4: The Science of Hiring Sales Talent
One of the tasks of a sales manager that gets the most attention is hiring the right people. "Unfortunately," the author states, "most sales managers have only the vaguest idea of how to go about doing this."
(EN: More unfortunate is that hiring the right people into an organization is often prioritized over developing people within the organization. It's based on the premise that somewhere there is a firm who's doing a great job of training and a poor job of retention, such that good people are out there, eager to be hired away from a firm that has done a great job of developing their skills but neglects them in other regards. When an entire industry consists of firms who look to hire the right people while failing to develop and retain those they already have, you can't count on someone else to "make" the kind of people you'd want to hire.)
The author comments on the state of affairs in sales"
- One industry professional suggests that sales managers feel that only 40% to 60% of their current salesmen have the competence to execute even a basic sales strategy
- The Pareto principle holds true - that 80% of sales come from your top 20% of salesmen. Going by industry statistics, it's 87% and 13%
- Sales managers can readily identify their top salesmen according to volume of sales (it's generally five times as much as the average), but are at a loss to explain the reason why they are so capable.
- Only 40% of firms have a systematic method to assess the sales competency of candidates. Most go by gut feel.
- While almost half of firms admitted their hiring practices needed improvement, only 11% indicated any plans to alter the hiring processes.
- Average employee churn in sales is 30% - which means one in three salesmen will leave each year and the average tenure is about three years. Some firms report losing 90% of their salesmen in the first two years.
- For sales managers, turnover is even worse: the average tenure of a CSO or VP of Sales is less than two years.
Failure to retain sales professionals is most often attributed to poor hiring practices - if you hire the wrong kind of person, they leave quickly. (EN: See my previous note on this presumption.) But if you hire the right kind of person, they are very appealing to other firms that wish to hire them away.
Aside of the cost to a company of constantly replacing sales staff, there is the impact it has to the customer: a customer who receives poor service from a salesman has a poor impression of his company, and a customer who is served by a string of different salesmen does not develop a relationship with the company.
How Most Companies Hire (and Why It Fails)
The author presents a hypothetical example as being representative of the hiring practices of a "type company." (EN: That's a red flag, but I'll play along.)
First, they float out a job opening. The ad describes the position in a way that they feel will be attractive to a candidate, and generally provides a list of requirements such as years of experience, education, and other traits, along with entirely meaningless requirements such as being "highly motivated."
Next, they sort through whatever candidates crawl out of the woodwork: the HR group does a perfunctory filter to clear out those that do not match the basic criteria, and forwards a stack to the hiring manager who sorts them by more subjective criteria, and even criteria that are patently idiotic (such as the quality of the paper on which the resume is printed).
Third, the promising candidates are contacted for an initial interview. This is likewise a process that includes a lot of vague gut-feel considerations (do they seem like they have the "right" personality) and silliness (the knot in their necktie and the shine on their shoes). In general, candidates to the interview are already qualified on paper - though interviews often seek to confirm that their resume is honest - and the interview is more a test of personality.
Finally, the sales manager makes a "best guess" for which candidate might succeed, based on the same succotash of objective, subjective, and silly criteria.
It's worth noting that many people are exceptionally good at presenting themselves in the application process: the self-help industry provides tons of advice on how to get a job, and headhunters coach people on how to get through an interview successfully. As a result, there are many people who are unqualified and incompatible who will interview very well.
The author also mentions an author (Gladwell) who asserts that most hiring decisions are actually made within the first two or three seconds of meeting a person - that is, the way the interview is conducted is heavily influenced by the first impression, which carries through to the ultimate decision. The notion of "a warm smile and a firm handshake" expresses the same observation.
After a hiring decision is made, it goes further downhill: a new hire is often put to work immediately (training is perfunctory or utterly absent) and assessed according to their results. It's sink or swim - they are pressured to make their quotas and receive little instruction or coaching. Most fail, and are fired or leave on their own. Some fail but are retained all the same. Very few succeed.
Ultimately, it's clear that the hiring process is based entirely on assumptions and guesswork and few companies take an objective or scientific approach to hiring - which is the thrust of the author's argument.
The Scientific Approach to Hiring
The authors suggest a more objective approach: to begin by assembling a statistical profile of the kind of person who is successful in your organization (not just their role) and then using this as a register against which candidates are measured in objective ways.
The current processes uses registers in comparing the details of a candidate's resume against the stated qualifications for that position, and a phone screen generally assesses whether those same details are honest and accurate. As such, the authors suggest using a survey instrument as a third step in gathering information to inform the hiring decision.
