facts. Use this guide to capacity planning and this headcount planning guide to create a tight, customized roadmap for your organization. Boldface the impact of delayed hiring on sales and revenue. Shout it (not literally) at every meeting and Zoom call, until your entire organization understands and embraces it.
  2. Refine that plan every month. Hiring flow needs to be as much a part of your monthly forecast discussions as your anticipated revenue and marketing plans. And, as we’ve emphasized many times in our blog, Excel is NOT the right tool for capacity planning, as it has a huge potential for errors and doesn’t take into account human factors like onboarding time, vacation schedules, and other people-centric issues that can have a significant impact on performance.
  3. Build a culture of hiring commitment, in which every senior leader knows their role in filling open slots and ramping up performance every time a new hire comes in the door — physical or virtual. When deadlines are missed (which we hope they won’t be if the process is working), discuss what went wrong and what you — as a management team — can do to fix issues. Check your hiring biases at the door and cast a wide net to find the best-qualified candidates.
  4. If openings exist, encourage your current hire performers to remain motivated and upbeat. Sales pros are likely to jump ship if they feel they are being “dumped on” and that management is slow to bring in new talent. Communicate your hiring plan and, as appropriate, involve current sales leaders in the process.

And, of course, share this article with anyone in your organization who doesn’t believe that timing is everything.

BurnRate can’t help you avoid lateness or find sales pros, but it CAN help you create a plan that works. Schedule your demo today (not tomorrow!)

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