SALES & DISTRIBUTION MANAGEMENT

Prof. G. Sridhar

Project Zero-D :
Managing Sales Force Attrition at Karnavati
Healthcare Ltd.

SUBMITTED BY:

Gagan Deep Singh (ePGP-02-027)

Executive Post Graduate Program

Indian Institute of Management Kozhikode
Q1) If you were consultants, what would be your two most important recommendations
to KHL? Substantiate and Justify?

A1) Why 2 recommendations…. Only one, ie….If the leadership team only followed in
spirit their mission statement 2nd para === “Our human resources will continue to be
the most valuable asset in this pursuit of leadership & prime driving force of our
growth”. This para sums it all. If only the corporate culture / environment is supportive
towards it’s employees, would the employees bond with company. Which in turn
unleashes a motivated & a committed sales force. Currently no bond or a sense of loyalty
exists between the employees & the company. Rather the relationship is negative
transactional.

However if 2 specific recommendations need be given, then…..

a) Compensation & Incentive system – to break the negative / downward spiral,

the company must restructure it’s Compensation & Incentive system to that of
better than the industry average. Currently the packages offered is the
lowest(derived fm data in case study). Some of the hardest statements supporting
this is the verbatim comment of one of the employees stating the company had
unreasonable norms / standards & a high handedness for not meeting tough
norms. Every year 1-2 months salary is lost / deducted for not adhering to norms.
Other examples such as Incentive on 100% achievement in any cycle is offered
only if minimum achievement of 90% achievement in subsequent cycle. Any
expiry / breakage or returned goods deducted of the value of double the original
value.

b) Reasonable primary sales target setting, Evaluation & Sales administration

system – The current system breeds severe “Job insecurity”. This is supported by
an employee sharing that here survival is a problem, so how can one think
creatively & contribute. The other glaring example is the company following
“planned attrition”. This is like a “Damocles’ sword” at every “month end”…..
when sales target pressure is the highest. Rather than being able to put creative
energies behind the real work, one could imagine that each month the sales staff
must be more busy speculating as to whose services will be terminated this month
& whose will be next in line. This has such a de-motivational spiral effect & can
be one of the worst things to happen to any organization.
Examples of poor Sales administration system are – any daily report delayed for
more than 10 days, allowance for that day is deducted. No reminders for delayed
reports. At ABM level, daily report is must as against weekly as Industry std. At
ABM level, 225 calls a month is must. An ABM was not empowered enough for
non-routine developmental initiative. “No decision can be taken for benefit of
business. Only proposal can be made through SM. Decisions like which docs to
sponsor & how to channelize promotional materials requires consent / apvl fm
HO.
Q2) What do you think of the situation faced by KHL? How severe is the attrition issue at
KHL? How, do you think, it can be addressed effectively?

A2) The situation faced by KHL is grave. Post the split, while KLL has moved upwards
consistently & is ranked in top 5 by 2004. However KHL has only been consistently
loosing ground & is ranked #26th by 2004. With consistently loosing market share &
increasing sales pressure, the morale of the team had tanked….this had put the company
in a vicious circle of attrition. There were clearly several factors that contributed to each
other through circular paths, causing attrition & impacting the company adversely. The
vicious circle also had the potential to generate spirals over a period of time. It is critical
to prioritize these factors & identifying ways to break this cycle.

a) Compensation & Incentive system – to break the negative / downward spiral, the
company must restructure it’s Compensation & Incentive system to that of better
than the industry average. Currently the packages offered is the lowest(derived fm
data in case study). Some of the hardest statements supporting this is the verbatim
comment of one of the employees stating the company had unreasonable norms /
standards & a high handedness for not meeting tough norms. Every year 1-2
months salary is lost / deducted for not adhering to norms.
b) Reasonable primary sales target setting, Evaluation & Sales administration system
– The current system breeds severe “Job insecurity”. This is supported by an
employee sharing that here survival is a problem, so how can one think creatively
& contribute. The other glaring example is the company following “planned
attrition”. This is like a “Damocles’ sword” at every “month end”….. when sales
target pressure is the highest. Rather than being able to put creative energies
behind the real work, one could imagine that each month the sales staff must be
more busy speculating as to whose services will be terminated this month &
whose will be next in line. This has such a de-motivational spiral effect & can be
one of the worst things to happen to any organization.

Q3) Would you support planned attrition? Is it serving its intended purpose? Why is it
going wrong?

A3) Employees can never be consistently pushed to achieve stretch goals by means of
“fear” of punishment. Infact planned attrition must only be a tool for management by
exception & not as a recurring / consistent affair. Consistent performance can only be
achieved rather by motivating employees by means of both hard motivators like good
salary & incentives. And along with soft motivators or morale boosters like appreciation
letters.
However in it’s current avatar, the current system breeds severe “Job insecurity”.
Wherein the company regularly asked underperformers to quit. Planned Attrition led to a
cyclical path of influence or a vicious cycle of attrition… as it further negatively
impacted the so called “Unplanned attrition or voluntary turnover” as well. Elements
such as planned attrition, job insecurity, unplanned attrition, poor performance, low self
esteem, unrealistic sales targets & so on constituted this circle. This had an adverse
spiraling effect on the company. This is supported by an employee sharing that here
survival is a problem, so how can one think creatively & contribute. The other glaring
example is the company following “planned attrition”. This is like a “Damocles’ sword”
at every “month end”….. when sales target pressure is the highest. Rather than being able
to put creative energies behind the real work, one could imagine that each month the sales
staff must be more busy speculating as to whose services will be terminated this month &
whose will be next in line. This has such a de-motivational spiral effect & can be one of
the worst things to happen to any organization.

