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The Columbia University Libraries reserve the right to refuse to accept a copying order if, in its judgement, fulfillment of the order would involve violation of the copyright law. Author: Lange, William Endres Title: Turnover in the sales organization Place: [Pittsburgh] Date: 1922 MASTER NEGATIVE * COLUMBIA UNIVERSITY LIBRARIES PRESERVATION DIVISION BIBLIOGRAPHIC MICROFORM TARGET ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD [■trsiMcsd Hp68 Cernegid' Iristuttite of Technology, Pittsburg. Pi^ti a bupgh i ; CarnogAo i notUu te> Cama^ifiL-onaii- tu^o of ^ii ulillUl(Jg^4 Bureau of personnel re- search* Turnover in the sales organization; a study of the actual turnover conditions in a large number of national sales organizations with a discussion of causes and remedies, by William £• Lange... fPittsburgh^ Carnegie institute of teohnologyi 19&8« 18 p. tables, charts, forms. 30 om« Mimeographed^ ^ RESTRICTIONS ON USE: TECHNICAL MICROFORM DATA FILM SIZE: ^^ ^ REDUCTION RATIO: iXx IMAGE PLACEMENT:tJA) HA IB IIB DATE FILMED: // -/^-^^ INITIALS: I^se TRACKING # : /n^^ OZ6SC FILMED BY PRESERVATION RESOURCES. BETHLEHEM, PA. > Xf^ a: GJ (Jl 3 3 Q) CT O > I" Is N CO GO CJl OOM O rf ^: ^^ if ^ cn 3 3 > CD o m CD CD OfQ N). — 00^ C>(^ O o CO X N X M ^'V# A^ 'vr a? ^ ^0.3 %#V '^t^'^^ ^^* lO o o 3 3 > o 3 3 ^, > Ui J^/ a? s 3 3 Ol O rr O^ S IS bo ro Ol 1.0 mm 1.5 mm 2.0 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghi|klmnopqrstuvw«yz 1 234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyzl234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 2.5 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 ■♦ V fo :(p fp ^Sr ^/^^^j^ ^/^f^ 4^^ c^ L% m O O ■om-o > C CO I ' JL Off) ; m o m f^ ^^^'^j>> ^/^> '\^ 4 ,^v •— ro 3 3 3 3 IS ^i h r 2-rn If II QDIM 8 4^ ^^ 4fr LANGE TUaNOYER IN THE SALES CRG/.NIZATION (CARNEGIE INSTITUTE OF TECHNOLOGY) 4 m 4 ^zsz Cidtuniria Wininnviitp LIBRARY School of Business 'm^ TURNOVER Itl THE SAIES ORGA.NIZATION A Study of Actual Turnover Conditions in a Large Wumber of National Sales Organizations With a Discussion of Causes and Remedies LIBRARY . SCHOOL OF BUSINESS By William B* Lange Research Assistant The Bureau of Personnel Research Carnegie Institute of Technology Hovemher, 1922. All Rights Reserved 1*. \ \ V ^>l>.^iAyN^^.X^ V"-^ icX/u, J -v 25i 6? * ■ ■ 'I ^ FOREffCRD « I / i Sales executives, economists and marketing experts all agree that our system of distribution in the United States is extreme ly inefficient and costly • The distribution cost of Diany commodities exeaeds their production cost. In this distribution cost the expense of operating a sales force is often the pre- dominating factor. The various industries of the country support an amy of 400,000 salesm-en in order to bring their products to the favor- able attention of prospective buyers. Each member of this army represents an inve stment of capital, for the modern salesman must be trained ror"Tiis work an? training is a costly process. When- ever a salesman for any reason fails to mate good, both the expect- ed dividend and the principal are lost to his employer. Failures and replacements swell by so much the costs of marketing goods • Turnover in the sales force, therefore, ^*ien it exceeds the changes due to promotions and imavoidable losses^ is a matter for serious consideration upon the part of sales executives. Is salesman turnover in the majority of commercial lines excessively high? If so, what are the causes; what remedies can be applied? These ere the questions vrhich this bulletin attempts to answer. Complete data were not available because few companies keep accurate records. But the facts disclosed are sufficient to challenge the serious attention of sales executives everyv/here. Something mwst be done to reduce the high selling costs caused by excessive salesman turnover. A discussion of the available facts is the necessary first step in this direction. In the beginning of the Bureau's investigation of turn- over conditions, it was discovered that two New Tgrk concerns were collecting the same data. The individuals in charge of these investigations offered to cooperate with the Bureau in order to secure as comprehensive results as possible. Acknowledgment is therefore gladly made of the helpful assistance of Mr. S. Sedelmier, Staff Secretary of the Alexander Hamilton Institute, and Mr. Theodore £• Damm, of the Research Department, Joseph Richards Company. H« G. Kenagy, Editor . ,y •#i TORNOVER IN SAIES OEGAMIZATIOiS TABLE CF COTJIESTS PAQ? IS TURNOVER A SEIIDUS MATTER ^ • • 1 Instances of High Turnover -....• 8 Costs of High Turnover . • 3 TBS FACTS OF TURUOVER How Data Wore Gathered • • • • • 4 Results of Questionnaire .•..• • •... 