Valley Winery

The high turnover rate and its effects are causing excessive training and recruitment costs. Table 1 illustrates the tangible employee turnover costs. In addition, a loss in sales due to the representative not being available to manage the accounts and the time it takes for a new representative to gain rapport with buyers is also a factor leading to high turnover.

Table 1

Type of Cost Number of Employees Cost Per Employee Total Amount

Training Costs 50 $25,000 $1,250,000

Hiring Costs 20 $2,000 $40,000

Total $1,290,000

What causes Pat Waller's problems?

Unrealistic quotas and poor management prompts the sales representatives into misrepresenting, or "stretching", their sales figures to meet their quotas. Working in fear of missing quotas and perhaps losing

their jobs can perhaps lead the sales force to look for alternate employment, contributing to high turnover. Sales quotas are oddly patterned and add stress to sales representatives that are under pressure to meet an unrealistic number one month, and none the next.

Compensation strategy