Organizing and Staffing the Salesforce

The management process consists of first setting the firm’sobjectives and goalsPlanning the suitable strategies and actions to achieve thestated objectives and

goalsTo implement the strategies and action plans, the companymust have an

organization structure and people.

Introduction

Concepts of Sales Organisation

• A sales organization assists the sales manager tocarry out needed tasks efficiently and effectively

• The basic concepts included in sales organization are:• Degree of centralization• Degree of specialization• Line or staff positions• Market orientation• Effective co-ordination

Basic Types of Sales Organisations

Sales organizations are generally classified into fourbasic types:

• Line Organization

• Line and staff organization

• Functional organization

• Horizontal organization

We shall discuss main characteristics, advantages, anddisadvantages of each type of sales organization

Line Organisation

Characteristics: All managers have line authority to direct and controlsubordinates. Used in small firms / departments

Advantages: Simple organisation, clear authority, quick decisions, low cost

Disadvantages: No support to line managers from subordinates who havespecialised knowledge / skills. Less time for planning / analysis

Line and Staff Organisation

Characteristics: Specialist staff managers are available for senior marketing /

sales managers. Staff managers’ role is to assist / advise line managers. Used in

medium and large size organisations

Advantages: Better marketing decisions, superior sales performance

Disadvantages: High cost and coordination, slower decision making, conflict may

arise if staff managers’ role is not clear

Functional Organisation

Characteristics: Each functional specialist has line responsibility over

salespeople. Used by a large firm with many products / market segments,

minimising line authority to functional managers

Advantages: Qualified specialists guide salesforce, simple to administer

Disadvantage: confusion due to more managers giving orders to salesforce

Horizontal Organisation

Characteristics: Removes management levels & departmental boundaries.Except planning team, all others are members of cross-functional teams. Usedby firms having partnering relationships with customers.

Advantages: Reduction in supervision, unnecessary tasks, & cost; Improvedefficiency and customer responses.

Research & Design Team:•Customer Research•Product / Service Design

Planning Team:•Strategic Planning•Accounts, Finance•HR, Administration•Chief Operation Officer

Operations Team:•Production / Operations•Quality Assurance•Systems Engineering

Customer Support Team:•Information•Service•Training

Customer Satisfaction Team:•Sales & Marketing•Pricing, Promotion•Channels, Logistics

Specialisation within Sales Organisation

• In order to increase effectiveness of Salesforce

• Done by expanding basic sales organization

• Basis of specialization are factors such as :

• Geography

• Type of product

• Market

• Combination of these factors

• Criteria to be used – (1) meeting customer needs, (2)nature and number of products (3)sales forceabilities, (4)Sales cost

Geographic Specialisation

Characteristics: salespeople, assigned geographic areas, are responsible for all

selling activities to all customers within assigned areas. Branch sales managers

adjust marketing plan to local needs

Advantages: Better market coverage and customer service, more control over

salesforce, quick response to local conditions & competition

Disadvantages: Limited specialisation of marketing tasks. Hence, it is combined

with product / market sales organisation

Product Specialisation

• Used when the company has many products and / or brands

• Two types of product specialization

(a). Sales organization with product managers

(b). Sales organization with product specialists Salesforce

Head-Marketing

Marketing ResearchManager

GeneralSales Manager

Area Sales Managers –

Product Group ‘A’

Salespeople –Product Gr. ‘A’

Area Sales Managers –

Product Group ‘B’

Salespeople –Product Gr. ‘B’

PromotionManager

Sales TrainingManager

Fig. ‘x’ Sales Organisation with product specialised salesforce

Fig. ‘y’ Sales Organisation with Product Managers as Staff Specialists

In fig. ‘x’: Characteristics: Salespeople in each product group sell only the products in thatgroup

Advantage: Each product gets specialized attention from the Salesforce

Disadvantage: Sometimes, more salespeople contact the same customer, resulting incustomer dissatisfaction and higher cost

In fig. ‘y’: Characteristics: Each product manager plans to ensure attention to product linesand brands at planning level.