5 Reliability of Data 6 ANALYSIS OF GEKRAL TTOSOl^R C0ra)ITI0H3 7 COMPARISON OF TURFOVER ARlO??G ORG^JIZATIO^^ HAI^n)LINa DIFFERENT PRODUCTS 10 COMPARISON OF TURlCfWBR IN OFFICE SPECIALTY OEa^MZATIONS WITH TURNOVER IN ALL OTHER BUSINESSES 12 THE NEED FOR BETTER TURNOVER DATA Insufficiencies of Present Data 14 LmiTATIONS ON VALUE OF TURNOVER DATA 16 WHAT TURBCfVER RECORDS SHOULD BE KEPT 18 Record Form - Turnover of Sales Force Analysis of Exits - Termination Record VALUE OF PROPER RECORDS • 18 TURNOVER IN SALES ORGAIvIZATTONS Is Turnovor A Serious Matter. / . ) •^> Is large tv.rnovGr within sales organizations a serious :• matter? Evidently it has not been so rogardod by many companies, for only a small per cent of national sales organizations havo given the matter much consideration. Convincing proof of this fact comes readily to any organization or concern which sooks to investi- gate conditions. For one reason or another, most companies have not thought it worth while to keep tvirnover data . Records of factory labor tiornover have been considered essential for years; sales labor turnover records are still regarded as fads. Utiintentionally, many sales executives have adopted an indifferent attitude towards the matter. Salesman turnover has been uniformly high during the past few years and, as a result, the condition has come to be accepted as a matter of course. A turnover percentage which, considered alone, might have caused serious concern, lost much of its alarming quality vjhen considered in connection with general business conditions and the situation in other companies. The abnormal conditions since 1915 have led other sales executives to adopt a hopeless attitude - to believe that high turnover is unavoidable . The fact that causes other than abnormal conditions majr be operating within z sales organization to cause high turnover has not beer^ considered. Believing that abnormal conditions alone were to blame a^fid that these conditions could not be changed by their efforts, these pales managers have simply let turnover run its -a- course. Some executives have not even beeh avmre that turnover with- in their sales organizations has been high. In the press of other matters, they have neglected to secure the facts. Although aware that many men were leaving their organizations or being dropped, they have not appreciated how serious the condition was, since they have not had figures showing the turnover in percentages. Instances of High Turnover. A turnover of 100 per cent in any year indicates that the number of changes in personnel equals the average number employed, and yet percentages in excess of this figure are not uncommon, especially during the last year or two. A real estate sales organi- zation, employing a sales force v/hich at times has numbered one hundred men, had an average annual sales turnover for the period from 1915 to 1922 of over 400 per cent. The percentage of turnover for « each year is indicated below.. Year Average JJamber On Total Number Total Per Cent Sai es Force Hired Exits Turnover 1915 €0 250 200 338 1916 80 400 320 400 1917 40 150 110 275 1918 35 125 90 257 1919 100 525 425 425 1920 60 360 300 500 1921 20 125 105 528 1922 (to AugO 25 100 75 518 •*> Conditions lAlth this organization are exceptional anii yet turnover figures in excess of 100 per cent in other sales organi'* zations can be cited. A notable example of high turnover is furnished by an organization handling an office specialty. Since 1919 it» INTENTIONAL SECOND EXPOSURE -a- course. Somd executives have not even beeh a\vare that turnover with- in their sales organizations has been high. In the press of other matters, they have neglected to secure the facts • Although aware that many men wore leaving their organizations or being dropped, they have not appreciated how serious the condition was, since they have not had figures showing tho turnover in percentages. Instances of High Turnover. A turnover of 100 per cent in any year indicates that the number of changes in personnel equals the average niomber employed, and yet percentages in excess of this figure are not uncommon, especially during the last year or two. A real estate sales organi- zation, employing a sales force which at times has numbered one hundred men, had an average annual sales turnover for the period from 1915 to 1922 of over 400 per cent. The percentage of turnover for « each year is indicated below.. Year •mi-^^ Averagg Ifamber On S^les Force I I. I ■ t 1915 €0 1916 80 1917 40 1918 35 1919 100 1920 60 1921 20 1922 (to AugO 25 Total Rumber Hired Total Exits Per Cent ■AMk Turnover I . tin* 250 200 333 400 320 400 150 110 275 125 90 257 525 425 425 360 300 500 125 105 528 100 75 518 Conditions with this organization are exceptional aoiSL yet turnover figures in excess of 100 per cent in other sales orgai^i^ zations can be cited. A notable example of high turnover is fiiTnlshed by an organization handling an office specialty. Since 1919 lt» -3- / ♦-» ^ percentage of ttirnover has not fallen below 100 per cent • In fact, for the seven months of 1922, the turnovor was 394 per cent. The range of t\arnover percentages is shown below. Year Average Niamber On Total Number Total Per Cent Sales Force Hired Exits Turnover 1919 36 100 42 110 1920 75 126 76 101 1921 139 281 181 130 1922 (to AugO 117 308 268 394 This organization increased its sales force from an average of 38 in 1919 to 117 in 1922. With this increasing sales force it has had increasing turnover. During the seven months of 1922 alone, 268 salesmen left the company and 308 were added. Conditions such as this are surely worthy of serious analysis. Costs of High Turnover The seriousness of a high sales tiirnover lies in its costli- ness. The sales manager of a company _employij:]^ over 600 sa lesman states that eachjBalesman_r^-Prfi§^?