In this article we will discuss about the problems faced by sales management in rural areas.
Rumblings about the role of HR in organizations have been heard since a long time. Cappelli (2015) writes, many leaders feel that HR managers focus too much on ‘administrivia’ and lack business knowledge, vision and strategic insight. While this is true in urban markets, the problem becomes compounded in rural markets – most HR managers have no idea about market conditions in rural areas, and lack the ability to find people and to administer them, given their urban orientation and training.
Managing people in rural areas is a challenging though the least explored area. However, since most companies wish to establish their rural presence, managers have to learn to manage a rural sales force. They have to learn to deal with problems that arise in dealing with people whose needs and motivations are quite different from people in urban areas.
A number of studies describe the problems faced by rural microfinance institutions (MFIs), which are also problems faced by all other companies venturing into rural marketing. They have long struggled with HR issues. A study by Jha and Singh (2015) of HR issues faced by MFIs found that organizations face problems of high labour turnover, low participation of women in employment, over burden of work, informal hiring, low compensation and lack of training and development facilities. Lombe et al. (2012) found that marginalized women, when they become part of an SHG felt empowered and acquired new energy to face their poor situation in society.
Selvaraj (2012) writes that most of the essentials of HR functions in MFIs are being carried out on an ad hoc basis. Due to lack of standard people policies in the microfinance sector, companies have to follow practices and solve problems as they arise. HR managers in rural areas proceed without manpower planning, and therefore must deal with high employee turnover, lack of second line leadership, lower remuneration and other facilities to employees, lack of a system of rewards and recognition and inadequate organizational system for capacity building. There are also conflicts of orientation and values—companies face difficulties in combining professionalism with a laid back rural lifestyle.
A report on managerial and operational problems of MFIs by IRMA (2006) shows that getting or attracting professionals to augment the HR is a major challenge of the MFIs. A survey report of HR challenges in social enterprises by Intellecap (2012) also found that recruiting qualified staff was the biggest challenge.
Not only is there a dearth of qualified professionals who can work as agents, but hiring them is also usually unaffordable. Even if the MFIs are able to attract some professionals or get the existing staff trained, there is the problem of high turnover of staff. Many MFIs have found it frustrating to lose the professionals and trained staff especially after making serious efforts to recruit and train them.
We can sum up the problems of human resources in rural areas as follows:
1. Availability – Recruiting qualified staff is the biggest human resource challenge because educated people usually prefer to migrate to urban areas. There is usually a shortage of willing and qualified people to work in rural areas.
2. Socially Committed – Since rural marketing often has a social objective, companies seek people who wish to serve the company’s social mission. They want sincere and committed people but finding such people is often difficult.
3. High Attrition – Hiring full time on-roll people in rural areas is expensive, so companies often hire part-time workers on commission basis. Such people may not continue for long with the company. They look for alternate employment especially during the off season when earnings are reduced.
4. Financial Viability – Volume of business in rural areas is not large enough to sustain salaries. So hiring full-time workers is not financially viable.
5. Low Participation of Women – Most of the microfinance clients are women, so are members of the SHGs with which companies must work. Yet, companies have few women in their sales force.
6. Over Burden of Work – Rural salespeople must do a variety of tasks apart from selling. Moreover, travelling and staying facilities are also not as good as in urban areas. This results in over burden of work of the rural workers.
7. Informal Hiring – Much of the hiring in villages is informal. Company managers often lack the skills to work with a large number of informal workers who are not full- time employees.
8. Low Compensation – Compensation is often used as a retaining tool by HR managers. However, in rural areas high salaries are not viable. This creates a hurdle in retaining talent.
9. Lack of Training and Development – A rural sales force has to be trained but most companies lack training and development facilities in rural areas.
10. Promotion and Career Paths – Another hurdle is that there are less promotion opportunities for rural salespeople. This again results in high attrition.
11. Lack of Professionalism – Reconciling a professional sales approach with rural lifestyles is another problem faced by companies. Time-bound targets, for example, often do not work as transport and other facilities are unreliable.
