Nearly two-thirds of new hires (including sales hires) turn out to be failures. The cost of a hiring failure to a company is estimated to range from 150% to 220% of their annual salary, depending on the position. These costs, combined with lost opportunities, wasted time and lower morale demonstrate the need to take the guesswork out of hiring (especially hiring sales people). This fact has motivated efforts to deal with the problem (especially when hiring sales people) but only in the last few decades has much been accomplished.

The first practical progress in taking the guesswork out of hiring sales people was reported in the Harvard Business Review over four decades ago when Empathy and Ego-Drive were found to be common traits of successful sales people. This launched a benchmarking approach (hire candidates who have the same traits as your best sales people) to sales person selection. This strategy had merit but suffered from the problem that unsuccessful candidates frequently demonstrate high levels of both empathy and ego-drive and other traits that appear to indicate success.

The next major advance was in the mid-90’s when it was discovered that four elements (desire, commitment, outlook and responsibility) were crucial because they indicated incentive to change, and thus, trainability of an individual. An equally significant advance was the discovery of five weaknesses (need for approval, tendency to become emotionally involved, self-limiting record collection, non-supportive buy cycle and discomfort with issues involving money), that, when present in certain combinations, prevent sales people from achieving their apparent potential. At about the same time, it was also found that when desire, commitment and a good outlook were combined with sales weaknesses, the percent improvement probable from a training program designed to eliminate these weaknesses could be calculated.

In the early 2000s, service motivation, conscientiousness and ego strength were added to empathy and ego-drive as benchmarking traits. By then, also, research was indicating that experience-based, company specific requirements of sales people were also important … and routinely overlooked by the benchmarking approach. These factors (closing, hunting, competition, price shoppers, and money tolerance) were found to indicate whether candidates were likely to execute, given the nature of the job, e.g., closing -- a company with a short sales cycle or a one-call close must select sales people who have performed in that environment previously, or, if the company sells at a higher price than its competitors, it must select sales people who have sold in a similar price sensitive environment.

Then in 2004, two variables, lack of money motivation and not enjoying selling, were found to be deal breakers when found in combination. At about the same time, it was also found that severity of sales weaknesses could predict failure even when the number of weaknesses revealed by a candidate were few enough to be acceptable. Also in 2004, research revealed that 3 additional company-specific hiring criteria should be utilized when appropriate. These were success with top executives, success overcoming customer resistance, and success when hunting with lack of supervision.

On this Saturday's edition of The American Enterpreneur, Sam will discuss how an employee development firm like Partners Through People will help small businesses eliminate the number of hiring mistakes they can make during the business life cycle. For more information on Partners Through People, visit them on the web at partnersthroughpeople.com.