^'*^s an expenditure on the part of J — — — — the company of one thousand dollars for his training and supervision. j ' -- i i^w hxmdred and eighty salesmen left this con.pany during the first seven months of 1922, which means a cost to the company of |^180,000. This is a considerable sua of monify' Most companies probably do not have so expensive a plan of training as the company mentioned, but whatever method of training is used involves some expense. The new salesman may simply travel with an experienced salesman for a certain period of time, or he may be trained in the aompany's course. In either event, he represents an investment which is lost to the company when he leaves its enqploy. Furthermore the new salesman requires more supervision than •a. / -♦I the more experienced, ai^d thus increases sales costs* In an organi- zation ^ith a rapidly changing personnel this item of increased supervision cost tecomes of considerable importance. The increased supervision cost caused by a rapidly chang- ing sales personnel is dwarfed, however, by the cost of lost business due to high salesmf;n t\;rnover. A customer doe s not feel co nfidence i n a compary whi^h ha 3 a rap idly changing sales persciinel. In the i a» .«WWW1 ■ c ustomer's eyes , the ef.lesman is the company* If the company changes representatives rftsa the customer's confidence in the house and his willingness to bay cannot be conserved or developed. As a reault, business is lost to the compary* Not all ccmpnnies lose a thousand dollars every time a salesman leaves, fpr most companies the loss may b e conservatively pla ced at two h\mdr3d doll ars. A company v/hich has a sales force of one hundred and & tirnover of thirty per cent, would lose six thousand dollars per year on this basis. Such a sum ir worth saving, and a great part of it can be 6a^-ed by reducing turnover. Turnover can be reduced if its causes are known. In order to discover these causes, however, sales turnover conditions must be studied and accurats turnover records must be maintained for regular analysis. TBS FACTS OP TURKCfVEi How Data Were Gathered. One hundred and fifty national sales organizations were ad- dressed by the Bureau and ^sked to cooperate in an investigation of salesman turnover by furnishing their turnovor figures. These organi- zations were selected so that they inducted ccncerns handling many different types of product. f^ ^.5- / . For the convenience of the companies and to insiire uniformity in the calculation of turnover percentages, each company was furnished with a Sales Turnover Blank, a copy of which is in- cluded in this report. Annual data were asked for covering the period from January 1915 to August 1922 and full directions for all calculations were included on the blank. Results of Questionnair e Responses were received from sixty-nine of the one hundred and fifty companies addressed by the BufeaU. Of these sixty-nine companies only thirty-five were actually able to furnish turnover figures- Several other companies, though unable to furnish figures, estimated general turnover conditiotis vriihin their organiJsations and manifested interest in the investigation* An analysis of the responses indicates the wide variety of concerns addressed by the Bureau and the status of turnover records among sales organizations handling various types of products. >•• TABLE I ANALYSIS OF im RSSPOMS ES TO THE BTffiRAn QIESTIONHAIRE Type' of Company ^■"•■•■^"^w Number of Responses Office Specialties Automobiles Rubber Products Life Insur a nee ^ Real Estate, Mortages, Stocks fc'^Bonds Steel Clay Products Heating Equipment Commercial Feeds Drugs & Drug Store Supplies Paint Electrical Supplies Vacuum Cleaners Electric Lights 16 7 5 s 8 2 2 1 2 2 1 1 1 Ntanber Furrti shingTigur e s 10 3 1 S 1 2 2 1 2 1 1 X SAJ^ES TDRIDVER PEOCRD (Coafidontial InforinQtion) COjVIPAIiy DATE ADDRESS OF COMPANY Important : Please road dirootions carefully before recording data. If you cannot supply the data according to the headings given, then furnish turnover figures as you have them, explaining how the percentage figiire is secured* / TEAR 1915 1916 1917 1918 1919 1920 1921 1922 ^to^ Au^ost AVERAGE NUMBER ON SALES FORCE •^r TOTAL ITOffiER HIRED TOTAL EXITS PER CEUT TURNOVER DIRECTIONS : Ki (1) The "average niomber on e^les force" for any year may to obtained "by adding the number on the payroll at the begin* ning of each month r.nd dividing by 12. (2) UTotal number hired" means the entire number of additi<^fi to'th* sales force during the year — in other words^ tho men hired. (5) "Total exits" moans tho number of salesmen who loft tho company during tho yoar for any reason, including discharges. (4) "For cent turnover" is tho figure obtained by dividing "total exits" by "average number on sales force". ; (5) When tho information called for has boon filled in, mail tho blank at once to: THE BUREA U OF PERS(2NNEL RESEARCH -'■■'■■■' -• ■■ - ■ CAR^GIE INSTITUTE OF TECHI^LOOT PITTSBURGH, BENI^SYLVANIA. ./ -6- Tablo I (Continued) Number of Number Tjrpe of C^pany Responses Furnishing Figures Aluminum Cocking Utensils 1 Fibre Board 1 Food Products 2 Roofing Products 1 Novelties 1 Packing House Products 1 Soap 1 4B Candy 1 Oil ' 1 Women's Clothing 1 Tobacco % • Plumbing Supplies 1 Plate Glass 1 Taps & Dies 1 Agricultural Machines 1 Sewing Machines 1 Brass Products 1 In addition to the figures furnished directly by thirty- five companies, data were received from the Alexander Ifemilton Institute and the Joseph Richards Compary who were also making an investigation of Sales Turnover. Tholr data