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 Companies which once had money available, are finding those funds have dried up or been rescinded.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.
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