After this, another commercial break as the authors attest that their firm helps companies assess and hire more qualified people by methodologies that are scientifically sound, statistically valid, and other good things as well. No salient or objective details about how this is done, just that it has to do with behavioral assessment.
How to Implement Scientific Hiring
The authors describe the hiring process in terms of seven steps:
- Analyze the Job
- Design a Recruitment Ad
- Filter Applications
- Telephone Screening
- Behavior Assessment
- Strategic Interviews
- Refine the Model
Each is described in greater detail.
STEP 1: ANALYZE THE JOB
A critical first step is to understand what you are looking for. Many firms have only a vague sense of what is needed to be successful in a position and as such are often defining their criteria during the interview process. Careful consideration helps to craft an accurate and thorough job description
(EN: A formal job description may not be the best guide. It should be, but HR departments can be very finicky about what goes into the official job description, sometimes for legal reasons, sometimes quite arbitrarily, such that the official description becomes too vague to be useful.)
The cut-and-dried requirements, education and years or experience, are fairly simple. The other requirements (able to interact cordially with a variety of customers, being able to connect quickly with a new acquaintance, being able to handle a conversation fluidly).
The system that the authors sell involves an instrument called "performance requirement options": that examines many of the softer criteria to arrive at specific psychological properties. The test is first administered internally, to baseline a profile on the behaviors and attitudes of high-performing employees as well as the desires of the managers and executives have (EN: though I suspect the latter are less accurate).
The result might be that finding a person who "is able to connect quickly with a new acquaintance" is translated into assessable qualities: a person who is observant, empathetic, and sociable would likely satisfy that requirement. It is easier and more accurate to assess these qualities than to speculate as to whether a person might do a given task well.
As to how to best do that, the authors naturally suggest that you should consider paying to attend their courses and earn their certification. But it's conceded that what is important is the methodology rather than the specific system.
STEP 2: DESIGN AN APPROPRIATE RECRUITMENT AD
Once you've arrived at a profile of the person you wish to hire, craft a recruitment ad. However, the focus of the advertisement should describe the position and the environment, not the kind of person you are looking to hire. The latter is good source material for candidates who seek to (mis)represent themselves as the precise kind of person you are seeking to hire.
Moreover, it allows candidates to self-screen. Even candidates who intend to present themselves honestly are likely of the opinion that they are fast-thinking self-starters with a great sense of humor. But if you describe the position and environment, the candidate must do some soul-searching to decide if they would be confortable in such a position, which in turn is based on how they really match up.
As an example, an ad that indicates the firm wants a "self-confident" person will get more inappropriate applicants than one that states "must remain eager to make sales even after being rejected multiple times." The candidate who reads the latter description will be more likely to give it serious thought.
(EN: This makes good sense, but it may also require a hiring manager, particularly an inexperienced one that feels success means getting a lot of applicants rather than a smaller number of more qualified ones.)
STEP 3: FILTER APPLICATIONS
In general, the top three thing to consider when reviewing resumes all deal to easily assessed factors: the required experience and education, the number jobs have they had (and tenure at each), and specific successes.
The author suggests that a candidate's resume can be screened to find behavioral evidence of their ability to function in the target environment: if you're looking for a position that focuses on process rather than defining goals, look for evidence of being patient and detail-oriented.
(EN: I have my doubts about this. A resume is a summary document and highly structured and refined to communicate specific information. It is often worked over several times, and often by persons other than the applicant, so looking for "clues" in the writing may not be effective or accurate. My sense is that it would do more harm than help to go deeper than the basic facts or making speculative assumptions based on word choice or the like.)
STEP 4: TELEPHONE SCREENING
The use of telephone screening is largely a convenience to a hiring manager: it is far more efficient to winnow the list by phone than to schedule interviews. The author's advice is to look for evidence of behaviors and attitudes that match the register, and at the same time to probe deeply into a few areas of the candidate's experience to ensure he has been "genuine" on his resume.
A list of questions is provided - in general, they are open-ended questions that require the candidate to speak at some length (rather than give a yes/no answer) and probe a few different topics: The candidate's interest in the position (what is he seeking in a job and firm that attracted him to you ad), his work patterns (what he feels would be an ideal job in terms of work processes), how his experience demonstrates attitudes and behaviors, etc.
The point of the telephone screening is to discover signs that the candidate might possess the abilities and temperament you seek - but more importantly, its objective is identify strong candidates for interviewing, not to result in a hiring decision.
