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Sales Assessment: What Can I Say After I Say I’m Sorry?

by
Dr. Wendell Williams
Nov 29, 2010, 5:39 am ET

Imagine you were in charge of quality control, and no matter what you did you still had a problem with 80% of your product. Do you think it would be a good idea to carefully examine raw material quality?

That is a lot like hiring salespeople. You might think 80% of the salespeople would produce 80% of the sales, but that is seldom the case. In most organizations 80% of the salespeople generally produce about 20% of the sales. I know. I was a sales manager for a long time. I was also a sales trainer who used the best-known training and coaching programs I could find. Guess what? I never once saw a workshop or sales manager consistently turn poor salespeople into exceptional ones. It was 80/20 from the day of hiring to the day of firing.

Our organizations might have mastered machines and processes, but overall, they fall short in the human resources department. By that I mean we seldom, if ever, measure accurately candidates for the specific skills they need on the job. Instead, we take their word for it.

That’s why sales performance stays at a rock-solid 80/20 ratio.

Aseement: A Part of Evyday Life

People tend to think they are the best judge of other people. Normally, this keeps us out of trouble, but in jobs where specific human performance skills are required, it makes for disaster. Easy to fake pre-hire practices encourages hiring and promoting unskilled people and rejecting skilled ones.

Perhaps you noticed a few misspellings in the title of this section. Based on these errors, you might have jumped to a negative conclusion. Making sweeping assumptions based on insignificant snippets of information is human. If we like candidate X, we tend to assume he or she has positive skills (i.e., halo). If we see small mistakes, or dislike candidate Y, we do the opposite (i.e., horns). Both halo and horns decisions lead to dead-weight employees, abusive managers, and, narcissistic executives, to say the least.

We cannot avoid assessment … halo-horns decisions are pre-wired. Have you ever gone on a date? Both you and your date were in assessment mode. Have you ever taken a written driver’s exam, eye test, or drove around the block to get a driver’s license? You were being assessed. Have you ever taken a certification exam, completed an application, or answered interview questions? You were being assessed.

Forget for a moment the rumor that “assessment” is a virulent disease that hitchhiked to earth on moon rocks (e.g., I have it on the highest government authority that high-altitude weather balloons were involved); people are in assessment mode all the time. Assessment has been around since God made dirt. It happens every time a hiring manager or HR specialist asks an interview question, chooses a recruiting source, decides whether someone is worthy of promotion, reviews a job application, reads an ad, or checks a reference. Assessment done well is a blessing. Assessment done poorly leeds to organizational disaster.

Sales: The Life’s Blood of an Organization

Are you doing a good job avoiding sales candidate halo? Rank-order your current salespeople based on personal productivity. Next, subtract the right-time-right-place sales. Did you notice that a few folks produce a majority of the sales? Didn’t you expect everyone you hired to be a high producer … or at least perform equally?

Productivity differences are often the result of halo decisions. The low producers burn through potential clients and drain cash faster than a career politician. As an example, take a 10-person salesforce generating 5 million in sales. Four folks generate about 4 million and the rest generate about 1 million. Sales costs are budgeted at 10% of revenue, or about $500,000. The top four salespeople earn twice the commissions as their low-producing brothers and sisters. Assuming everything else is constant, we want to discover how much the bottom six sales people really cost.

Start by allocating sales costs by producer; that is, $500,000 /((4 people times 2x) + (6 people times 1x)) = 35.7K. Using this figure, we learn the top sales group costs $285,714 (4 x 35.7K x 2) and the bottom costs $214,285 (6 x 35.7K x 1). Next, we’ll calculate sales as a percentage of revenue. Top sales = 7 cents on the dollar ($285,714 expense/4mm revenue). Bottom sales = 21 cents ($214,285 expense/1mm revenue).

Our oversimplified math shows the bottom group costs three times the top group and generates 3 million less revenue. And, we have not even added the cost of recruiting, training, coaching, turnover, lost sales, poor customer service, and so forth.

Seven Steps to Hiring Successful Salespeople

Top salespeople have seven things in common: 1) the ability to quickly build and maintain trustworthy relationships; 2) skillfully asking questions to discover potential problems; 3) making persuasive recommendations and presentations; 4) helping people overcome purchasing risk; 5) having strong motivations to win; 6) willing to put the prospect or customer first; and, 7) doing all these things at the right time. Whew!

Look closely. Can any of these factors be ignored without sacrifice? Even if they could be accurately measured using traditional interview questions, do you expect a candidate to be honest? Suffice it to say unless each factor is thoroughly and accurately assessed pre-hire, we are doomed to be lifetime members of the 80/20 club. Breaking free requires hard-to-fake tests, behavioral interviewing, and simulations.

Decision Paralysis

So are you ready to start hiring top producers? A few readers may say, “Yes!”, but my experience predicts the majority will be paralyzed by indecision. After all, payroll money does not come out of HR’s pocket; low performers are someone else’s problem; horns and halo decisions are comfortable; people are afraid they will lose control; filling slots gets more emphasis than hiring qualified people; and, in spite of the rank-ordered facts to the contrary, many sales managers insist they “know ‘em when they see ‘em!” Meanwhile good candidates are turned away and bad ones are hired.

