In the October issue, comparisons were made between termination payments for representatives and agents. The example used was that of a Mr Lonsdale, who was an agent selling shoes. His agency contract was terminated and the end result was that the House of Lords ruled that he should not receive the figure of compensation that he was seeking. According to Godloves, this ‘struck a blow for common sense in agencies', implying that future settlements might be governed by this ruling. However, what was not mentioned was the fact that Mr Lonsdale represented another shoe company as well as the one which had terminated his contract and it was this fact that played a large part in the House of Lords' decision. The rest of the article contained a ‘comparison chart' which I consider to be unfairly biased towards representatives. For instance, to compare ‘No unfair dismissal possible in first 12 months' for representatives with ‘No threshold - very large awards after just one year' for agents is grossly unfair, as the time scales are totally different. To compare ‘No retirement payout' with ‘Compensation due' implies that the representative had been working for a company that did not offer a pension scheme, which is unlikely. An agent has to make his or her own arrangements for an income in retirement, hence the need for retirement compensation.

However, let me put the case for employing agents. When a new company starts up, it is unlikely that it would be in a position to employ a sales force, so using agents makes sense. Financially, the only remuneration that an agent receives is the agreed commission, therefore if sales are low to start with, so are the commission payments. More importantly, however, the company is using the experience of the agent to ‘open doors' for it. A new representative selling a new product might find getting appointments and writing orders difficult to start with. An agent simply introduces the new product along with the others in his or her portfolio and is, therefore, more likely to make a sale. As the business grows, the commission payments increase, but, as the agent's costs will have been taken into account when fixing the trade price of the product, the percentage cost to the company stays the same. It has been estimated that the true cost of a representative can run to £60,000 per annum. This takes into account salary, plus all costs such as car, travelling expenses, mobile phone, laptop etc. The representatives would also need managing to ensure that they were working as the company required. The agent, however, being self-employed and working solely on commission, is self-motivated and can be relied upon to make all the calls that are necessary for the good of the business at his or her own expense. All the agency costs have to be met from the commission that we earn and these costs are constantly rising. Has anybody noticed the price of a litre of petrol recently, or how expensive it is to eat out, or the cost of a basic hotel? Costs are spiralling for principals as well. This is why it makes sense to employ agents who have a fixed percentage cost, as well as the experience, to make their business a success right from the start. I have been an agent for 15 years, but I am still one of the ‘new boys'!

There is a place, as well as a need, for both reps and agents and we work alongside each other very happily.  Following the recent instigation of  the Sales Agent of the Year competition, by the BPA, we feel that we must be doing something right in the eyes of the trade, so a little less criticism would be appreciated by us all.

Mike Stanford

Printer friendly version

Email this article to a friend