We recently met with a client who was producing more business than he ever had. Revenue was up nearly 6% over last year (and they are not a small company). Nevertheless, profitability was down.
Now if this was a function of increased marketing spending then that would be one thing, but upon examining the operating statements from the last 5 years we saw a disturbing trend. Every year since 2006, revenue had increased and profitability had decreased. Worse, no one in the business seemed to know why.
They had not made any radical changes in their business model, and marketing expenses had remained relatively consistent. So what was happening?
We asked the client whether or not he knew the number of salespeople that had left the company over the previous calendar year. He said he did not. It was of no surprise to find out that turnover was through the roof.
I should point out this is not an attempt to denigrate our client. The situation that is being presented is not an isolated incident; in fact, there are more companies that we work with who do not have a handle on their operating statements than there are that do.
Because sales were increasing, and marketing costs were stagnant, the client figured that there was nothing wrong with turnover among his sales force. To a certain extent he was right. Some turnover is healthy, because it weeds out non-producers and keeps people focused. However, too much turnover will lead to exorbitant costs that in many cases are hard to track when you are calculating your year-end operating statement.
Let me ask you a question: do you know the average cost of a mishire? This relatively standard projection catches a lot of companies off guard.
The simple fact of the matter is that while the science of selling can be taught, not everyone can exceed in it. This is where behavioral profiling becomes useful.
The profile does a better job than any hiring assessment we have found at matching someone to a job and predicting future success. In our 40+ years of using the DISC Classic behavioral profile, we have found their to be a 80-85% success rate in determining an individual’s behavioral style.
Behavior is neither right nor wrong, it just is – – and every behavioral type has a specific match when it comes to a job role. The question is whether or not it is the job you are hiring for.
Or, you can choose to go by intuition, and experience has taught us that even the best HR personnel can make significant hiring errors – – and these errors can lead to exorbitant turnover costs.
For more information on behavioral profiling, you can contact Brian Nelson at email@example.com or call our office at (703) 591-2940.