Is gut important? Of course! The gut is always the final form of assessment … but, right or wrong, guts are always 100% convinced of their infallibility. Hiring professionals cannot afford the luxury of uninformed guts. There are good reasons why every organized sports team only hires players who pass tryouts. No skills, no play. The same goes for many other professions where the costs of unskilled people are too big to ignore.

So, unless your organizational objective is to pay for attendance instead of performance, your job is to thoroughly and accurately assess every sales candidate for each of the seven factors. Yes, you will kiss more frogs to find your prince or princess because only one about 1 in 10 sales candidates can perform all seven satisfactorily; however, the newly hired royalty will produce like champions.

One last note: depending on their involvement in the setup process, expect a few hiring managers to override some of your early rejections (e.g., it’s not easy to control uninformed guts). But, fast learners don’t make the same mistake twice.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

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  2. Maria Mull

    The content in this article is something I discuss EVERYDAY with clients and potential clients. Why is it so hard for hiring managers to “believe” that a true validated assessment can HELP them hire product people?

  3. Vicki Lauter

    If you set up a benchmarking process and then have candidates take a validated assessment on how they stack up to that benchmark, the process will SAVE hiring managers TIME and MONEY. If you can show them the numbers they will willingly get on board with the process.

  4. Keith Halperin

    A thoughtful, sensible article. IMHO, most organizations look for quality sales reps (and other employees), but aren’t prepared to pay premium prices for them. Also, often high-level sales people are attached to their organizations with golden handcuffs, which take lots of money and/or time to break. Companies want the best, but often can’t even afford the rest.

    There is a point which seems implied, but not stated- if the 80/20 rule holds for sales reps, a rational employer would fire 80% of its sales force, as the added costs of the bottom 80% outweigh their contributions. ISTM that this is rarely done. By extending the argument, it would be best for our economy if only the top 20% in any given field were employed, yet clearly no advanced society does this (I’m excluding underdeveloped countries with extremely high levels of unemployment), because there are other factors involved.

    Cheers,

    Keith

  5. Robert DeBoer

    Dr. Williams article is brilliant! and….right on the money. My background is in the automobile industry as a dealer and manager, The 80-20 rule is alive and well. When hiring for sales take the skills of the top 20% and define them. Don’t hire another salesperson until they have some or all of thise basic skills. Also pay them on commission and don’t cut them back when they start making some big money, as long as the cost of sales is in-line and their customer relations are acceptable. There is a proverb that relates to a clean trough where no “Oxen” are, but where “Oxen” are working much is accomplished. Good sales people are like “Oxen”, it may take some work to keep the area clean but it is worth it to be productive and profitable. It all starts at the hire, people make the difference. Robert DeBoer, DeBoer Professional Search

  6. Robert Blanchard

    I would suspect that companies don’t use assessment tools as often as we might think that they should for the same reason they don’t use any product that claims a high ROI, HR or the vendor of the product hasn’t made the case for receiving the ROI strongly enough to the prospect. Pretty ironic considering the product being sold was designed to find the super salespeople that could do that. Did the vendor selling the prodct use it to find their own salesperson? I am admittedly ignorant of how the product works so if anyone can enlighten me on that I would appreciate it.
    Best regards,
    Reb

  7. Dr. Wendell Williams, MBA, Ph.D

    My experience assessing salespeople is very consistent: hiring managers get discouraged when too many people fail to make the grade…so they hire the next smiling face; hiring managers are easily swayed by impressions and emotions…so, they override objective data; someone feels sorry for a weak candidate; or, HR managers fail to see the benefits of quality assessment and think it takes too much of their time and resources.

    My solution has been to let HR do the skills and motivation screening (i.e., validated behavioral interviews, specific tests, and motivations) and only send-forward passing candidates for hiring-manager chemistry checks. I’m still looking for a solution to problematic HR managers who fail to see how critical assessing organizational talent is to the bottom line.

  8. Eliot Burdett

    Great article Wendell. The sales environments in every company is different – things like org culture, selling approach, company maturity, level of competition, offering, and price have an impact on the type of person that will be successful.

    In our experience (many years of sales management and thousands of sales recruiting projects), there is no one type of top performer and companies need to understand what sales dna is required for someone to be successful in that unique sales environment.

    Unfortunately, as you point out, too many companies have too little structure in their hiring process and fall victim to making subjective choices on who to hire. A recipe for disaster. The more structure in the hiring process, the more times a reliable and consistent performer will be hired.

    Eliot Burdett
    http://www.peaksalesrecruiting.com
    http://www.peaksalesrecruiting.com/blog

  9. Eliot Burdett

    Another point…Jack Welch has a concept called the HBA – Hiring Batting Average, whereby everyone involved in hiring is scored on how many of the hires pan out. HR departments may be measured on turnover, but seldom on the results of sales hires. Then is stands to reason that they would simply be focused on making a hire and filling a seat rather than assessing candidates for their ability to be consistent and reliable performers.

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