I. Statement of the Problem
Valley Winery has recently hired Pat Waller as the sales manager of the San Francisco region’s chain division. With this new position, Pat has inherited problems that are in need of attention and resolution. The sales results for the San Francisco region are promising, but the turnover rate is alarmingly high over the past several years. These issues should not only concern Waller, but the board as well.
II. Summary of the Facts
The Valley Winery, established in 1933 in Napa, California with only a $7,500 investment has become the largest domestic producer of wine in the United States (Johnston and Marshall, 2013, p.194). The key to success has been the production of consistently high quality wines offered at a reasonably low price. Although over the past several years the turnover rate is astonishing. The average sales rep was with the San Francisco division only seven months and the sales force turnover neared 100 percent a year. Almost 99 percent of sales reps are lacking experience of more than 2 years. Not to mention 50 new sales reps are hired each year.
III. Analysis
As far as revenue is concerned, in 2012 Valley Wines were said to have exceeded $1.8 billion. Valley’s low prices and use of push strategy by the sales force has resulted in phenomenal growth and success. Valley owns fifty percent of their distributors helping them save on costs. Therefore, turnover rate is the company’s biggest issue.
The San Francisco division has fifty representatives and out of the fifty only one has been there for over two years. Waller’s encounter with the other two “veteran” sales representatives, who have been with the company no more than 9 months, was not reassuring. Both showed up late with excuses. It was revealed on the sales trip that the former sales manager had encouraged his sales representatives to “stretch” their sales estimates. These factors lead to discouraged employees, which lead to high turnover rates.
IV. Recommendations
Some recommendations that could help the company would be to stop telling employees to stretch orders to meet quotas. Contacting employees after work hours at least three times a week on a consistent basis should be addressed. In one scenario where Waller worked with Bill Murphy, it was brought to his attention that Bill’s district manager would call him frequently at night to check his progress on winery directives.
Furthermore, the organization’s three sales groups should also be