High Attrition in Junior Sales: Could Fixed-Term Contracts Be the Solution?

Dear All,

In the Sales Team, the junior-level attrition rate is too high. I would like to implement fixed-term contracts for 12 months to avoid long-term benefits or third-party rolls. What would be the best way, according to you? Kindly guide. Many thanks in advance for your suggestions.

Thanks,

Sales Team Junior Level attrition rate is too high. - ????

a) What is your product?
b) Why do people leave the organization?
c) What tenure do they complete with your organization?
d) Is this problem related to a particular HoD/Manager?
e) What is the average age & gender of leaving employees?
f) What is the educational qualification for leaving employees?
g) Where do they join after leaving your organization?

Please let me know if you need further assistance with this.

You can have them on a direct contract with fixed compensation. (TDS and Professional tax will be applicable) or a revenue-sharing basis.

Outsourcing and Fixed Term Contracts: Legal Considerations

Both outsourcing and engaging employees for a fixed period with a Fixed Term Contract are illegal due to various reasons. The employees are involved in your sales function, which is a perennial role that requires full-time employees. Contract labor cannot be utilized in this function due to the high degree of personal relationships involved. The sales team directly reports to the company's key individuals, and compromise is not an option in this critical function. An outsourced individual lacks the autonomy to make decisions independently, as they are expected to work without direct supervision from company officials. Therefore, outsourcing is not a viable solution in this case.

Fixed Term Contracts: Limitations and Legal Implications

Regarding Fixed Term Contracts (FTC), a contract of employment is typically continuous unless it is for a specific project or timeframe. It may be acceptable to offer an FTC appointment to employees engaged in a time-bound project, where the contract automatically terminates upon project completion without notice or compensation. However, sales roles do not operate on a fixed-term basis and continue until the company ceases operations. Therefore, engaging a sales team on FTC is legally untenable and considered an unfair practice under the Industrial Disputes Act.

Challenges in Engaging Contractors for Core Operations

In practice, multinational corporations often engage contractors to handle core operational areas. This approach has led to discontent among the workforce, resulting in disputes, violence, and, tragically, even harm to Personnel/HR Managers who are tasked with implementing management decisions. The prevalence of FTC requirements is higher in newer companies, especially in locations where Trade Unions have significant influence.

Regards, Madhu T K

Considerations for High Attrition in Sales Teams

Are you operating in a market segment where sales personnel do not matter and your product, for any reason whatsoever, sells a lot? Otherwise, it does not appear that the FTC route will solve your problem of the high attrition rate of your sales force.

You also need to think about whether the sales figures will go up with a change of personnel at fixed intervals. Will it not affect your sales relationships, retention of customers, etc.? Will you not be disclosing your sales secrets to too many, a situation that can be exploited by your competitors?

As pointed out by Madhu Sir, it is not a correct solution otherwise also.