covered thirty-five companies among which were several which had already reported to the Buureau# Reliability of Data.. Statistics of txirnover have been, in general,, unsatis- factory^ Ihe small number of companies furnishing data is trhown In the preceding table.. Sven in those companies ^ere complete records are kept, the presence of a large number of variables may cause the sales manager to deny that a high turnover rate has any significance. T!he abnormality of the times and the aggressive tactics of sales Managers in "cleaning house" have caused a high turnover. Other variables affecting turnover are compensation, the character of the line, the methods of selection and training, and even the site of the -7- / company. These variables, however, do not so seriously affect the individual t\irnover ratios as to prevent the indication of the general tend of turnover or the relation of the individual turnover ratio to other ratios • AmiOrSIS OF CEKSHAL TURBQISER COroiTIOgS probably the best index of general sales turnover condi- tions is the average yearl^r percentage of turnover for all the companies reporting. In Table II, the year, the average percentage of turnover for that year, and the number of companies reporting for that year are listed. k TABIE II GENEBfiL TDRKOVER C0NDITI013S AS SHOWN BY AVilHAGS PERCENTAGE Of TDRTOVER l^umber of Companies Average Percentage Year Reporting of Turnover 1915 12 41 \ 1916 16 49 ^ 1917 20 45 1918 24 51 i 1919 26 60 / 1920 32 60 / 1921 33 77 / 1922 35 85 / ■^ > »/ It can be seen that during "the period from 1915 to August 1922, there has been a gradual increa-se -in the percentage of sales- man turnover, though this may be the rersult of the £act -previously mentioned, - that the number of companies keeping turnover records increased with each year. In 1915, only twelve of the thirty-five companies maintained accurate records* From then on there is a gradual increase until in 1922 thirty-five companies trere able to supply data* -8- / I ^ I The general increase in t\irnover in these thirty-five companies can be shown to better advantage by the use of a chart* The average yearly percentage of turnover for all concerns report*- ing. Compared to business conditionfi for the same period, is pictured in Chart !• business conditions are represented by Babson*s curve of business activity-. With the exception of the year 1917, the increase in turnover is gradual from year to year. In this year there is a slight decrease in tiirnover as compared to the preceding year, but still an increase over the year 1915. On first thought, it seems logical that the curve representing sales turnover conditions should be the reverse of that representing business activity. As business improves, it would seem that the turnover among salesmen should grow less and when business is retrogressing turnover should increase. In times of business activity a seller's market prevails, sales are easily made, and men of lesser ability can hold their jobs. In times of depression, with sales difficult to make, these poorer men are dropped and swell the turnover percentages. Chart I, indicates however, that for the period under con- sideration, turnover conditions in sales organizations were not the reverse of business conditions. Despite the business activity of the years 1915 to 1919 inclusive, t\irnover continued to increase. This whole period -was abnormal, perhaps, due to war conditions* One company reports that 37 per cent of the salesmen who left their employ in 1917, entered military service. Anothej reporte d that 19 per cent of the salesmen employed frcoj 1914 to November 19J.B, left to go to war. I T > C w tp t a. < IbO I^O t-K> t3o IZO uo IOC Chart I Comparison of Sales TurT^over with Business Activi+M Curve r<)p noveir ■j^_ Curve o-f TTcTivT^^P Business ( I -9- During 191S, although the war wriS over and business "wao booming, salesman turnover continued to increase. The demand for salesmen was very great and the competition between companies for their services caused them to jump from one organization to another as larger compensation was offered. For this reason, largely, ttarn- over continued to increase despite business activity. Nine teen-twenty and 1921 were years of business depression. During this period salesman turnover increased rapidly. Sales were difficult to make and those salesmen who had only the period of the war as a beekground of experience could not meet the conditions that existed. Many of the older salesmen who had became spoiled by the "easy sales" of the preceding years could not accustom them- selves to the new state of affairs and were dropped also. The largest cut in sales organizations came in the early part of 1922. At the beginning of the year most sales organizations adopted an aggressive policy and definitely "cleaned house". As one sales manager expressed it •'We will continue to have a large turnover until we have built up our organization to one thousand salesmen who will be hardboiled and veterans". This aggressive policy is reflected in the 1922 figures. The turnover figures for the first part of 1922 are undoubt- edly higher than the figures for the entire year will be. From present indications it seems that the turnover ratio for 1922 will not greatly exceed that of 1921 while the turnover for 1923 vdll pro- bably be much less. In other words, general salesman turnover