Friday, September 03, 2010

The Cost of Hiring

Since so many of my clients are in need of new employees, I thought I would talk about the Cost of Hiring.

"More thought and time goes into replacing a computer printer than hiring "their most important asset"", writes Chrysalis Corp. in a 2004 newsletter. " estimates the cost of hiring one employee at $4,263 in 2003." (I'm certain that has gone up but can't find the stats).

"The cost of hiring an employee has enormous impact on both productivity and profitability and costs over four times more than what you might spend on something as basic as a computer printer." Think about all the time spent just training the new hire. Two salaries burning away.

I'm not saying don't hire. I'm saying do it slowly and carefully. Assess them. Bring them in for at least 2 interviews. One in the morning and one in the afternoon. Have more than 1 person interview them, so you get different views. Attitude is important.

It's an employers paradise right now, because jobs are few. But the best employees most likely already have a job!

When hiring salespeople, remember that you aren't Cbeyond, so don't try to be. In other words, unless you are going to high hundreds of sales drones to plow the city -- and unless you have a system in place to manage and organize those sales drones -- then you need to hire carefully when hiring a salesperson.

In speaking with Katie Butcher at B-Lynk (who understands the Hosted PBX world well), if you hire a $30K per year sales drone, don't expect them to bring in $100K in sales. It doesn't happen that way.

At a TED Talk, one speaker mentions poaching the best salespeople from your competitor - but you have to pay them a bunch of money.

You will spend time and money training that salesperson on your services, because it is difficult to sell Hosted PBX if you don't know the service offering. Then you will spend time and money training the salesperson on your internal systems, quoting engine, paperwork, installation checklists, support tree, etc. (And if you don't have a back-office system in place for all of this, how do you expect anyone to succeed in the system? Here are some details about the back-office.) So you want to make certain - before the training - that the candidate has the right attitude and acumen for the position.

Today, there are even more things to consider about hiring.

  • Should you just hire them as temp-to-perm for 90 days?
  • The total employee payroll costs including the tax wedge(see here)
  • Is the candidate coach-able? A Learner? Does the Candidate read books?
  • Is the candidate a Linchpin?
  • Does the candidate network or understand social networks?
Just some food for thought for the hiring process.

Here's some more:

  • Do you perform background checks?
  • Is the candidate given assessment testing?
  • Google and Facebook search?
  • Do you check references, including the ones on Linkedin?

1 comment:

The B-Lynk Buzz said...

Nice post, Peter. I'd like to add that hiring "industry experience" over "culture fit and attitude" is a common mistake and can result in sales management headaches, cancers within sales teams and longer term problems far exceeding the $4300 bad hire hit. Be selective - don't let "X+ years in telecom sales" fool you. That could actually represent "X+ years of bad habits and selling on price."