The Motivation, Compensation and Evaluation

By Prithwi Tilak Banerjee Assistant Professor

Saturday, March 30, 2013 Aravali Institute of Management 1

Motivation and Sales force

Maslow Physiological and safety needs Social needs Alderfer Existence Herzberg Hygiene Sales force motivators Salary Commission incentive Group incentive Basic training Encouragement & Contact of supervisor Sales meetings Motivators Publicizing comparative performance Advanced training Special perquisites Travel prize Participative goal setting Opportunity for promotion Individual incentives

Relationship

Esteem needs

Growth

Self actualization
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Special recognition for outstanding performance

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The basic differences occurring

Sales managers Vs Salespeople Sales managers perceive these factors more than what sales people think Salespeople value these factors more highly than what sales managers perceive
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Motivators

De-motivators

Competition/prizes Targeted incentives

Personal problems

Fringe benefits

Lack of Advancement Lack of security Hours of work Supervisory relations

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Financial Compensation Plans

Type of Plan Fixed Salary Advantages Simple to administer; planned earnings facilitates budgeting and recruiting; salespersons loyalty enhanced; more control on non-selling activities Disadvantages No financial incentive to improve performance; pay often based on seniority, not merit; salaries may be a burden to new firms or to those in declining industries Common Uses Sales trainees; sales support

Commission

Income linked to results; strong financial incentive to improve results; costs reduced during slow sales periods; less operating capital required

Difficult to build loyalty of sales-force to company; less control of non-selling activities

Real estate; insurance; wholeselling; securities; cars

Combination

Flexibility allows frequent reward of desired behavior, may attract high-potential but unproven recruits

Complex to administer; may encourage crisis-oriented objectives

Widely used-most popular type of financial pay plan

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Generalized Compensation
Sales response function (Product type/ Market conditions) Firms objective Market development required 50% Fixed and 50 % Slab system 75% Fixed and 25% bonus Fixed Fixed plus productivity based bonus
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No market development required 25% Fixed and 75% variable 50% Fixed and 50% variable Fixed Fixed

Individual

High Competition

Moderate competition Low competition Group

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Sales force Evaluation criteria

Market condition (Product life cycle) Type of Product Search attributes (example Non durables) Experience attributes (example Durables / Industrial Prod.) Credence attributes (example Services)

Introductory phase of Product life cycle

Growth phase Low competition Maturity phase High competition
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Displays organized

Demonstration

No evaluation for salespersons required

No. of calls

New retail outlets opened and Sales Market share

New Service outlets Sales

Customer base

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Evaluation of channel members

Market condition (Product life cycle) Type of Product Search attributes (example Non durables) Shelf space Inventory maintained Sales Experience attributes (example Durables / Industrial Prod.) Demonstration Credence attributes (example Services) No evaluation for channel required No. of calls

Introductory phase of Product life cycle Growth phase Low competition Maturity phase High competition
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Customer service

Market share

Sales

Customer base

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The process of target setting

Market condition (Product life cycle) Type of Product Search attributes (ex: Non durables) Experience attributes (ex: Durables / Industrial Production) Bottoms up Credence attributes (ex: Services)

Introductory phase of Product life cycle Growth Low competition Maturity High competition
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Bottoms up

Top Down

Top down

Bottoms up

Bottoms up

Top down

Top down

Bottoms up

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Companies & Salary structure

Sales response function (Product type/ Market conditions) Firms objective Market development required ITC Branded foodsSalary partly fixed and partly slab based variable component Tata motors- Fixed Salary plus Bonus as the Variable component No market development required ITC cigarettesSalary mainly composed of commission based variable component Tata Steel- Salary composed of fixed as well as well commission based variable component . Fixed salary Ashapura- Fixed salary

Sales is an Individual activity

High Competition

Moderate competition

Low competition Sales is a Group activity

Britannia Arrowroot biscuit. Fixed salary Caf Coffee DayFixed salary plus productivity bonus

Saturday, March 30, 2013

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Saturday, March 30, 2013

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