In part one (and if you want to have a read, click here!), we talked about some of the hidden costs in recruiting internally. It can seem like a really good idea – after all, you have control, and control is good, no uncertainty, what could be better?
Well – quite a lot could be quite a lot better!
We have detailed the internal time and effort it can take to interview – and remember, that is not just one person! When you get to the later rounds of an interview process, you are taking the time and effort of some pretty senior people, most likely on some pretty significant salaries. But this post isn’t about the internal cost.
Instead, today, I want to talk about the Jerry Maguire effect.
Imagine, in this instance, that you have a strong salesperson, in a reasonably strong sales area, resign. Now, that’s a shame – and you have the significant risk that the customers who have a relationship with that salesperson will leave, too! But after all the tears, and the farewell party, and the cringeworthy speeches, the time comes to fill that role.
We have established that doing this internally means taking time – time out of your day, time out of others’ days, time away from your core role or other responsibilities. But what else does choosing to do this internally mean?
It means…as ever…that time marches on.
Every day that role is unfilled, is a day of potential revenue that may be missing – that’s money coming in to grow the business. That could be from existing business – although you may be able to handle some of that, perhaps not as well, with your current resources. But that is also new business – clients you don’t have yet. And if you aren’t winning that business, your competition is. Just hold that in your mind for a moment – when you’re not selling, your competition must be. Not only do you lose, but your competition wins – it’s a double whammy.
Now, back to time.
If it takes six weeks to advertise, vet the CVs, phone screen, first round interview, final interview, and reference check – which for an internal process is about right – that is almost 12% of the year before a new sales person is even close to starting. Now, let’s assume the new starter has a four week notice period, which is pretty standard. We’re up to ten weeks – almost 20% of the year.
What happens when a new starter joins a business? They go through induction, they meet the teams, they go through training – let’s assume another two weeks at least, up to twelve weeks now – and they take the time to build up and ramp up their activity – let’s say another four weeks, so sixteen weeks – we see the kind of timeframe before they even begin to produce.
Getting up to that full level of production in sales can take up to 5 months in some industries (source). Bearing in mind that annual attrition rates in sales roles are about 36% (source) – and one in ten organisations experience a sales staff churn rate of 56% (source) – what does all of this mean to your revenue?
If you are in that last bracket, that means that even after the ten weeks to recruit, and the further six weeks of training and onboarding and initial activity (all of which, remember, takes your time, and time is money) – even after all of that missed revenue, you have a better than one in three chance that you’ll go back to the drawing board! So that 16 weeks – 31% of the year – resets.
That is just for the sales role, of course – but the lost revenue opportunity exists in many roles, and the loss in productivity is still a productivity your competitor are likely to take advantage of.
Relying on your own internal resources, without leaning on an expert who can help you place a role with candidates that are high quality, who aren’t actively applying for roles and therefore who you never see, and without the speed to fill that a dedicated recruitment partner can bring…it’s another version of the definition of insanity. If we keep doing the same thing – why would the result ever be different?