Valley Winery
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The high turnover rate and its effects are causing excessive training and recruitment costs. Table 1 illustrates the tangible employee turnover costs. In addition, a loss in sales due to the representative not being available to manage the accounts and the time it takes for a new representative to gain rapport with buyers is also a factor leading to high turnover.
Table 1
Type of Cost
Number of Employees
Cost Per Employee
Total Amount
Training Costs
$25,000
$1,250,000
Hiring Costs
$2,000
$40,000
Total
$1,290,000
What causes Pat Wallers problems?
Unrealistic quotas and poor management prompts the sales representatives into misrepresenting, or “stretching”, their sales figures to meet their quotas. Working in fear of missing quotas and perhaps losing
their jobs can perhaps lead the sales force to look for alternate employment, contributing to high turnover. Sales quotas are oddly patterned and add stress to sales representatives that are under pressure to meet an unrealistic number one month, and none the next.
Compensation strategy for the sales force does not give any benefits for sales volume to the women selling to hotels, resorts, and restaurants. If the chain division which is working off of a Salary + Car + Bonus system is retaining the most employees and providing the basis for future sales managers, perhaps it can be adapted to use in the other two divisions. As of now, the current employees who get only salary have no reward for selling more than their quota.
Recruiting techniques and hiring processes are not efficient for the hiring of salespeople. At one stage applicants are screened by their youthfulness and attractiveness. Young sales representatives have less experience and are more likely to quit or be fired due to their “youthful spirit”. An older representative may be just as effective, especially when working with customers of similar age and experience.