12. Long Gestation – We have seen that rural sales depend on building relationships and moulding opinions. It is thus a long process with a long gestation period. Many companies will find this situation quite unprofitable.
Doing business in rural areas thus comes with its own set of problems. Educated people leave villages to work in urban areas, so organizations struggle with finding and attracting educated, willing and committed salespeople. Companies need good communicators and relationship builders with a commitment to stay for the long term. Voluntary organizations initiating social causes get over this problem by working with people with very high commitment levels. For companies to create such a committed workforce in rural areas, a paradigm shift in approach is required.
Resolving Rural Sales Management Issues:
To achieve the paradigm shift, firms have to overcome several challenges in their approach and working, which are described as follows:
1. Managers must be Trained in Rural Areas:
For successful rural marketing initiatives, managers must have a rural orientation. Rural sales can hardly be managed by urban salespeople who visit small towns and villages occasionally. Managers often have to live in villages for extended periods to understand the local conditions and requirements. They have to understand rural salespeople and the conditions in which they work. A physical presence of company managers also enhances the status of the local workers and serves as a motivating tool. Serving villages from nearby towns will not only result in disconnect with markets but also create supply chain bottlenecks.
2. Recruiting People:
We have seen that for rural sales, companies often look for people who are ‘intrapreneurs,’ or grass root entrepreneurs. Successful strategies like Tata Sky hiring local repairmen, HUL training women as Shakti Ammas, ITC’s Sanchalaks for its e-choupals, Essilor’s rural push or Novartis Arogya Parivar call for hiring and training local but committed workers. Recruiting such people is difficult and requires direct dealing with SHGs in villages and panchayats. Non-availability of educated and trained staff means that companies must develop skills among local workers.
3. Train and Encourage Women Employees:
An important finding in studies about the rural workforce shows that employment of women in MFIs is very low even though most of their customers are women. This problem is faced by medicine and consumer goods companies too. Though women suffer from social and cultural limitations, companies must find ways of incorporate more women into their rural workforce. Nurturing and working with SHGs helps in reaching out to women, but to do so company managers also need to be women so that they are able to connect properly with rural workers.
A way has to be found to keep people from moving away, which calls for innovative compensation structures. Gradual enhancement of responsibilities and remuneration will help in retaining local salespeople. Compensation schemes must include insurance and social security for contractual workers. Companies have to offer innovative compensation packages so that interest of salespeople is sustained, while at the same time keeping an eye on financial viability. Cost reductions can be achieved by adopting local means; for instance, sending goods in a local bus or on a motorcycle helps reduce logistics cost.
5. Break Up Silos:
Companies need to break up departmental silos for rural marketing. None of the departments can function in isolation of each other because for the consumer the company is one. If, for instance, a company is unable to send its engineer to service one machine in a village, or fails to refund even a single customer, the entire village will be lost to future marketing efforts.
While compensation schemes and social benefits can help in reducing attrition, HR policies too have to be changed to address this problem. Social recognition and increase in stature can serve as motivators, and companies need to devise schemes that enhance the local workers’ prestige. Regular communication and commitment to social principles will often help achieve this. Many professionals use MFIs as launching pad for furthering their career. At times even remoteness and backwardness of the area of operation have resulted in high staff turnover. These must be addressed by the HR or sales managers.
Regular on-the-job training, skill development and exposure to best practices is required in rural areas. HR managers must go beyond their brief and help to increase the business of the agent and thereby increase their commissions. Further, performance evaluation has to be oriented not only towards business generated, but also towards groundwork such as demonstrations and relationship-building activities. HR managers also need to develop local trainers over time so that the cost of sending trainers from cities can be avoided.
Urban sales are divided into various distinct functions. Mostly, sales, service, promotion, and HR are distinct entities. Such a system works when volumes are very large and the expenses on each function are justified. But in rural areas this system does not work. It is the rural salesman who must do all the functions required in the village.