con- ditions are improving. «i 7 f -10- \ COMPARISON OF TORIJQVEB AM)NG OiRGAKIZATIOMS HAaDLIITG EUFFEREITT FRODDCTS I ■ I ■ ■ P ■ I I I ■ ^>» •■■■■■■ Tlhe average turnover of a large number of sales organi- zations is indicative of general tendencies in salesman turnover, but of little value in considering the turnorer in any particular line of business. Organizations handling similar products are affected in the same manner by general conditions and, other things being eq\aal, should tend to have the same percentage of sales turn- over The average s -11- TABIfi III BBRCENTAGE OF TURNOVER FOR VARIOUS TYTES OF COMPAl^HES f •Type of Product : No^ of ;■ ■ » • 9 .... ... : Handled : Companies :1915 :19X6 :1917 :1918 :1919 :1920:: 1921:1922: Real Estate : 1 : 333 ; 400 : 275 ; «89 : 425 : 500: • • 525: 515: Oil Company : 1 232: 108: Rubber Products : 1 : 60 : 80: : 50: 170: 189: Candy : 1 : 83: 68 : 89 : Roofing Products I 1 : 59: 93 : 52 : Automobiles : 8 ; 45i ! 8li '. 57; i 62: : 56: 69: 111: Office Specialties : 10 ; 15. : 30: ; 30; : 52: : 60: : 58: 70: 88: Soap 1 : 1 ; 38j ; 51: : 51; ; 47: : 69: : 80: 58: 51: Blectrioal Supplies i : 1 : 38: I 44: ; 60: I 62: ; 37: : 57: 57: 47: Packing House Products : ; 1 J : 48: ; 50: 42: 60: Commercial Feed j : 1 i : 22: 39 : 53 : Life Insurance j 3 ; 33: : 67: : 51: ; 34: \ 42; ; 38: 35 : 40 : Heating Iquipnent \ ( 2 : 0: 12! 25; 37: 15: 17: 27: 41: Women's Clothing \ 1 : . 2fT E 16: 22; 18: . 11: 31: 50: Novelties j 1 : • 18: 21; 20; 18: . 38: 9: 17: 33: Drugs J 2 : 5: 10: 9j 12: 20: 27: 25: 23: Clay Products j 2 : 0: 0: 17; 51: 15: 18: 22: 35: Food Products : 1 : 44: 43 : 40 : Vacuum Cleaners : 1 : « 166: 230: • • Several companies estimated their turnover figures. These figures are shown in Table IV. Estimated figures are, as a rule, too Icfvr since such companies tend to minimize the importance of turnover. Such estimates are presented for twenty-one companies representing fourteen different lines of business. A comparison of the figures with those for similar lines in Table III show that the estimates are very low, on the average. Altogether the figures do not form a basis for reliable conclusions. »^ / •12- TABtE IV ESTIMATED TURlPDTER IN FOURTEEN LINES Per Cent - Tvpe of Product Storage Batteries Turnover 50 Period Covered Past two years Machinery 50 1921 Aluxninun Goods 48 Past year and a half Insurance 44 1921 Weighing devices. sea les, etc u 25 Annual figure Sashes and door6 25 , Annual f igvire Electrical applisncee 5 20 Annual figure Corsets 15 Annual figure Hardware 12i Annual figure Electrical vehicle 6^ hoists. etc. 10 Annual figure Metal beds 8 Annual figtire Buttons . 6 Annual figure Corrugated BoxeA 3 to 5 Annual figure Flour 3 to 5 Annual figure CaiPARISON OF TURNQVES IN OFFICE ^CIALTY 0RGA.NI2ATI0NS WITH TURNOVER IN ALL OTHER BUSINESSES k Ten office specialty organizations furnished their turn- over data. From these data accurate conclusions can bo drawn as to turnover conditions in this field. Table V compares the annual average percentage of turnover for office specialties ^vith the turn- over in all other lines represented in Table III. TABLE V. COMPARISON OF TURNOVER IM OFFI CE SIECIALTY SAXES ORGA MZATIONS TO TtteNcMft ilf bTHfeft SALES tfkd^iikiim i«B*a*i ^fj Type Office Specialty Other businesses :1915! 11916; : 1917:1918: : 15 1 : 30 ! • • : 30 : 52 : : 47 i : 54 i r 51 X 51 : » % • 1 • * 1 • • 1 • • 1919:1920:1921:19221 60 : 68 55 ; 61 > -13- This same information is pictured in Chart II » During 1915, 1916, and 1?1T^ turnover wa^ considerably higher in all other businesses than in office specialty organizations. In 1918, however, turnover in the office applicance group increased considerably and from then on remained as high or higher than the turnover in other businesses. During the period of prosperity it seems evident that many companies purchased all sorts of office appliances, v/hereas in less prosperous times they would not have done so. The demand for office specialties caused expended sales forces as vroll as expanded manufactur* ing facilities. The fact that expansion in office specialty organi- zations was much more rapid than in organizations handling other types of products, is illustrated in Chart III. The chart shows the expansion of office specialty sales organizations and all other organizations in terms of their size in 1920. The year 1920 is used as a base since seme of the companies did not report figures previous to this time. Rapid expansion by office specialty companies naturally resulted in hi^ salesman turnover. Salesmen were scarce and many men lA^re hired who could not become salesmen. This was true of organizations selling other types of product but more true of office specialty organizations* Figures for individual office appliance companies furnish some interesting variations from the general averages given above. Such figures are given in Table VI. « / -> A 4 Chart H Companson of Turnover in Office 5pecia)t<^ Sales Organizations TurpOYer in other ^'^*^ Sales 0r9ani7crtjons IXO l«)»5 'l(o 'It 'ie> '19 't-O Ye^r •»! 