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Chapter 5

Organising and Staffing the Salesforce


Learning Objectives
To understand the concepts of the sales organisation, and the basic types of sales organisations To know specialization within the sales organisation, and alternative organizational approaches for major accounts

To determine the size of the salesforce by using various methods

To understand the major stages of salesforce staffing process, consisting of planning, recruiting, selecting, hiring, socialisation and assimilation To realise the importance of the various steps included in planning, recruiting, and selection stages
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Concepts of Sales Organisation

A sales organisation assists the sales manager to carry out needed tasks efficiently and effectively to achieve results The basic concepts of the sales organisation are: Degree of centralisation Degree of specialisation Line or staff positions Market orientation Effective co-ordination


Basic Types of Sales Organisations

Sales organisations are generally classified into four basic types: Line Organisation Line and staff organisation Functional organisation Horizontal organisation We shall discuss main characteristics, advantages, and disadvantages of each type of sales organisation
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Line Organisation
Head Marketing Sales Manager

Area Sales Manager1

Area Sales Manager2

Area Sales Manager3

Area Sales Manager4

salespeople salespeople salespeople salespeople

Characteristics: All managers have line authority to direct and control subordinates. Used in small firms / departments Advantages: Simple organisation, clear authority, quick decisions, low cost Disadvantages: No support to line managers from subordinates who have specialised knowledge / skills. Less time for planning / analysis
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Line and Staff Organisation


Marketing Research Manager

Sales Manager

Promotional Manager

Customer Service Manager

Area Sales Manager-1

Area Sales Manager-1

Area Sales Manager-1




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
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Functional Organisation

Marketing Research Manager

Sales Manager

Promotional Manager

Customer Service Manager

Area Sales Manager #4


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
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Horizontal Organisation
Research & Design Team: Customer Research Product / Service Design

Operations Team: Production / Operations Quality Assurance Systems Engineering

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

Customer Support Team: Information Service Training

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

Characteristics: Removes management levels & departmental boundaries. Except planning team, all others are members of crossfunctional teams. Used by firms having partnering relationships with customers. Advantages: Reduction in supervision, unnecessary tasks, & cost; Improved efficiency and customer responses.
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Specialisation within Sales Organisation

Needed to increase effectiveness of salesforce Done by expanding basic sales organisation Basis of specialisation Geography Type of product Market Combination of above Criteria for selection (1) nature of product, (2) salesforce abilities, (3) demands of selling job, (4) customer and market facts
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Geographic Specialisation

Marketing Research Manager

General Sales Manager

Promotion Manager

Customer Service Manager

Branch Sales Manager-1

Branch Sales Manager-2

Branch Sales Manager-3

Branch Sales Manager-4





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
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Product Specialisation
Used when the company has many products and / or brands Two types of product specialisation
(x). Sales organisation with product specialised salesforce (y). Sales organisation with product managers as staff specialists

Marketing Research Manager

General Sales Manager

Promotion Manager

Sales Training Manager

Area Sales Managers Product Group A

Area Sales Managers Product Group B

Salespeople Product Gr. A

Salespeople Product Gr. B

Fig. x Sales Organisation with product specialised salesforce

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Product Specialisation (Continued)


Marketing Research Manager

Promotion Manager

General Sales Manager Area Sales Managers

Product Manager Product Gr. A

Product Manager Product Gr. B


Fig. y Sales Organisation with Product Managers as Staff Specialists

In fig. x: Characteristics: Salespeople in each product group sell only the products in that group Advantage: Each product gets specialised attention from the salesforce Disadvantage: Sometimes, more salespeople contact the same customer, resulting in customer dissatisfaction and higher cost In fig. y: Characteristics: Each product manager plans and implements marketing plan, for a product group Advantage: Corrects the problem of duplication calls on a customer by salespeople Disadvantage: Lack of product specialisation by salespeople SDM-Ch.5 12

Market Specialisation
General Sales Manager

Sales ManagerInternationalMarkets

Sales ManagerCommercial

Sales ManagerGovernment

Sales ManagerConsumer Markets

Area Sales Mgrs International

Area Sales ManagerCommercial

Area Sales ManagerGovernment

Area Sales MgrsConsumer Markets

Sales Executives




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 13


Combination Sales Organisation

Director Sales & Marketing

General Manager Sales - North

General Manager Sales - East

General Manager Sales - West

General Manager Sales - South

Regional Sales Mgr. Govt.

