Sales Reps & Startups
Something I’ve come across all too frequently is the young company who, in an effort to scale, hires too many salespeople in a short time frame. After what is always a difficult process of raising funds, this tech startup quickly jumps into building a large sales force. Yet the company often does so without considering its ability to support this expansion, nor does it predict the consequences of hiring too many, too quickly.
I first encountered this issue years ago while working at a tech startup. Sales were growing strong in the Northeast and the company was looking to expand. With the assumption that existing success could be replicated in other regions, the management team began hiring sales reps in California, Texas, Florida, and Chicago. But what seemed like a sound decision ended up holding back progress over the next few years. In reality, the business couldn’t support such a rapid expansion of its sales force.
Now, as a recruiter for tech startups, I see this happen repeatedly. When building a new sales team, startups should determine if they are expanding too quickly, and consider the impact of such a move. The way a business scales its sales team impacts the success of those hires, and affects how you allocate resources in other important areas of the organization.
Hiring too many sales people early on will have an impact first and foremost on the success of the hires themselves. The notion of building a larger sales team often fails to account for the ability of the business to handle such a large addition of employees. The issues begin with the capacity for the company to train these employees, which is a large undertaking, even for a small sales team. This especially comes into play for the early stage startup, where the product and strategy may lack full conceptualization or definition. In such conditions, it will be difficult to shape a single sales rep, much less an entire team.
The management of a large sales force early on can prove difficult as well. With no prior learning experience to draw from, and a relatively young support and management staff, addressing critical issues with the sales team can be incredibly challenging. Working through obstacles with a small team early on allows for lessons to be passed on to future hires, and for more senior salespeople to become mentors in the long run.
And don’t forget the impact that scaling your sales force too soon can have on that group’s quality results over the long term. Early stage startups know too well that their early hires need to be top performers. And for sales professionals, top talent is drawn to where the action is. Yet startups must work hard in the beginning to generate demand and awareness for their product or service. If there isn’t enough demand to go around, what could have been your top performers might jump ship for better opportunities.
The financial impact of unnecessary hiring is apparent for early stage startups. In a process that is already time and resource intensive, attracting the right talent can be difficult early on, and can result in even higher costs. Given the financial constraints that most tech startups face, wasting capital on unnecessary hires can have a significant impact. An unnecessary hire also means that the hiring manager’s time is wasted, along with the training party’s time.
Beyond the direct cost of hiring, consider the opportunity cost of unnecessary hires. The capital needed for both hiring and paying employees is obvious, but consider where that capital could have been better utilized. Early stage startups have several areas of business that require focus and resources. Using resources in one area often means sacrificing in other facets of the business early on. Scaling a large sales team can be a distraction from other areas that should be receiving the focus otherwise. Consider what your hiring and training manager could have been working on had they not been focused on unnecessary hires. Consider where else the capital put towards hiring would have gone otherwise, and the returns that could have been made. It may seem like a sales team lacking in size would hinder your growth, but so can a lack of development and progress in other areas.
Looking back on my time with my former employer’s tech startup, a more pragmatic approach early on could have saved them valuable resources. Perhaps adding a single additional location or vertical would have improved the development of the company’s business structure. Rather than hiring 15 new sales reps, they could have expanded more slowly, focused on branching into a single marketplace, and used the knowledge from those successful expansions to provide direction in new markets in the future. They also could have avoided the unnecessary hiring and subsequent loss of several sales professionals, leaving themselves with resources to be used elsewhere. Had there been more focus on minimal hires rather than a larger team, the company could have focused on hiring the right quality and fit for their needs.
Hiring too many salespeople in the early stage of a company can have an effect on several aspects of the business. The number of people you need and the timeline for hiring will vary from startup to startup, but the benefits of maintaining a practical hiring pace will be apparent, regardless of the company.
