April 22, 2011 — Without question history does seem to repeat itself, which means people also repeat past acts, behaviors and habits as well as making the same decisions, etc. When studied, this provides a good window into possible future events, circumstance or situations.
For those relatively new personnel employed in the sales and marketing of timeshare intervals who are looking to secure and develop a career– possibly striving towards a retirement objective– it may be wise to first consider the industry’s track record before committing the time and resources required to achieve that objective.
The following is a factual recount of an often ugly era in the timeshare industry that, over the past forty (plus) years, directly affected tens of thousands of ‘workers’. And although some situations have greatly improved in recent times things still aren’t quite right in Paradise.
To begin, if there was ever a scenario of having your cake and eating it, too, it has been the many timeshare developers dating back to the 1960’s who accumulated impressive fortunes on the backs of a mostly free and/or grossly underpaid work force.
Those ‘workers’ were the sales/marketing personnel dating back to an era when developers offered work solely on a 1099 commission-only basis and reps agreed to accept, perform and fulfill the developers’ requirements without any guaranteed salaries, draws, hourly pay, benefits or retirement plans.
As is well known among ‘seasoned’ personnel, it really was wild and crazy times and those workers were so unprotected that when, for example, they were terminated (quite often for bogus reasons), recourse was basically nonexistent and the reps didn’t even have unemployment benefits as a temporary income back-up to at least pay their bills while regrouping.
And there was a lot of abuse, too, because ‘sales-management’, often with the developers’ blessings, could fire any rep for any reason at any time, and often did without so much as a warning regardless of how many sales the rep(s) had previously made. Over the years thousands of them were cut loose on the spot, only to then learn no final paycheck (from earned commissions) was forthcoming, either.
In fact, the unwritten industry motto then, which still pretty much exists to this day among some ‘sales-management’ and developers, was “Hire ‘em in masses, train ‘em in classes, fire their asses, and keep their reserves!”
For thousands of reps over the decades this was often a brutal and financially devasting experience because 80% + – of reps (then, as now) weren’t making the “big bucks” and like most sales/marketing workers in other industries timeshare reps also lived paycheck to paycheck.
However, even when commissions were earned and due, including owed spiffs and other bonuses, and even though the reps were (mostly) paying their taxes, they couldn’t even file a grievance complaint with the ‘State’ because in most jurisdictions, as a matter of policy/law, the ‘State’ did not get involved in ‘commission-only’ (1099) disputes. And timeshare ‘sales-management’ and the developers knew that as well!
Those earnings due also included their reserve funds, which for each rep would be up to thousands of dollars more, and whether the rep was terminated or merely decided it was time to move on, their reserve funds magically disappeared as well.
Regardless of whoever kept those earnings, tens of thousands of reps never saw a penny and the collective total of just those reserve funds alone surely amounted to millions and millions of commission dollars (aka: ‘earnings’) that were never paid out, dating back to the 1960’s.
Throughout much of that era these workers were left to fend for themselves at every level which included, if they could even afford the regular monthly premiums, paying their own expensive individual life and health insurance policies.
And ‘if’ they could afford to take an annual vacation, ironically, the developers turned their backs on them once again, because if they did take a well deserved vacation so they could come back refreshed, etc. that holiday time was without pay and that additional cost (over and above the vacation costs) resulted in hundreds or thousands of dollars in lost ‘income’ (commissions) each time they ‘vacationed’.
Then there was the issue of sick-leave. Yes, sales and marketing reps do become ill and need time off to visit the doctor, stay at home and rest in bed, etc. And that, too, was w/o pay, meaning hundreds and thousands more in earnings (commissions) were lost.
And if all that wasn’t enough there was no real training provided (paid or otherwise) for new hires, and retirement plans or building for the future were obscure concepts. The atmosphere of dog-eat-dog prevailed over the ensuing years as tens of thousands of reps’ fate was cast in stone long before their first day on the job!
Today, of course, much seems to have changed and many developers at least offer and/or provide a ‘benefits’ package that includes retirement options, etc. But my sense is some developers are banking that they’ll not have to pay out those legacy (retirement) and benefit costs.
I suggest that because as far as I’m able to determine those ‘hard’ costs do not seem to be factored into the developers’ selling price, just as they weren’t for over four decades. This, if true, then begs the question, where is the money going to come from to cover those costs?
Take GM for example. Reports suggest that in the price of every new car sold today about $1,600 goes towards ‘legacy costs’ (retirees) and about another equal amount covers those employees working the line today (their salaries, benefits, etc.)
Those numbers are not exact but the point is that when John and Mary buy that new car they are contributing to Billie Bob, who is currently enjoying his golden years, as well as paying for Mary Jane who is putting in her week’s work today on the line attaching those rearview mirrors.
That GM example was just that, an example, and was a comparison to a line worker paid an hourly wage. But for generations GM and many other corporations in many other industries have also provided retirement and benefit packages for their sales/marketing personnel which, I might add, includes salaries, commissions and bonuses and those costs were all indeed computed into their selling prices.
I have no raw data but here is how I see it. Going back to, say, the 1960’s the first interval was sold by a 1099 rep who met a prospect who was invited to the presentation by a 1099 OPC…
From that point on, up to 2008 before the big crash hit, the industry grew exponentially year in and year out and by this decade the timeshare business had collectively become, according to ARDA, a 10 Billion + dollar per year enterprise.
If memory serves me correctly timeshare sales hit that golden ‘Billion’ dollar a year mark sometime in the mid to late 1980’s, so I’m comfortable suggesting that between the 1960’s and 2011 timeshare developers (collectively) have likely sold over $150,000,000,000 (Billion) in ‘intervals’.
Yet I have been unable to locate or document one retiree in all that time from the sales and marketing ranks in the timeshare industry who is enjoying all the customary retirement ‘perks’ during their golden years for a job well done…
So, where does this leave the sales and marketing personnel in this “new and improved” era? Well, the short answer or analogy might be just one word. ENRON!
I say that because in most working relationships between the employee (like ENRON employees) and the company ( a timeshare developer) there is rarely (if ever) an iron clad guarantee that future funds, benefits, etc. will be ‘available’.
And it is that reality that today’s sales and marketing personnel need to wrestle with because nowadays, unlike years gone by, commissions are being lowered, spiffs and bonuses are being eliminated and a lot of those old management and developer tactics as they apply to sales and marketing reps still prevail as well.
I leave you all (including developers and management) today with one final thought that was written some thousand or so years ago and that may be relative and/or applies today, and that is this:
“Thou shalt not muzzle the ox that treadeth out the corn.” And, “The labourer is worthy of his reward.”
Or to put that another way, especially for any myopic career sales and marketing reps: Absent Divine intervention or becoming a force to be reckoned with, you’re on your own, gang!
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©2011 Inside The Gate