Regional Sales Mgr. - Commercial

Regional Sales Mgr. - Dealers




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
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Alternatives for Major Accounts

Major accounts / customers are called by various names like key accounts, corporate accounts, house accounts They make up a large share of a firms sales volume and profits Firms use the following alternative approaches to deal effectively with them Create a position of major / national account manager Use existing territory sales managers Create a separate division Create a separate salesforce
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Size of the Salesforce

How many salespeople needed (or salesforce size) to achieve a firms 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:
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Workload Method
Assumption: All salespeople have equal workload Steps involved to calculate salesforce size are: 1) Classify customers as per their sales potential 2) Decide time per sales call and call frequencies for each class of customers 3) Calculate total market workload = (1) x (2) in hours 4) Decide total work time available per salesperson 5) Divide total work time available by different activities per salesperson in hours 6) Calculate total number of salespeople needed
total market workload (3) total selling time available per salesperson (5)



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 S N (1 T P N=Number of salespeople needed, ) salesforce size or 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 new salesperson to reach average productivity



Incremental Method
It is based on marginal analysis theory of economics Basic concept: Net profits will increase when additional salespeople are added, if the incremental sales revenues exceed the incremental costs Merit: Conceptually accurate, as it quantifies relationships between salesforce size, sales, costs, profits Demerit: Can not be used if historical data on sales and costs are not available


Salesforce Staffing
It is one of the most challenging and important responsibilities / activities of sales management Salesforce stages: Planning Recruiting Selecting Hiring Socialisation We shall briefly discuss each of the above stages
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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 for various stages / activities of staffing process Generally in a medium / large size company, middle and senior levels H.R. and sales managers are responsible Proper coordination needed between sales, marketing, and HR executives
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Planning Stage (Continued) Decide the number of salespeople needed

Steps followed by each territory sales manager to plan requirement of sales people: 1) Decide optimum salesforce size (using methods discussed earlier) 2) Add number of promotions, retirements, transfers out, terminations, resignations expected from existing salespeople 3) Subtract expected transfers into the territory and existing salesforce 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 new salespersons 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 salesperson would work E.G. nature of customers, competitors, products. (2) Determine duties and responsibilities of the salesperson. Obtain information from sales managers, customers, etc.
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Preparing a Job Description

It is a written document developed from the job analysis The detailed job description is a useful tool for recruiting, 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 and responsibilities, location and geographic area to be covered



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
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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
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Finding the Sources of Sales Recruits

For identifying prospective candidates, firms use internal and external 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 built over number of years Evaluating factors are: Performance rating of salespeople, after 2 years working Percentage of salespeople retained, after 2 years working Total cost of recruiting Selecting most effective source of recruiting at least cost For a new company, selection depends on cost Contacting candidates through the selected source is done by H. R. department
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Selecting Salesforce
Selection process consists of seven major selection steps / tools Companies differ in using selection tools, depending on expenditure budget and time available Major selection tools / steps are: Screening resumes Application blank Initial interview Intensive interview Testing Reference check Physical examination
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Screening Resumes
It is done when the company receives many resumes This step / tool not required, if somebody else like employment agency does initial screening Initial screening of resumes are done by comparing with job specifications

Application Blank
Widely used, it is a methodical way of collecting relevant information from the applicant Advantages of using application blank (also called formal application form) are: (1) Easy comparison of many applicants (2) Useful for asking question during interview sessions
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Widely used selection tool A good predictor of the candidates performance Initial interviews are used for screening candidates Intensive interviews are conducted to get indepth view of candidates 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 candidates fitness for a job
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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 intelligence quotient (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
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Reference Checks
They are important due to possibilities of resume frauds and false personal information They are done by letters / e-mails, telephones, or personal visits Instead of candidates references, previous employers / customers to be included for reference checks

Physical Examination
Objective is to find a physical problem that may prevent job performance of an applicant Most companies want their prospective employees to undergo physical examination Increasing number of firms ask applicant to complete the health information form without seeing a medical doctor
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Hiring Stage
After completing selection process, a list of candidates to be hired is made 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 the job offer and continues until the person is assimilated into the company culture Assimilation is the second stage of socialisation process Companies have this process, in order to retain new salespeople
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Key Learnings
A sales organisation assists a sales manager to carry out needed tasks efficiently and effectively Basic types of sales organisations are : (1) line, (2) line and staff, (3) functional, (4) horizontal Specialisation within sales organisation, which are needed to increase effectiveness of salespeople, are: (a) geographic, (b) product, (c) market, (d) combination Companies use alternate approaches to deal effectively with major accounts Methods available for deciding optimum salesforce size are: workload, sales potential, and incremental
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Key Learnings (Continued)

Salesforce staffing process includes five stages: planning, recruiting, selecting, hiring, socialisation Planning stage includes (1) establishing responsibilities, (2) deciding number of salespeople needed, (3) profiling the type of salespeople needed Recruitment stage consists of (a) finding sources of sales recruit, (b) evaluating and selecting recruitment sources, (c) contacting candidates Selection process consists of seven steps / tools: (1) screening resumes, (2) application blank, (3) initial interview, (4) intensive interview, (5) testing, (6) reference check, (7) physical examination Hiring stage includes (a) making the job offer, (b) persuading applicant to accept it Socialisation stage is required to retain new salespeople
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