Steady growth allows for executives to gradually monitor the needs of a sales team and adjust accordingly. As I have experienced, expanding too quickly can cause an unnecessary waste of resources. Early stage tech startups should focus on the quality of salespeople hired, and not necessarily the quantity. Hiring top sales people at a steady pace can not only help ensure the substantial growth of a quality sales team, but can save a company time and money in the long run.
Mark Cergol, a senior executive recruiter at Millennium Search, has over 20 years of experience in software sales. Working with a variety of companies, including early to mid-stage startups and large publicly traded organizations, Mark has developed a deep understanding of the tech industry. The knowledge and network of long-term relationships Mark has built through the years gives him an edge on the competition, making him a top recruiter for technical sales and marketing positions.
Finding quality talent can be a challenge, especially in the tech industry. Sourcing and hiring qualified people are time and labor intensive. Employing a recruiting firm allows companies to take advantage of the correct resources needed to locate skilled and interested candidates as well as access to larger candidate search networks for a much lower cost. Recruiting firms usually offer two routes for finding candidates: retained search and contingency search. For an efficient search, hiring personnel must take the time to not only properly understand the difference between these two methods, but the needs and wants of the client.
The main difference between retained search and contingency search is the payment structure. With a retained search, the hiring company pays the recruiting firm upfront and may only work exclusively with them. When the candidate is placed, a back-end fee is also paid. With the contingency search, on the other hand, the hiring company only pays the recruiting firm at the time of candidate placement.
The differences between these two solutions often leads to a difference in the priority and resources that a search firm will dedicate to the search. As a result, each recruiting solution lends itself to certain hiring needs.
Benefits of a Retained Search
Because of the payment structure, search firms usually give retained clients a more individualized focus and a higher level of priority. Because a retained search receives this focus and are accomplished with more specific information, a retained search can usually save time for the hiring company by providing fewer, more specific resumes. The client does not have to worry about working with multiple recruiters and sifting through numerous resumes. The retained recruiter has one focused voice and works together with the hiring company, like a recruiting partner. A search firm being retained by a client also adds a sense of credibility to the firm’s work, especially when dealing with candidates who are being pursued by multiple recruiters.
Benefits of a Contingency Search
A contingency search allows for a greater range and scope of search, which might mean reaching more potential candidates. There are often several contingency recruiting firms hired in the search, which creates more competition among recruiters. A contingency search also allows for a variety of different opinions from recruiters as well as different options of candidates. One benefit of using a contingency search is the payment method. A contingency search is usually less expensive, and the payment is conveniently delivered only after a client is placed.
When a Retained Search might be best for your company’s needs:
- For high level positions – C-level, VP level, Director level
- If you are very busy and do not have time to keep track of each step of the hiring process
- When time is a critical factor for the hiring company
- When the company requires a very specific skill set or cultural fit
- When confidentiality is of importance to the client (the need for the hire can be revealing to competitors, investors, stakeholders, etc.)
- When the position requires a higher caliber of talent
- When the skill sets you are hiring for are scarce in the market
- If you want dedicated resources to your hiring needs
- If you want a strategy/plan for identifying, screening, evaluating, and hiring the proper candidate
When a Contingency Search might be best for your company’s needs:
- When hiring mid or lower-level employees
- When you are not familiar with a particular recruiting firm and would like to test out different options
- If many people will likely be qualified for the position.
- If you have multiple positions being filled
- When you are considering upgrading talent on your team only if the right candidate is available
- If your own network is not yielding qualified candidates
- When you want to compare/benchmark candidates to the candidate you have identified (on your own) to ensure you have truly identified the right person
- When the hiring manager wants to control processes of screening, interviewing and negotiating with candidates
It is important for hiring companies to identify the benefits of each solution with regards to the payment structure and the corresponding recruiting process. Differentiating between a retained search and a contingency search, and selecting the most beneficial method ensures an efficient and successful hiring process.
