The Agency Cost: Why You Can't Hire Your Way Out of Ignorance

By Sept 2021, my business stabilised after 18 months of Covid disruption. I could focus towards growth instead of survival.

I spent most of my career in operations, so sales was a known enough to fool me. I knew words such as leads, prospects, pipeline, follow-up and relationship management. However, I did not know what those words meant when applied to my own business.

So I decided to hire a “Sales Manager”. Six months and ₹ 2.5 Lakhs poorer, I learnt a simple lesson:

I cannot hire well for a function when I cannot separate activity from progress.

I was not hiring for a “Sales Manager”. I was searching for clarity I did not have.

After meeting a few candidates, my Ops manager recommended someone with 12+ years of experience in my industry.

During his interview, he shared multiple anecdotes and success stories from his prior roles. He rarely mentioned how he did it or what support he needed from me to succeed.

I had my doubts but my limited knowledge and my operations manager’s confidence made me ignore them. I made him an offer. He joined a week later.

Most articles and podcasts on sales repeat the same advice: Sales takes time and effort. Trusting that advice I told him:

I don’t expect results for the first two months. I expect business to start flowing in 45 to 60 days from now. Take your time to settle in and keep me posted on a weekly basis.

What I actually said was:

I don’t know how to measure sales, so I will pay you to exist and hope revenue appears.

For the next 90 days, he updated me on his ‘building relationships’, ‘reaching out to my network’, and ‘having conversations’ activities. He appeared busy but apart from a single proposal, nothing else happened.

Sales, like any other business function, has its own set of metrics. I should have tracked leads generated, qualifying leads to prospects, and proposals sent.

I never correlated his update work to any metric. So, I could not verify if he was doing the work or not.

Here is what I had missed: even if he did work hard, he would have failed. He knew how to work inside an established sales system. He had not shown that he could build one from scratch

I asked him to resign and he left quietly.

A week later, I ran the numbers: I paid him ₹ 2.5 Lakhs as salary and generated zero revenue. I could earn the money back, but never recover the time. I had wasted the post-lockdown momentum in the market.

I expected him to build a sales machine for me. I needed a builder, but I hired an operator (someone used to working inside a proven system). I could not tell the difference between “the market is tough” and “the approach is wrong”.

It is easy to blame him. The larger mistake was mine. I never tested whether he could build.

In “Rework”, the Basecamp founders explain why they do the job before hiring for it. They valued clarity on the work before hiring anyone.

It made sense when I read it. I ignored it when it mattered.

I spent the next few weeks actually doing the job I was scared to do. I reviewed our existing leads, set up meetings and shared our service proposal. My team qualified 50 leads, met 20 prospects, sent 15 proposals, and won 3 contracts

I realised I had already been doing sales work. I had just never called it “sales”.

Once our leads dried up, the real bottleneck was visible: we had no process to generate new ones. Rather than hiring for a “Sales Manager”, I needed someone who could generate new leads.

While I am yet to hire a “Sales Manager”, the lesson stayed with me: Try doing the job for two to three weeks before hiring. For roles I cannot do, I research to define progress metric before hiring.

Economists call this agency cost: paying for work that you can’t inspect. The gap cost me ₹ 2.5 Lakhs and months of momentum.

Now, before I hire to solve a problem, I spend two to three weeks doing the work. Once I identify three specific metrics that explain the progress of the work, I am clear on who needs to be hired.

If I cannot define at least three progress signals, I am not ready to hire. I am only outsourcing confusion