What's the Real Cost of a Bad Sales Hire?

Ask a sales manager about the most important decisions they make, and you will probably hear about exceeding budget, growing market share, or achieving year-over-year growth. While those decisions are critically important aspects of the job, and they require a great deal of attention, none of them can be accomplished without an even more important decision being made first.   

The most important decision you will ever make as a manager is the decision of who to hire. If you don’t have great people working in the sales department, you can’t accomplish the rest. 

Think of the very best salesperson you have working for you. Not the highest biller or the person that has been there the longest. I want you to think about the best seller. Imagine if you had an entire sales department of people just like that. Would sales go up? Of course. 

If you want to accomplish more, there is something you can do about it. 

A bad hire can cost your organization more than just money—it can drain resources, damage morale, and hinder growth. 

The Financial Impact

The financial repercussions of a bad hire are staggering. The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of the individual’s first year potential earnings. In complex B2B sales environments, this figure can soar even higher. This includes not only the direct costs of recruiting and training, but also the opportunity costs of lost sales and the negative impact on team performance.

Here’s a short list of the hidden costs of making a bad hire.

• The cost of the hiring process to hire this individual
• The cost of the training and onboarding
• The cost of the lost draws or salary
• The cost of the time spent with that person that could have been spent somewhere else
• The cost of an account that was mishandled and lost
• The cost of an account that was never sold but could have been if another salesperson had been on the job
• The cost of the lowered morale by others on staff
• The cost of customer attrition because of the bad service customers received
• The cost of time spent having to re-hire

The cost of a bad hire could easily range from $50,000 to $500,000. Three or four of those a year you’re looking at a $200,000 to $2,000,000 loss. 

Productivity and Performance

A bad hire doesn't just affect the bottom line; it also disrupts productivity. In some organizations, it could take a while for a new salesperson to become fully productive. Even more concerning, many new hires don’t ever meet their sales quotas 

This lag in productivity can create a ripple effect, slowing down the entire sales cycle and putting additional pressure on your top performers. 

Utilizing Talent Assessments when hiring bring many benefits that could help to identify Sales Superstars and maximize productivity and performance.  

The Hidden Costs

Mitigating the Risks

So, how can you avoid the costly mistake of a bad hire? Here are some strategies: 

1. Commit to making talent a priority. Use Talent Assessments and recognize that experience and the right fit are important but not at the expense of talent.  
2. Build a recruitment strategy and stick to it. 
3. Don’t forget to check references. You’ll be amazed at what you can learn when you check references diligently and use talent-related questions in this process.  
4. Once you’ve hired your Sales Superstar, use the Talent Assessments in onboarding. 
5. BONUS TIP: Never stop building a Talent Bank. 

The cost of a bad hire in sales is too high to ignore. By implementing a robust hiring process, focusing on talent, and investing in your team's development, you can minimize these risks and build a high-performing sales organization. Remember, the right hire can propel your business forward, while the wrong one can set you back significantly.