Q4) Do you think the 3M study, considering the extent of time and effort spent on it by
the consultants and staff of KHL, was really that useful in the whole scheme of work
done by the consultants in KHL, especially in view of the caution expressed on the
limitations of its data collection? What was the prevailing nature and levels of
orientation/attitude of KHL staff towards their job and the organisation?

A4) Yes. M^3 (Manpower Mood Meter) helped to quantitatively put facts in
perspective (supported w/ qualitative research) to gauge employees feelings about &
orientation towards their job and the organization, and to assess what they felt about their
fit with & future prospects within KHL. M^3 investigated 9 aspects or dimensions :
company leadership, corporate culture, communications, career development, self role in
the job, recognition-rewards, working conditions, immediate supervisor and
compensation. Issues divided into hygiene factor & motivator typology. 9 possible mood
scenarios on a 3x3 matrix. Each of these combinations of mood scenarios could have
positive or negative consequences / impact on the organization. As per the typological
analyses, KHL scrored low on hygiene & high on motivating factors. Hence KHL was in
a frustrating mood scenario, causing attrition. As employee did not work “dil se”. They
shared no bond or loyalty with the organization.

Q5) How important is the aspect of sales force motivation for marketing success?

A5) Sales force motivation is the single most critical factor for any sales organization to
succeed. As it is them who act as foot soldiers & help an organization achieve it’s sales &
revenue objectives. Employees can never be consistently pushed to achieve stretch goals
by means of “fear” of punishment. Consistent performance can only be achieved rather
by motivating employees by means of both hard motivators like good salary &
incentives. And along with soft motivators or morale boosters like appreciation letters.
However in the case of KHL, Quality of field sales force was a critical drag for KHL
holding it from becoming a mega brand / global brand.
Q6) Assess the usefulness of the Qualitative study done by the consultants in enabling
them to understand the attrition phenomenon at KHL

A6) The Qualitative data / comments clearly helped the consultants understand the
impact that attrition had on KHL personnel & on their relationships with the customers.
They revealed some of the sales force concerns such as HeadOffice – field relations, sales
organization & decision making, marketing strategy, marketing services support, call /
reporting norms including issues on newly introduced sales force automation system,
compensation, allowances & training. It also helped to clarify & confirm the initial
notions of the vicious circle of attrition. They could clearly trace several factors that
contributed to each other through circular paths, causing attrition & impacting the
company adversely. The vicious circle also had the potential to generate spirals over a
period of time. It helped critically prioritize these factors & identifying ways to break this
cycle.

Q7) What are your final recommendations to KHL? Substantiate and Justify?

A7) The leadership team must follow in spirit their mission statement 2nd para === “Our
human resources will continue to be the most valuable asset in this pursuit of leadership
& prime driving force of our growth”. This para sums it all. If only the corporate culture /
environment is supportive towards it’s employees, would the employees bond with
company. Which in turn unleashes a motivated & a committed sales force. Currently no
bond or a sense of loyalty exists between the employees & the company. Rather the
relationship is negative transactional. The company must work on the below on
priority….

a) Compensation & Incentive system – to break the negative / downward spiral, the
company must restructure it’s Compensation & Incentive system to that of better
than the industry average. Currently the packages offered is the lowest(derived fm
data in case study). Some of the hardest statements supporting this is the verbatim
comment of one of the employees stating the company had unreasonable norms /
standards & a high handedness for not meeting tough norms. Every year 1-2
months salary is lost / deducted for not adhering to norms.

b) Reasonable primary sales target setting, Evaluation & Sales administration system
– The current system breeds severe “Job insecurity”. This is supported by an
employee sharing that here survival is a problem, so how can one think creatively
& contribute. The other glaring example is the company following “planned
attrition”. This is like a “Damocles’ sword” at every “month end”….. when sales
target pressure is the highest. Rather than being able to put creative energies
behind the real work, one could imagine that each month the sales staff must be
more busy speculating as to whose services will be terminated this month &
whose will be next in line. This has such a de-motivational spiral effect & can be
one of the worst things to happen to any organization.
c) People need to be given reasonable stretch targets. While they must be
challenging enough, but it is important that the team derives a sense of
achievement / self esteem after having achieved them.

d) Team Empowerment – teams need to b empowered to take dynamic business

decisions. While checks & balances need to b maintained. However a balance is
important. Balancing act to be engaged between the staff, managers, top
management, owners, structures, processes, systems, etc.

e) Soft motivators or morale boosters like appreciation letters r essential

ingredients.

f) Infrastructure & support system - Conducive / supportive business

environment alongwith trust is important for high performance teams.