'ZZ >*^ T IT no loo O a 9o 80 Chdrt HI Campcnrison of the Expansion of Office The Expansion of o^her 5al 5pecid)t<^ Sdles Onjanizotioiis es Organizations o ^ bO 50 V 5 so 0. ;lo lO >^ Office S oeci •IT •18 19 '^O Jt.1 ^x -14- TABLE VI SAT^SMAN TDRKOfER IN OFFICE APPLIANCS COWPANIBS • * i * :A'veras:e for Prodxict :1915: :1916: : 19171 r 1918 J :1919: 1920:1921: :1922 :Period of Record? Record system \ : 3 : I 4 : : 6 : 1 5 J ; 7 : 6:8: ; 11: 6. : Record System J : - : I - ! ; - : • : ;110 : 101 ;130 : : 394: 184, : Duplicating machine : : - ' : - : ; 43 : ; 107: : 51 : 54 : 48 : 53; 56* : Duplicating machine i : 27 J : 54 : ; 24 : r 27! J 88 : 95 :112 : . 60: 60. J Adding & Calculating Machines - - ! ; - : -: • : 48 : 62 : . «3: 51. 1 Adding & Calculating Machine: : - ; ; - : . 29 ; ; 21: ; 33 : 36 : 31 : . 37: 31, Adding & Calculating Machine; : - ; ; - ; ; - : ; 81: : 97 : 87 :147 : : 128: 108 . : Adding & Calculating Machine; ; - ; ; - : r * : -: - : 94 : 54 : : 80: 76. : Filing Equipment : .♦ i : U : . 46 : : 68: : 30 : 21 : 39 : . 40: : 40. : Cash register : » •• 1 I •• < • ► •: • • • • • 4 32: 32. ♦Fi^es for 1922 are on a yearly basis It will be noted that there is one instance of a very low annual turnover. V/ith this exception no one of the ten ccmpanies reported a turnover of less than 20 per cent for any year since 1915 ( or since records have been kept.) In fact, ^vhen the averages for the entire period are taken, the figures, ^vith this same single exception, are all above 30 per cent. From this point they range all the way to 184 per cent. THE NEED FOR BETTER TURNOVER DATA Insufficiencies of Present Data ^ny sales organizations maintain no records of turnover. Twenty-nine companies addressed by the Bureau wore \inable to furnish turnover data for various reasons. An analysis of ttese reasons discloses the fact that most of these companies have no records of t\irnover, or their records are unavailable. "Our sales force is too small" or "Our turnover is negligible' "Were the reasons advanced by six compRnies for not fxarnishing turnover -15- r -I data* Ten oompenies reported that they kept no records at all or that their records -were not in the proper form. Three other Gompaniesy although keeping records » found that the data wenr so scattered thab their compilation would involve considerable clerical work. In other words, nineteen of the twenty-nine companies eithsr have no records at all, or their records are for most purposes un- available. It is also very likely that a large number of the companies which did not reply to tho Bureau*s request for information failed to do so because they had no records* Many companies, although keeping turnover records, get little benefit from them* In most such cases the records are not easily available* One company reported that as soon as their pay- roll clerk gathered the figures on turnover, thsy would forward these figures* This company bought that it was keeping turnover records but actually it was not* The payroll clerk had probably . seldom, if ever-^ been asked to compile t^e information from the pay- roll for the benefit of the sales executive • The information was all there but probably was never used* Txirnover records which are merely kept and are not analyzed are of little value* Companies are rare, however, who analyze their records and really attempt to deternine what is causing turnover* A ferw of the companies submitting data to the Bureau included analyses of a more or less general nature* A consideration of these analyses will be interesting* In • single year one company lost forty men* 8ighteen of these men had a service record of less than one year, while twenty- two had served more than a year with the company* The reasons given for dropping these men were: -16- Lack of character •• 7 men Lack of ability 22 men . Lack of industry 4 men Lack of courage ••• 1 man Lack of personality 2 men Unavoidable •• 4 men Of fifty men hired in one year by a certain company, twanty failed. The reasons for their failure, as given by the company, ivere: Lack of industry •....« 9 men Failure to follov/ instructions 1 man Lack of tact .* 2 men Lack of stick-to-iti*Bness ... 2 men Lack of confidence in closing. 1 man Lack of kno?/ ledge of line .... 2 men llnable to withstand counter offenses • •.•• 2 men Dishonesty 1 man Another company hired 118 men from 1914 to 1918. What happened to those men dtiring this pc3riod is shovm below: 19jJ entered the war. 18^ v/ere let out as incompetent. 19^ quit of their own accord (some would have been let out). 44jJ remained with the compare • These analyses all indicate the reasons for vvhich the company dropped certain men, but they do not indicate the reascais for which men voluntarily left the company - that is reasons for salesman turnover which are chargeable to the company - though such reasons are probably more important than the others. LIMITATIOHS OH VALUE OF TURITOHER DATA To truly interpret turnover data the policies of a company and the conditions of business at the time must be considered* Turn- over data is limited by both of these considerations. -17- i The markod compensation scheme employed by a company has a effect upon the tiarnover of sslesmen. In times of poor business, the commissions earned from a few sales are, in most cases, insuffi- cient to support a salesman. The rate of commission per sale is usually set so that in normal times the salesman earns a fair wage, but it is not a measure of the value of the sale to the organization. Therefore in times of depression the salesman on a commission basis is not receiving the reward his services justify. He becomes dissati- sfied leaves the company. A straight