Advantage: Corrects the problem of duplication calls on a customer by salespeople

Disadvantage: Lack of product specialization by salespeople

Head-Marketing

Marketing ResearchManager

PromotionManager

GeneralSales Manager

Area Sales Managers

Salespeople

Product Manager

Product Gr. ‘A’

Product Manager

Product Gr. ‘B’

Product Specialisation (Continued)

Market Specialisation

• Characteristics: Desirable when customers are classified by type, user industry, or

channel. Salespeople carry out all activities for all products only for specific

customer groups

• Advantages: Meets needs of specific customer groups, implements customer-

centred philosophy of the company

• Disadvantages: Geographic duplication, high cost

National sales manager

Sales Manager-Commercial

Area Sales Managers-Commercial

Salespeople

Sales Manager-Government

Area Sales Managers-Government

Salespeople

Combination Sales Organisation

• Characteristics: Many firms use some combination of specialisation

organisations, called hybrid or combination sales organisation, with a view

to minimise disadvantages and maximise advantages of specialisation

organisations

• Figure above shows combination of geographic and market specialisations

Director –Sales

& Marketing

General Manager

Sales - North

General Manager

Sales - East

Regional SalesMgr. – Govt.

Salespeople

Regional SalesMgr. -

Commercial

Salespeople

Regional SalesMgr. - Dealers

Salespeople

General Manager

Sales - West

General Manager

Sales - South

Alternatives for Major Accounts

• Major accounts / customers are called by variousnames like key accounts, National accounts, headquarter accounts, corporate accounts, houseaccounts

• They make up a large share of a firm’s sales volumeand profits

• Firms use the following alternative approaches todeal effectively with them

• Create a major or key account management team

• Use existing sales managers

• Creating a separate division

• Creating a separate Salesforce

Size of the Salesforce

• How many salespeople needed (or salesforce size) to achieve a firm’s sales and profit objectives is a key decision

• Methods available to decide optimum salesforce size are as follows:

• Workload

• Sales potential (or breakdown)

• Incremental

• We shall discuss these methods briefly:

Workload Method

• Assumption: All salespeople have equal workload

• Steps involved to calculate Salesforce size are:

1) Group present and potential customers according to theirsales potential

2) Decide time per sales call and call frequencies for each classof customers

3) Calculate total market workload necessary to cover the entiremarket

4) Decide total work time available per salesperson

5) Divide total work time available by different activities persalesperson in hours

6) Calculate total number of salespeople needed

)5(

)3(

nsalespersoperavailabletimesellingtotal

workloadmarkettotal

Workload Method (Continued)• Advantages: simple method, conceptually sound, used for all types of

selling situations

• Disadvantages: Neglects sales productivity & salesforce turnover

Sales Potential / Breakdown Method• The formula used is: , where

N=Number of salespeople needed, or salesforce size

S=Annual sales forecast for the company in value (Rs. Million)

P=Estimated productivity of the average salesperson in sales (Rs.Million)

T=Estimated percentage of annual salesforce turnover

• Advantages: Simple and straight forward

• Disadvantages: Conceptually weak; lead time needed for a newsalesperson to reach average productivity

)1( TP

SN

Incremental Method

• It is based on marginal analysis theory of economics

• Basic concept: Net profits will increase when additionalsalespeople are added, if the incremental salesrevenues exceed the incremental costs

• Merit: Conceptually accurate, as it quantifiesrelationships between salesforce size, sales, costs,profits

• Demerit: Can not be used if historical data on sales andcosts are not available

Salesforce Staffing

• It is one of the most challenging and important

responsibilities / activities of sales management

• Salesforce Staffing Process includes following

stages:

• Planning

• Recruiting

• Selecting

• Hiring

• Socialisation

• We shall briefly discuss each of the above stages

Planning Stage• It consists of three steps:

• Establish responsibility for staffing process

• Decide number of salespeople needed

• Outline the type of salespeople needed• Establish responsibility for staffing process

• Company management decides responsibilities forvarious stages / activities of staffing process

• Generally in a medium / large size company,middle and senior levels H.R. and sales managersare responsible

• Proper coordination needed between sales,marketing, and HR executives

Planning Stage (Continued)Decide the number of salespeople needed

• Steps followed by each territory sales manager to planrequirement of sales people:

1) Decide optimum salesforce size (using methods discussedearlier)

2) Add number of promotions, retirements, transfers out,terminations, resignations expected from existing salespeople

3) Subtract expected transfers into the territory and existingsalesforce

4) Make a total of new salespersons needed

• Territory sales managers submit their requirements to national /general sales manager, who calculates the total number of newsalespersons to be hired

Outline Type of Salespeople Needed

The steps involved in the process are:

• Conducting a job analysis

• Preparing a job description

• Developing job qualifications / specifications

Conducting a Job Analysis• It is done by a person from sales / H. R. department,

or a consultant. It consists of two tasks:

(1) Analyse environment in which the salespersonwould work – E.G. nature of customers, competitors,products.

(2) Determine duties and responsibilities of thesalesperson. Obtain information from sales managers,customers, etc.

