Last week, we published a survey on distributor labor costs for 2016 and received enthusiastic feedback from distributor friends. In 2016, due to economic downturn, declining product profits, and the impact of the internet, distributors are having a hard time. In terms of human resource investment, most distributors indicated that the cost-effectiveness of personnel is too high, and turnover rates are high. They want to recruit new people and give employees raises, but they are forced to face the pressure of continuously declining profits. In view of this, we are publishing the results of over 1,000 surveys collected this time to provide an analysis for distributor friends and manufacturers, hoping to offer some reference for everyone's 2017 recruitment and personnel management.

1****Survey Participants The main participants in this survey are distributors from the FMCG industry, though some manufacturer sales personnel also assisted clients in filling out the questionnaire. Overall, distributors from categories such as alcoholic beverages, beverages, grain and oil condiments, packaged foods, home care, and personal care participated, with a relatively balanced proportion across sub-categories and covering different sales scales. Overall, the survey has broad coverage and strong data reference value.

2****Survey Results: Distributors Under Internal and External Pressure 1) Sales Staff In terms of employee numbers, most distributors have between 5 and 30 employees. It is worth noting that about 20% of distributors have teams of more than 30 people, which is slightly more complex to manage, and these distributors face more problems and need to invest more effort. Regarding sales staff salaries, the most common annual income range is between 40,000 and 60,000 RMB. This means that the monthly cost per employee for distributors is roughly between 3,400 and 5,000 RMB. Most distributors indicated that they do not purchase social insurance for their sales staff. Therefore, if operating in a standardized manner, including social insurance, distributors need to budget additional costs. In terms of salary models for sales staff, over 80% of distributors use a combination of base salary plus performance-based pay. This model is widely adopted, indicating that most distributors believe this method is the most direct and effective way to motivate employees. However, performance appraisal contains many aspects worth in-depth analysis and discussion, and it is a crucial part of overall company management. We have published many articles on performance appraisal on our public platform, and we have compiled some for sharing here. Interested friends can click the blue text to view.

Extended Reading

Looking at salary growth for sales staff over the past two years, more than 43% of distributors indicated that annual salary increases exceed 10%, while only 22% said there was no increase. This shows that it is difficult to hire and retain people, and for distributors, annual raises are a necessary part of management planning to retain employees. Regarding the cost-effectiveness of personnel, the situation is not optimistic. Only a small number of distributors can control the proportion of personnel wages to profits. Over 70% of distributors spend a large portion of total costs on personnel wages, and when adding other costs such as warehousing, logistics, and capital usage, distributors are left with little or even facing losses.

2) Sales Supervisors/Managers In this survey, 44% of distributors indicated that they do not hire sales supervisors/managers and manage directly themselves. The remaining 56% bear the salary costs of sales supervisors/managers in addition to sales staff wages. For most, the average monthly salary for a sales supervisor/manager is between 5,000 and 6,700 RMB. Despite the pressure on distributors, employee performance is not very stable, with nearly 60% reporting turnover rates above 10%, and 50% indicating that raising salaries is a method to increase employee stability.

3****Survey Results: Can Distributors Withstand Pressure and Raise Salaries and Increase Staff? Only 33% of distributors have no plans for salary increases in 2017; the rest have already considered or planned it. Regarding the standard for raises, most distributors believe that a 10% increase is acceptable. Although the economy is currently sluggish and distributor profits are far lower than before, we see that many distributors still have significant staffing needs this year. Only 15% have layoff plans, while over 46% have plans to increase staff. This indicates a large demand for personnel, so for sales supervisors/managers or sales staff currently looking for jobs, you are in high demand!

That concludes the content of the "2016 Distributor Labor Cost Survey." We would like to especially thank all friends who participated in this survey for your support and trust in New Distribution. We will do our utmost to provide you with more valuable content and information!

Finally, we welcome you to leave comments and share your views!

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