salary for salesmen often decreases turnover. One sales manager recommends a combination of the commission and straight salary plan. He uses a commission basis with a drawing account. By using such a scheme he feels that the high turnover common to the conn is si on scheme of compensation can easily be halved. Companies employing a "hit or miss" scheme of selecting salesmen are certain to have a higher percentage of turnover than a company using very careful scientific methods. The effect of poor selection upon turnover is illustrated by results in a litho^^raphing company "which maintains a training coxirse for its salesmen. Out of every six men whom they select and train only one man actually makes :ood. ^ ; Insufficient training and si S6rle smen are probably as much to blame as poor selection for causing high turnover. Neither training nor supervision has been developed in terms of the actual elements of the salesman's job. He does not, therefore, as a rule receive specific help in the things which are most difficult for him to do. Then again, the salesman is often turned loose on his on resources too soon. He does not have the necessary confidence in him- -18- 86 If Brd, as a result, he fails* Adverse business conditions, of course, limit the value of turnover data. Increasing turnover naturally occurs. in times of business depression, and is to be expected. However, since it is to be expected, an increase in turnover which is really too large is often disregarded. WHAT TURNOT^R RECOHDS SHOULD BE KEPT? Every sales organizatiSn should keep a record of its turn- over. This record should be kept on a separate form provided for the purpose. It is then always available for reference and the trend of turnover is always known. A mere record of exits indicated upon the payroll is not sufficient as it is not easily available. A simple form for recording and analysing turnover data was devised in 1918 by the Bureau of Personnel Research, (at that time the Btareau of Salesmanship Research.) for its cooperating companies, and has been successfully and profitably used by many of them. A copy of this blank is included in this report. Another type of turnover record is illustrated by the Termination Record shown. This form was devised by the Life Insurance Sales Research Bureau of Carnegie Institute of Technology for its thirty-seven cooperating companies. With such a method of analysis, a cOTipany can determine very accurately the real facts about turnover. VALDE OP raOPER RECORPS -k. The value of proper records lies in the fact that such records make reduction of turnover pbssible by indicating its eauses If the turnover records of a company show that a large part of the salesmen lemming the organization are leaving because of the ^ammsm Form 1100. 500-3-21. \ / TURNOVER OF SALES FORCE V (Name of Firm) (Year) READ BOTH SIDES < CAREFULLY BEFORE FILLING IN THE RECORD CHANGES IN SALES FORCE Totals (or Year January February March April May ! June July August Sept. 1 October November December TOTAL ENTRANCES 1 New Employees i i i 1 ; 1 Re-Employed ' \ i ] 1 , . , 1 ' Transferred from other Departments ■ ■■ ■ ' ■ ' - . : ! ■■ ■— 1 1 '■ . ^ TOTAL EXITS 1 .... — ' i i i NUMBER ON PAYROLL at beginning of Month i i . ' ■ i ■ ; , INCREASE (or the Month t 1 1 DECREASE (or the month « J 1 i i I 1 1 1 AVERAGE NUMBER OF SALEIS PEOPLE on the oavroll (or the year. (Add the number on the oavroll at the betrinnintf o( each month and divide by 12.) ( ) GENERAL PERCENTAGE OF TURNOVER- niv;(l#> »h(> tntnl #>xi(s for th#^ vf>«r hv \V^ t^vt^rtat^ niimh#>r of s«I<^« neonle on the navroil (or the vear. ( ) - r r- ANALYSIS OF EXITS Totals LENGTH OF SERVICE Less than 1 month 1 to 3 months 3 to 6 months ' 6 to 12 months 1 to 2 years 2 years or more A. TRANSFERRED TO OTHER DEPARTMENTS I 1 B. TEMPORARILY LAID-OFF (Totals) 1 1 : Regular Seasonal Change Government Service Other External Causes 1 , C. LEFT (Totals) Death 1 i Health or Age Family Changes 1 1 t Dissatislaction with Pay 't Other Dissatisfactions 1 - ' ■ , ... ! ; t D. DROPPED (Totals) Misconduct : ' i Poor Sales Ability Miscellaneous Reasons 1 1 1 i 1 How many of your sales force at the end of the year were being paid only on a commission basis? (- Both salary and commission? ( ). Both salary and bonus? ( ), Other Plan? — -). Only salary? (- ( ). -). v-' EXPLANATION OF FORM X This form is submitted to each co-operating member of the Bureau of Personnel Research for an analysis of the turnover among its sales force. ^ If the various items are not at present recorded, the analysis of the turnover may be carried out as far as your data permit. Complete records will greatly increase the value of the analysis when the turnover is large. Turnover in the sales force (THOSE ACTUALLY ENGAGED IN THE WORK OF SELLING) is here defined as the change in personnel brought about by exits from that force during a given period. To compute the GENERAL PERCENTAGE OF TURNOVER, divide the total number of exits from all causes during the year by the average number on the payroll during the year. This is the method proposed in 1917 by the Committee on Employment Plans of the National Association of Corpora- tion Schools. The expression "on the payroll" does not refer to any particular method of remuneration. If the sales force is separated into widely different groups, c. g., part-time or full-time, com- mission or salary; or, with insurance companies — industrial and ordinary — , use a separate blank for each group or class which it is desirable to study separately. Copyright 1022 Life Insurance Sales Research Bureau Form 1-40 2M-5-22 Life Insurance Co. General Agent Reporting Agent's Name.