Preparing a Job Description

• It is a written document developed from thejob analysis

• The detailed job description is a useful tool forrecruiting, selecting, training, compensating,and evaluating salespeople

• Some of the points it generally covers are:• Job title, reporting relationship, types of products /

services sold, types of customers, duties andresponsibilities, location and geographic area to becovered

Developing Job Qualifications / Specifications

• These are generally based on job description

• Job specifications / qualifications include education, sales

experience, skills, and personality traits

• Many studies done, but no generally accepted job

qualifications for selecting salespeople, due to many types of

sales jobs

• Some methods used for developing job specifications are as

under:

• Study job description. Useful for a new company

• Analyse personal histories of salespersons

• Ask customers

Recruiting Salesforce

• Recruiting include activities to get individuals who will apply

for the job

• The general purpose of recruitment is to get enough qualified

candidates, to enable company select the right persons

• H.R. and sales managers must update information on

government employment regulations

• Recruiting stage / process includes following activities:

• Finding the sources of sales recruits

• Evaluating and selecting recruiting sources

• Contacting candidates through the selected

source

Finding the Sources of Sales Recruits

• For identifying prospective candidates, firms use internal andexternal sources. They include:

Internal Sources External Sources

• Employee referral

programmes

• Current employees

• Promotions and transfers

• Advertisements in

newspapers and journals /

magazines

• The Internet (job sites)

• Educational institutions

• Employment agencies

• Job fairs

• Other companies

Evaluating and selecting Recruiting Sources

• Recruiting sources are evaluated based on the database builtover number of years

• Evaluating factors are:

• Performance rating of salespeople, after 2 yearsworking

• Percentage of salespeople retained, after 2 yearsworking

• Total cost of recruiting

• Selecting most effective source of recruiting atleast cost

• For a new company, selection depends on cost• Contacting candidates through the selected source is done by

H. R. department

Selecting Salesforce

• Selection process consists of seven major selection steps /tools

• Companies differ in using selection tools, depending onexpenditure budget and time available

• Major selection tools / steps are:

• Screening resumes

• Application blank

• Initial interview

• Intensive interview

• Testing

• Reference check

• Physical examination

Screening Resumes

• It is done when the company receives many resumes

• This step / tool not required, if somebody else likeemployment agency does initial screening

• Initial screening of resumes are done by comparing with jobspecifications

Application Blank

• Widely used, it is a methodical way of collecting relevantinformation from the applicant

• Advantages of using application blank (also called “formalapplication form”) are:

(1) Easy comparison of many applicants

(2) Useful for asking question during interview sessions

Interviews

• Widely used selection tool

• A good predictor of the candidate’s performance

• Initial interviews are used for screening candidates

• Intensive interviews are conducted to get indepth view ofcandidates

• Interview structure / type of interviews:

• Structured / patterned / guided interviews

• Unstructured / non-directed / informal interviews

• Semi-structured interviews

• Behaviour and performance based interviews

• Stress interviews• Purpose is to decide a candidate’s fitness for a job

Testing

• Many firms use tests as a selection tool – EG P&G, IBM

• Purpose of testing: To find whether applicants have traits /characteristics that lead to success in sales job

• Type of selection tests:

• Aptitude tests measure ability for selling and learning

• Intelligence tests find out mental intelligence or intelligencequotient (IQ)

• Interest tests find out level of interest in a sales career

• Knowledge tests measure knowledge of products, markets, etc

• Personality tests find out attitude or traits like empathy, self-confidence

• Tests must have reliability and validity

• Tests should be one of the selection tools and not the only tool

Reference Checks

• They are important due to possibilities of resume frauds and falsepersonal information

• They are done by letters / e-mails, telephones, or personal visits

• Instead of candidate’s references, previous employers / customersto be included for reference checks

Physical Examination

• Objective is to find a physical problem that may prevent jobperformance of an applicant

• Most companies want their prospective employees to undergophysical examination

• Increasing number of firms ask applicant to complete the healthinformation form without seeing a medical doctor

Hiring Stage

• After completing selection process, a list of candidates to be hired ismade

• In hiring stage, two activities are performed:

(1) The company making the job offer

(2) Persuading the applicant to accept it

Socialisation Stage

• It is the process through which new salespeople learn values,norms, attitudes, and behaviour of people working in the firm

• Socialisation process starts before the new salesperson accepts thejob offer and continues until the person is assimilated into thecompany culture

• Assimilation is the second stage of socialisation process

• Companies have this process, in order to retain new salespeople

An effective socialization and assimilation process can help :

Increase job satisfaction and performance of salespersonReduce turnover of people and cost of the companyGive positive image to the company and the jobMinimize job related uneasiness for the salesperson