SALARY TRAP AND ATTRITION

In every organization, revenue is generated by the most frontline Sales staff. Hence these soldiers of organizations are subjected to more stress and accountability than any other personnel’s in the entire organization. A level up and everything is an exercise in creative vocabulary. (Except in cases where managerial talent is well rounded)

In a recent article I read in economic time, it was mentioned that 90% of financial jobs are comprised of Sales function. We also see a very high attrition amongst the same group. Since demand exceeds supply for these jobs in financial sector, there has been an explosion in salary offered to the sales employees.

Here comes the interesting part. Being revenue generators, every sales staff has not only to justify his salary but also justify the salary of his seniors and higher ups. With rising salaries, there has been an exponential increase in targets set for this group. My take on retail sales is that there are limitations in the extent of target that can be achieved since the there is hardly any scope for innovation in sales function. It is an exercise in discipline rather than mental agility (such as creating new channels or product innovations leading to windfall earnings). The job of a frontline sales staff is to run and his running is limited by the time available to him. Since his targets are huge, he has to keep running till the time he is completely exhausted. Yet the salary offered is not justified. This leads to frustrations leading to these employees looking for change.

Of course the employee will change provide he gets a better package? Profile change is not that easy (90% jobs comprised of sales). Organisations are left with little choice but offer higher salaries or else struggle to cope with lack of personnel’s. Which means the cycle of higher salaries and proportionate targets for the personnel is again reinforced leading to same events being repeated. It appears a never ending cycle till industry stabilizes.

Evolving nature of financial sales

I have observed that selling retail financial services is getting tougher with the passage of time.
My feel is the way in which financial industry has evolved has led to these difficulties
On one hand the sheer number of financial companies with their equally larger product/services offering has made this industry highly competitive.
On the other, customers are more savvy about the choices available to them. They are also wary about the financial salesmen showing them the moon and delivering very little on them. Hence customers go with the assumption that the salesman is lying until proven otherwise, keeping other factors in check for the moment.

From a sales personnel’s point of view, the sheer pressure from top management to sell leaves them no option but to promise stars and hope the customer falls in the trap.
Since customers have become very choosy, the only option left for them is to keep meeting more and more client with the objective that a larger sample size would help them in achieving their targets.

Now for every financial company, the effort to reward ratio (for salesman) would vary based on brand image, size, sector etc. Hence an ICICI would be a lot easier to sell than a DCB product.

So for every salesman, his sample size for achieving his targets would vary based on above parameters. E.g. Keeping things same (sales skill, target audience etc), An LIC salesman would have to meet 10 customers to achieve 1 closure, The salesman from Bharati AXA would have to meet 30 customers for achieving the same.

Hence it is important for each prospective employee to know the effort to reward ratio of the company he is joining. After all just as he would promise the stars, the company might just be doing the same to him at the time of joining.