Millennium Search successfully places candidates using both Retained and Contingency models. Learn more about our Recruiting Solutions
Don’t Hire The Way You Vote
Ah, voting. The day has arrived for the citizens of our nation to gather our wits about ourselves, weigh the candidates on the issues, weed through the rhetoric and political nonsense, and cast our ballot in the name of democracy. Voters face tough decisions this year, and so do hiring managers. It’s a busy time for politics and talent acquisition alike, but the methodology taken to choose the right candidate should differ dramatically between the two. So, how are you going to vote? Hopefully, not the same way you hire.
You Love One, and Hate The Other…
Classic. You’ve got a love affair with that one candidate. On the surface, he represents everything that you want, and sees eye to eye on all of your hot button issues. On the other hand, you can’t stand the opponent. He rubs you the wrong way on everything, from social issues, to economic perspectives and foreign policy. Naturally, you are inclined to vote for your favorite, but you’ve already voted (hopefully). Now, it’s time to hire.
In this scenario, your bias towards your favorite may actually hinder your decision making. When evaluating new talent, it is important to look at candidates objectively, which can be difficult when you are leaning strongly in one direction straight away. So how do we address this situation? Be critical of the candidates that you prefer, and leave the emotions out. When we like a candidate right away, we tend to rationalize shortcomings, even if the candidate clearly lacks qualifications that you need. And don’t rely on your judgment alone. Put the candidate you like in front of others, and see how your perspective lines up with theirs. Collaboration can expose truths about candidates that you may have missed, or even ignored altogether. On the other hand, be sure to do the same with candidates that you don’t initially prefer. Ask the right questions, and stay as objective as possible when evaluating them. Put the candidate in front of your colleagues, and compare their reactions to your own. You may find that the candidate you like is not a good fit in reality, and might even discover the candidate you didn’t like is the right one for the job. Your initial reactions may turn out correct, but it’s good to be sure.
Great Social Policy, So-So On Foreign Policy, But the Economy … Don’t Get Me Started
The dilemma of today’s independent. As an unaffiliated voter, you like one candidate’s stance on social issues, and may even see eye to eye on foreign policy. But economic policy? Oh, that damned economy…
Many voters end up casting a ballot based on most important and pressing issues of the day, even when they disagree on other issues. Selecting candidates to hire requires a different approach. Not every qualification is make or break, but it is important to establish your core nonnegotiables for hiring. Disregarding a lack a qualification in one nonnegotiable area for a high level of aptitude in another area may seem like an acceptable compromise, but in reality, the nonnegotiables are what they are for a reason. There will always be great candidates. You just have to make sure you hire the ones that fit your needs.
Pick the lesser of two evils
Better the turban then the mitre, they say. In the world of politics, many voters feel boxed in by the political parties, and though neither candidate feels like a good choice, their sense of civic duty compels them to make a choice. Voters weigh the choices against each other, and choose the least unappealing choice. A sad but true reality for many a citizen.
Picking the lesser of two evils is a reality for many voters, but it should not be a philosophy taken into hiring. In a competitive talent market, hiring managers may end up with a batch of candidates that come up short of their needs, but think that a choice must be made, and pick the best of the batch. In the long run, picking a candidate that falls short of your requirements can very likely lead to a failed placement, and can be a waste of the time and resources already invested in the process. So, what do you do? Again, you must hold strong with your core nonnegotiables, and make sure that you are being realistic and reasonable with them in relation to compensation and experience. Evaluate potential hires based on them, and if no one meets those requirements, then it is time to start looking again.
In Hiring, Be The Ron Paul Supporter
Despite his absence on the ballot, Ron Paul retains adamant supporters who see eye to eye with him on most of the issues. His supporters stick to their guns, and hope for the change to come someday. The bottom line is that hiring should not come down to weighing choices against other choices. In a bind, it may seem like there is no other alternative, but sacrificing for the sake of hiring can lead to less-than-optimal outcomes. Evaluate candidates for who they are, and not how they compare to others. Stick to your guns, and hold out for the right person. Do this, and you will ensure a better hire in the end.