Millennials: A Major Demographic Shift in Distribution
Brent Grover, President — Evergreen Consulting
• competitive strategy • distribution management best practices • management strategies • industry perspective • Wholesale Distribution Industry • distribution industry trends • promoting to management • millennials • personnel issues • Brent Grover
Monday, June 12, 2017—Distribution isn't just changing in terms of technology and practices, but also in terms of people. Within the next few years, the industry will face one of its largest ever demographic shifts as a multitude of Baby Boomers retire and far more millennials join the workforce.
Millennials, the generation born between 1980 and the early 2000s, grew up in a very different world. They have different attitudes, values, and motivations. Companies that hope to be successful in the coming decades need to be cognizant of these things if they hope to maintain their success. In this interview, Randy MacLean and Brent Grover discuss how these changes will be affecting distributors.
"Let's start with a question that was probably asked 10 years ago," Brent began. "What's the median age of your sales force? For a lot of distributors, the answer is probably around the early 40s. What's that age today? Odds are it's 10 years older."
Many distributors are well-aware of their aging sales force. One association that we work with ran their own survey and found that the average age of their salespeople was 58. However, hanging onto the same guys doesn't mean that your customers and suppliers are doing the same.
By the year 2020, millennials will comprise more than half of the work force as more millennials begin their careers while more Baby Boomers retire. This thought should terrify any rational business owner because, if you aren't careful, you may find yourself having to sell your way back into your own accounts.
"Part of the problem may be an inability of older salespeople to relate to this younger generation," Brent noted. "If the median age of a sales force is in the late 50s, that means they were born before 1960. As a result, your younger customers will have very different ways of doing things than your salespeople."
"Even if your sales reps can adapt to these changes, it's only a matter of time before they retire," Brent continued. "You're going to need to hire millennials to replace them and this can be a real challenge for distributors. How are you going to find and hire millennials who want to be sales professionals in this field?"
In many cases, the nature of the job we have is very different from the nature of the job they want. Millennials are very technology-savvy, they value collaboration, and they aren't as motivated by money.
"What used to attract people into the field was an unlimited income opportunity," Brent said. "People would expect to work at a company for life, building up a territory and portfolio for annuities that would keep paying commissions over an entire career. They didn't want to leave because they had built up something valuable. However, millennials don't always want to stay with the same company forever."
"Distributors also take a different approach to hiring," Brent continued. "They don't want somebody just out of school. They want people who have held 2 or 3 jobs and know what they want. However, the success rate for this approach is basically 50/50 and the costs of bringing in somebody new are huge because it often takes years before they've built up a profitable territory. If you were going to a casino, would you put down a $150,000 bet knowing that you had a 50% or lower chance of winning?"
Companies like IBM used to be known for their policies of hiring people straight out of school. The logic was that it's always hardest for somebody to quit their first job, they wouldn't have any bad habits to break, and they could more easily be molded into the person needed for the job.
"I'm not sure if IBM still uses that strategy today because people tend to change jobs more frequently nowadays," Brent replied. "What my company used to do was hire people who worked at our suppliers because they were abusive employers. We also hired former teachers at times – since they can make good salespeople – and stole sales reps from competitors."
The bottom line is that many – if not most – of the salespeople today are going to retire within the next 5 years. If companies don't find a way to bring new people into the environment and keep them, they're going to have a hard time in the future. It's something that distributors should keep on their minds because their continued success depends on it.
For more information about Brent Grover, visit: www.evergreenconsultingllc.com