STEP 5: GIVE THE CANDIDATES A BEHAVIOR ASSESSMENT
This step involves using a "scientifically valid instrument" (that is, a test or a quiz) to assess how well a candidate matches the personality types you have determined to be a fit for the position. This enables you to eliminate those who are clearly wrong, and prioritize the rest according to how well they match.
The author provides an example of three candidates, one of whom falls into an "authoritative management" pattern, the second who fits to a "persuasive sales" pattern, and a third who fits an "altruistic" pattern. The author suggests the third should be dropped "despite having a strong resume."
(EN: It's worth calling attention to the fact that this is done and assessed before the interview. My sense, based on experience, is that it is often handled more hastily: an interviewee completes the test on the same visit as he interviews, the hiring manager doesn't learn or have time to review the results before the interview, and because the results aren't tendered until afterward, they contribute little to the hiring decision. It really does need to be a separate step with adequate time before the interview if it is to provide any value at all.)
STEP 6: CONDUCT STRATEGIC INTERVIEWS
The previous measures matched candidates against a desired profile of skills and character, resulting in a smaller set of candidates who are the best matches (that you could find at the time) to interview.
The interview process falls along the same lines: it continues to match candidates against the skills and behaviors you seek. Because it is an interactive conversation, it provides the opportunity to adapt the questions to suit the particular candidate: gathering deeper information and filling in any gaps. In addition to qualifying the candidate, you can develop a perspective of the way in which you will need to manage them as an employee.
Depending on what was discovered in the previous steps, the interview might focus on a specific area: if you're confident in skills, you might seek to learn more about the way a candidate interacts with others.
The author suggests that "after a series of these interviews" you should be able to identify one or more candidates who are likely to be successful in the position.
STEP 7: REFINE THE MODEL
After following the firs six steps, your should have successfully identified a candidate to hire- but the seventh step should not be neglected: a firm will often hire multiple people for similar positions, or should at least look forward to the task of repeating the process when the new hire has left and the position again needs to be filled.
Primarily, evaluate how well the hiring process worked for the individual involved. Where a new hire did not work out, it is either because the questions you asked did not match the traits you really needed, or they did not gather sufficient evidence.
(EN: Or the candidate misrepresented himself. That should not be your jump-to conclusion when a new employee doesn't work out, but neither should it be taken completely off the table.)
While gathering this information to refine the model is helpful, it's also important to re-evaluate the model periodically even when it was successful because the needs of your organization will evolve over time.
Case Study: Rainsoft
Rainsoft, a firm that sells water treatment systems, was acquired by an investment firm that sought to make major changes in its model.
Primarily, the firm had been selling through independent dealers (franchise model) and was looking to open company-owned stores to penetrate markets where there were no independent dealers.
Second, the firm recognized that turnover in the sales staff was a problem for franchisees, and expected it might face the same problem in its owned dealerships. Onboarding employees required considerable expense, new employees would often leave the firm within 30 to 60 days, and morale was abysmal.
As a first step, the firm surveyed current employees. It's mentioned that store managers were initially apprehensive: most of them had been with the firm for ten years and, in spite of constant turnover, wished to control the hiring process and regarded the survey as a threat to their authority.
Rainsoft did not press the issue: hiring would utilize the survey, but managers were not required to consider it and could continue to make the final hiring decision on their own. Later, when it was demonstrated that there was strong correlation to turnover - with less attrition and better performance among employees who matched the desired profile - it became self-evident to managers, ho were more inclined to voluntarily adopt the tool.
Aside of the value of the tool, this case demonstrates the importance of respecting the authority of hiring managers. If they were compelled to use it in hiring decisions, chances are they would have been demoralized, and would have sought out ways to subvert it.
Case Study: Centier Bank
Founded in 1895, Centier Bank is a family-owned financial services firm with 44 locations and more than $1.9 billion in managed assets. The firm was already devoted to the idea of hiring employees based on character and maintaining a culture based on integrity, respect, friendship, caring, and loyalty.
It is not mentioned that the company was having any trouble hiring, but merely that the CEO had heard about PI from a colleague and took an interest in it. Sold on the theory, he had his HR department create job profile for each position, and utilized it in the hiring process.
It's reported that the bank cut turnover from 17% to 10%, which is significantly lower than regional and state averages. It also increased tenure, to the point where it has more employees with a decade or more of tenure than "any bank at any time in its history" and was identified as a "Best Place to Work" for three consecutive years.