- November 21, 2016
- Posted by: Dave Kurlan
- Category: Understanding the Sales Force
I was reviewing this page which shows the market share for most of the known applicant tracking systems. I was impressed with the analysis and with how much of the market share is held by Taleo. I was also disappointed that there isn’t a comparable study available on sales candidate assessments. But that’s a rant for another day. Back to the Applicant Tracking analysis. My first takeaway is that it validated what I knew only anecdotally –that just about every mid-market and large company are using cloud-based applicant tracking systems and smaller companies are quickly moving in that direction too. It makes sense. If companies are using cloud-based job sites to source candidates, then it only makes sense that they would be integrating applicant tracking as well.
My second takeaway is that with all of these companies sourcing from the cloud and tracking from the cloud, why aren’t more of them using the best sales candidate assessment in the cloud? I have 4 possible answers to that question:
(1) Legal groups in some companies warn against using an assessment for selection puproses. In an effort to protect their company and its CEO from legal action, they fail to recognize that role-specific assessments do not present any vulnerabilities. While personality assessments present a legal risk when used for selection, role-specific assessments, like Objective Management Group’s (OMG) Sales Candidate Assessments, do not present a risk because they assess to determine whether the candidate has the necessary skills for that specific role. You can’t say that about personality assessmenta.
(2) Some Sales Leaders don’t utilize sales candidate assessments because they believe their own instincts and experience will outperform an assessment. And Sales Leaders do get selection right – about half of the time. Unfortunately, getting it right doesn’t mean that they didn’t have turnover. Getting it right should mean that the new salespeople met or exceeded quota. Using that criteria, 50% right would be a generous number. Ironically, sales leaders could get selection right close to 90% of the time if they used OMG’s accurate and predictive Sales Candidate Assessments.
(3) Some HR Leaders won’t use sales candidate assessments because they have a sense of familiarity with some of the popular personality and behavioral styles assessments. Ironically, they don’t need to stop using those assessments as they do provide some nice information about candidates. However, those assessments weren’t built for or intended for sales and they aren’t predictive of sales performance. Using a predictive sales candidate assessment along side of a familiar personality or behavioral styles assessment will vastly improve sales selection accuracy.
(4) Some CEO’s don’t use any assessments because they don’t belive in them! I can understand that. If their only experience with assessments was with a “lighter” assessment – like one of the many versions of the popular DISC behavioral styles assessment, it makes sense that they don’t believe that one of those will help improve selection. But they need to look beyond what they themselves are comfortable with and have experience with and trust their HR and Sales Leaders and do what’s best for their company, not what’s best for themselves.
Why should a company use applicant tracking and sales candidate assessments to improve their sales selection consistency? To avoid the cost of a hiring mistake. For sales hiring mistakes, estimates run from between $100,000 to over $1,000,000. Of course it depends on the role, salary, length of the sales cycle, recruiting, training and development costs, and whether or not a company includes lost opportunities in its calculations. If you don’t know how much a sales hiring mistake costs at your company, you can use this free sales hiring mistake calculatorto figure it out.
Our statistics show that just one hiring mistake will cost between 20 and 50 times the investment you made in a predictive sales assessment.
For example, let’s say that you were going to hire one salesperson. If you get selection right half of the time, you’ll actually hire 2 salespeople to get the 1 that performs. Your cost to use the assessment was no more than $2,500 and your cost to recruit, hire, train, develop and compensate the salesperson who failed was $65,000 for six months – 26 times the cost of the assessment.
Let’s try it with 10 salespeople. Let’s say that you are better than average and only 3 of the 10 didn’t make it. You paid no more than $10,000 to use the assessment and your hard costs for the 3 salespeople who failed totaled $195,000 – 20 times the cost of the assessment.
There really aren’t any good reasons to avoid using a proven, accurate, customizable, predictive sales candidate assessment. What’s holding you back?