-. TERMINATION RECORD (To be filled out for each agent leaving the company) Agency. Full Time ( ) Part Time ( ) Date of Contract _ Date of Termination ? Agent's paid-f or premiums during each of his last six months : 1st month I..... 2nd month ? 3rd month 4th month $ 5th month $ _....- 6th month (last) $ Was agent entirely financed by General Agent ( ) partially financed ( ) or paid commission only ( ) ? Territory -Was it city ( ) country ( ) or small town ( ) ? 1. Did agent resign voluntarily ( ) or at request of General Agent ( ) ? 2. Was agent earning a living at selling life insurance? Yes ( ) No ( ). 8. Was termination caused by death, old age, ill health, marriage, or removal from locality? Yes ( ). No ( ). If yes, which? 4. Was agent undesirable for such reasons as: financial irregularity, conduct, disloyalty, or other weak- ness of character? Yes ( ). No ( ). If yes, which ? - - 5. Was he a graduate of any training course in life insurance? Yes ( ). No. ( ). If so, which? 6. 7. 8. 9. On the average, how many hours per day did agent work at soliciting? On the average, how many interviews per day did he have? - How many times during his last two months of active work did you or other agents accompany him in soliciting? days. Was agent assigned to anyone for joint work or supervision? Yes ( ). No ( ). If so, to whom? j» I 10. Is agent indebted? Yes ( ). No. ( ). If so, for how much? $ - - - 11. What is his general financial condition? Serious debts ( ) ; slightly in debt ( ) ; just clear ( ) ; mod- erate ( ); well fixed ( ). 12. Has all outstanding business been settled, so that bond can be cancelled? Yes ( ) ; No ( ). 13. State the line of work he has taken up : Former occupation, namely - - - New occupation, namely -- Agent for another life company, namely. - - - General agent or manager for another life company, namely. 14 Is cancellation of agent's license recommended ? Yes ( ) . No ( ) . '-L (OVER) Analysis of Termination Causes Indicate your answer to each question below by making a cross (X) on the line just where you think it ought to be. For example: in question 1, if the agent's appearance did not quite justify a cross at "Created fine impression", but was a little better than would be in- dicated by "Good appearance", put the cross on the line somewhere between these two places. 1. How were prospects im- pressed by agent's appear- ance (as shown by facial expression, physique, neat- ness and manners) ? Created fine impression Made a good appearance Often made an unfavorable impression Made a poor appearance 2. Did agent impress prospects by his sincerity? Left distrust as to his sincerity Seemed to exaggerate Usually created confidence All he said was taken at face value 3. What was agent's attitude towards supervision or suggestions? Sought for suggestions and help Welcomed suggestions when offered Indifferent to suggestions Objected to supervision 4. How successful was he in locating prospects? Did he strike out for himself? Waited to be directed. Had to be told. Often ran short of leads Usually well supplied with prospects Had exceptional **nose" for prospects 5. To what extent did he plan his interviews and study his prospects? Made careful preparation Used information readily available Made slight preparation Interviewed without r.eparation 6. How well did he know life insurance? Had thorough knowledge Quite well informed Often relied on manuals or rate book Had scant information. Made blunders 7. How did he like meeting and persuading people? Strong dislike for s(Miciting Showed some aversion Took it as a matter of course Enjoyed soliciting 8. To what extent was he sold on life insurance as a profession? Never really believed in profession Some faith in profession Thought well of profession Was sold 100 per cent on profession 9. How hard did he work at selling life insurance ? Loafed on the job Tended to take things rather easy Worked systematically Was a consistent, hard worker 10. What was the attitude of agent's wife or family? Enthusiastic Favorable Did not en- courage or cooperate Antagonistic -r -18- * /' compensation plan, turnover can be reduced by changing the scheme of compensation to oi» better suited to the situation* If many s a lesmen are failing because they are not aggressive. persistent, and forcible, or because they have not the proper personality, poor selection methods are being used. More careful attention to the selection of salesmen in a case like this will certainly reduce the turnover • Whatever the cause of turnover^ if proper records are kept and analyzed, this cause ivill be disclosed. Once disclosed, it may be eliminated and turnover automatically reduced. The reduction of sales expense is an objective which sales executives are constantly striving to reach* Serious study of the facts of salesman turnover will reveal one important line along "rohich real advances toward that objective can be made* — I Date Due ! 1 UEC^l rii^Q 1 A 89? '^'^2 71360 i ( i 1 1 SEP 2,.,, ^-11^4W /vis;/ ^.^^e^ «IUl«393 NEH ^3r HAY " 8 1927 :^ **♦• ■ '111 ':-,T^ 1<*'.-.^ m- <^^a5 ■W-. *"'-'■'-!•"., -N-^. fl^ END OF TITLE