I work in sales and have seen a new trend lately. With so many jobs being cut, companies are caught in a quandary: How to raise revenue after cutting sales and marketing staffs.
One way is to keep sales people, but on a commission/sales only role. For instance, a sales person has a base salary, insurance and HR cost to the company. The company depends upon the sales person to sell products and services which will cover those costs.. eventually.
However, some companies are cutting the employee and making them an agent or reseller. The company reduces their monthly fixed cost and the employee earns a higher commission (hopefully) for sales.
As a short term solution, this may work for both parties, but it will not work long term. As companies cut long time sales persons and teams, they are compelled to recruit new sales persons with higher and more demanding quotas. So available sales people, good ones, are constantly being recruited and headhunted. I know that is what I have seen in the market this month.
The agent model will probably continue for the time being. The monthly costs of employees is at the breaking point for too many companies.
Saturday
Marketing Me: Layoffs and the Transformation of Work
Layoffs are coming faster and with more urgency than ever before. The lack of credit and disappearing cash has left companies scrambling now more than ever to reduce head count and thus expenditures quickly. The end result is the jettison of the American employee.
More companies are laying off and the trend will continue throughout 2009. Despite what economists are telling the press, the inherent problem lies with the credit markets in the U.S.
Companies expand headcount and facilities by either tapping cash or using credit to bridge the gap between sales and invoiced payments. Customers, however, are cutting their spending or falling behind on their invoices. This means companies have to make up the difference for their customers late payments.
The problem is lenders are not lending money or are reducing lines of credit. Companies which once had money available, are finding those funds have dried up or been rescinded. Where some companies would feel comfortable using cash reserves to fill the holes, more and more are acting much more conservatively with their use of cash.
In order to quickly reduce spending, companies are resorting to the fast layoff to cut monthly costs. So employees are given two weeks pay and told to exit as fast as possible.
As long as this credit crisis lasts, there will be more layoffs, slower payments by customers and less employment. No easy answers here.
More companies are laying off and the trend will continue throughout 2009. Despite what economists are telling the press, the inherent problem lies with the credit markets in the U.S.
Companies expand headcount and facilities by either tapping cash or using credit to bridge the gap between sales and invoiced payments. Customers, however, are cutting their spending or falling behind on their invoices. This means companies have to make up the difference for their customers late payments.
The problem is lenders are not lending money or are reducing lines of credit. Companies which once had money available, are finding those funds have dried up or been rescinded. Where some companies would feel comfortable using cash reserves to fill the holes, more and more are acting much more conservatively with their use of cash.
In order to quickly reduce spending, companies are resorting to the fast layoff to cut monthly costs. So employees are given two weeks pay and told to exit as fast as possible.
As long as this credit crisis lasts, there will be more layoffs, slower payments by customers and less employment. No easy answers here.
Thursday
States: The Top Ten High Cost of Doing Business
Entrepreneur magazine (print version only) had an interesting article in their February 2009 edition, which outlined the states with the highest cost of doing business (figures were the most recent - 2007).
This matters because job creation in every state in the U.S. is critical. If costs are too high in one place, job seekers in those locations may suffer.
Taken into account were average worker's wages, tax burden, electricity costs, industrial and office space rents.
Here is the list of the states with the highest cost of doing business.
1. Hawaii
2. New York
3. Alaska
4. Massachusetts
5. Connecticut
6. California
7. New Jersey
8. Vermont
9. Delaware
10. Rhode Island
Some of the figures which are represented in the article would have been affected positively today would include the probable increase in office and warehouse space since late 2008 to the present. An increase in supply of either would logically dictate a drop in price. Well some places.
Also, wages have dropped as well as layoffs have increased in the past six months which can drive wages down.
Finally, some of these states have raised tax rates for individuals and businesses as tax revenues have dried up. They may be even higher than listed above.
Regardless, if you live in one of the above states, be aware what you are facing. The out of work in Texas for instance, have a better playing field to work with than those in New Jersey.
Author's note: I was surprised Michigan was not on this list.
This matters because job creation in every state in the U.S. is critical. If costs are too high in one place, job seekers in those locations may suffer.
Taken into account were average worker's wages, tax burden, electricity costs, industrial and office space rents.
Here is the list of the states with the highest cost of doing business.
1. Hawaii
2. New York
3. Alaska
4. Massachusetts
5. Connecticut
6. California
7. New Jersey
8. Vermont
9. Delaware
10. Rhode Island
Some of the figures which are represented in the article would have been affected positively today would include the probable increase in office and warehouse space since late 2008 to the present. An increase in supply of either would logically dictate a drop in price. Well some places.
Also, wages have dropped as well as layoffs have increased in the past six months which can drive wages down.
Finally, some of these states have raised tax rates for individuals and businesses as tax revenues have dried up. They may be even higher than listed above.
Regardless, if you live in one of the above states, be aware what you are facing. The out of work in Texas for instance, have a better playing field to work with than those in New Jersey.
Author's note: I was surprised Michigan was not on this list.
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