Using the best person has the prospective to, in the long run, conserve you thousands of dollars. Plainly the right initial option will conserve money by minimizing turnover but there are many other costs included, some less measurable than others. Most sales supervisors concur that they can not afford even one non-productive employee, yet most managers have their own ‘scary’ stories concerning troublesome or having a hard time workers. This highlights the significance of recruitment and choice of sales people.
Various practices can and ought to be used to finest prevent the unenviable situation of having actually employed the incorrect individual for the job.
Reliable recruitment procedures are important in bring in and retaining high quality personnel.
As revealed in the diagram in the extract in Appendix A, the Skill Selection Procedures are an important part of sales management. Marterella (2005, p. 2) describes how validated recruitment techniques and procedures based on important sales abilities will significantly boost the chances of initial success in hiring the right person for the job. In brief, an effective recruitment process is typically recognised as a three action process. Johnston and Marshall (2005, p. 316) summarise the 3 steps as “( 1) job analysis and description, (2) recruitment of a swimming pool of candidates, and (3) choice of the best candidates from the offered swimming pool.” See Appendix B for a graphical representation of the 3 steps.
The working with process must begin with a list of what the job requires. This analysis of job requirements accommodates the next action of discovering applicants. If nobody internal is appropriate for the opening, recommendations by employees may be helpful. Referrals can conserve administrative costs, however failing this advertisements or hiring firms are normally used. This phase of the recruitment process is much more crucial to effective employee choice than some might think “The most thorough choice technique can not offset a poor candidate pool.” (Billikopf 2003, p. 13.).
Different types of testing can be useful in the final step; depending on what the job is. Job simulations for more labour oriented positions are often the most successful. Additionally, interviews by more than one person will provide diverse views on the applicant. General theory is rather speculative with regards to successful hiring as each individual situation has its own intricacies, so only a brief account has been given. However, we can further explore the common problems related with unsuccessful hirng.
Some of the problematic concerns related to hiring the wrong person may be:
- Increased turnover / decreased retention
- Increased training costs
- Poor sales coverage and customer follow-up
- Decreased overall sales team performance.
To illustrate; one large computer company predicts that “…the investment in each new employee is more than $200,000. The company uses the word “investment,” which should mean a return on investment at some point. If the company hired 10 people a year, that would be a $2 million investment. And with a 15% turnover rate, that’s more than $300,000 in wasted money.” (Derby Management n.d.). In recruitment, (Hiring the Wrong Person Costs You Three Times Their Annual Salary 2005, p. 14) suggests that in this high-stakes ‘game’ an industry rule of thumb may be applied.
That is, as the title suggests, the company incurs the costs of three times the annual salary of the position in which the wrong person was hired. So, a $25,000pa position involves a cost of $75,000. Similarly, a $350,000pa position involves a $1.05 million cost. One can also consider lost opportunity cost, lost business, customers, momentum and finding a replacement to fill the position. Some more conservative figures are described by Zeller (2005) who states “Hiring the wrong person is expensive. Costs include wasted salary, benefits, severance pay, recruiting and training costs and hiring time, according to the Corporate Leadership Council, a Washington-based consulting group. Costs of a bad hire are:
Entry-Level : $5,000 – $7,000
Mid-Level : $40,000
It is hard to accurately quantify the cost of hiring the wrong employee but academically most will agree that a bad recruitment decision will have highly negative consequences.
There are also, various other less tangible problems that are also by-products of poor employee selection, these include:
- Stalling other employees careers
- Lessened company reputation
- Negative energy within workplace
Hiring the wrong person can be quite costly. Expenses are incurred in locating, in some cases relocating, and training each employees. Additionally, a compensation package may have to paid out and revenue is lost during each individuals start up time. In a large company, for example, these costs can add up to hundreds of thousands of dollars if poor selection of new sales people is a recurrent practice. Hiring the wrong person can be expensive if the employee quits after money has been invested in training and even more expensive if an incompetent worker remains. “A poor hire is likely to be unhappy and unproductive – another cost to the company. And an employee who leaves on bad terms is not a good advertisement for the firm.” (Wilkie 2004).
- Billikopf, G 2003, ‘Practical Steps to Employee Selection’, Labor Management in Agriculture: Cultivating Personnel Productivity, pp. 9-28
- Derby Management n.d., Salesforce Hiring Mistakes. Retrieved September 1,
2005, from http://www.derbymanagement.com/knowledge/pages/recruiting/salesforce.html
- ‘Hiring the Wrong Person Costs You Three Times Their Annual Salary’ 2005, Robotics World, vol. 23, no. 3, pp. 14-15. Retrieved August 25, 2005, from Gecko database.
- Marterella, J 2005, ‘The Eight Critical Success Factors of a High Performance Sales and Marketing Organization’, Lincoln Consulting LLC, pp.1-4.
- Wilkie, D 2004, ‘Hire Standards’, Engineering Inc., May | June 2004, p. 17. Retrieved August 29, 2005, from http://www.acec.org/publications/may-jun04/hirestandards.pdf
Cite this essay
The Importance of Proper Human Resources Management. (2016, Jul 22). Retrieved from https://studymoose.com/the-importance-of-proper-human-resources-management-essay