Sale force motivation & CompensationBy Prof. Raghavendran V

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Nature of MotivationThe meaning of word motivate is to

Move or Activate. Motivation is an internal feeling and an energy force within sales person that drives them to behave in a certain way. It can be both the forms of Positive and Negative motivation and its effect on individuals are similar in nature but different in intensity.

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Motivation has a system orientation, which means that goal of individual is shaped by the forces within the individual and its interaction with the surrounding environments. The individual gets the feedback from the environment which either reinforces behavior or dissuades them from pursuing certain goals.

Motivation and satisfaction, which is achieved through a compensation and rewards system are interrelated. While motivation is the drive to satisfy the goals of life, satisfaction is the experience of contentment when one particular is satisfied.

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Importance of MotivationSales organizations are made of human beings

working at different levels and every organization needs people in order to function.

Motivation in itself is a highly complex activity & affected by large numbers of the factors in organization.

Employees in an organization possess a huge amount of information based on the experiences about the structures & processes of the sales organization and market. Sales organizations serve as resource pool & talent

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The success of a sales organization depends on the ability and the style of the functioning of the sales manager to motivate the sale staff.

They get demotivated due:Frequent rejections by customers,Lower esteemCustomer complaintsNature of the jobFrequent travelling

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The Process of motivationThe sales manager need to understand the

process of motivation & uses it to improve firm’s efficiency. He can use this to stimulate sales person to work efficiently.

This starts when a motive prompts people to action. Motives are the primary energizer of behavior. Motives are largely subjective and represent the mental picture of the salesperson. They arise continuously and determine the general direction of the salesperson’s behavior.

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Motivation ProcessMOTIVE

BEHAVIOR

GOAL

TENSION REDUCTION

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Motives & Motivational DrivesMotives are drivers for the behavioral action of

the customers. They can be classified as General, Primary and Secondary motives.

The primary motives are more than comprehensive in nature and based on the physiological needs. It seek to reduce tension or stimulation.

The general motives are curiosity, manipulation, activity & affection. These are unlearned drives to explore & manipulate objects.

The secondary motives are drawn out from society & interaction of individual with the elements of society.

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Motivational DrivesPrinciplesSecurityAchievementApprovalLoyaltyAdvancementLeadershipHuman Behavior

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Theories of MotivationContent theories

Maslow's hierarchy theoryHertzberg’s two factor theoryAlderfer’s ERG theoryMcGregor Theory of X and Y

Process theoriesEquity theoryExpectancy theory

Reinforcement theoriesHull’s Drive theorySkinner’s Reinforcement theory

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Factor’s influencing the salespersonThere are various factors influence the motivation level of

the salesperson. They can be grouped as:Personal characteristics

Current job Career (Exploration, Establishment, Maintenance &

disengagement) Demographic variable Experience and physiological variable

Environmental Conditions Territory potential Strength of competition

Organizational Regulatory norms Sales Supervision Span of control, Leadership style Type of communication Compensation plan Prof. Raghavendran V

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Designing a Motivational ProgrammeSales manager can design a motivational

programme to keep up the motivation & Morale of salesperson in the organization so that the willingness to contribute will be high over long sustained period of time in the organization. The following are the steps involved in designing the motivation programme:Programme ObjectiveMotivational toolsIndividual MethodsGroup MethodsCommunicationAuxiliary EnvironmentFeedback

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Motivational Issues & Evolving Needs

External New Recruits •Enculturate into company•Socialize into sales force•Clarify sales role responsibilities

Internal Recruits•Socialize into sales force•Clarify sale role responsibilities

Hired Guns •Enculturate into company•Socialize into sales force•Clarify sales role responsibilities

Old hands Unsuccessful•Review Person job fit•Supervise & Coach•Improve working environmentSuccessful•Recognize achievement•Develop New skills

NEW EXPERIENCED

NEW

EXPERIENCED

SALES PROFESSION

COMPANY

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Sales CompensationSales Organizations design compensation Plans

with multiple objectives. One of the key objective is attract the quality

salesperson.Improve the productivity levelOptimizing the sales effortReduces the sales expenses and production

costReducing the attrition rate in the firm.Good rapport within the organization

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Characteristics of an effective compensation PlanBased on equality & equityEconomical & CompetitiveFlexiblePerformance of the salesperson

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Factors Influencing the Design of a compensation PlanFinancial ability of the firmSize of the marketGovernment rules & regulationsNature of the productEducational qualifications of sales personWork Experience

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Types of Compensation PlanAn effective compensation and reward system

management involves selection and proper utilization of firm’s reward to direct the sales staff behavior attaining Firm’s objectives.

Compensation is defined as Financial & Non Financial methods for the sales staff.

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Financial CompensationStraight Salary PlanStraight Commission PlanBonus & IncentiveSalary Plus Incentive Plan (Combination

Plan)Drawing account and Commission PlanAllied Methods

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Non –Financial CompensationPromotionsRecognition ProgrammesFringe BenefitsExpense AccountsPerks Sales Contests

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Steps in designing the Compensation PlanDetermine Sales force and compensation

ObjectivesDetermine Major Compensation IssuesImplement Long term & Short term

compensation PlansRelate rewards to compensationMeasurement of PerformanceAppraise the Compensation Plan

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Evaluation of the Sales ForceIt is important to measure and manage the

performance of the salesperson. It is observed that performance measurement and evaluation is done only for difficult jobs in sales organization.

It is crucial process of identification, measurement and management of the sales force in an organization.

Performance appraisal is the process of evaluating the performance & qualifications of the sales force in terms of the requirements of the job to ensure effective administration, including the selection for promotion, rewards and other recognitions on the administration.

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Performance Appraisal ProcessDeciding on the criteria for

measuring performance

Deciding on the conduct of appraisal

Deciding the evaluation of individuals and teams

Comparison of actual performance with standards

Deciding on the frequency of the performance appraisal

The external variables and their influences

Sales force performance appraisal process

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Performance Appraisal ProcessAppraisal Criteria

Relative and Absolute Judgment (evaluation) Trait Behavior Outcome

Performance Rating Forced choice scales Behavior Observation Scales Call Reports Silent Call Monitoring Scores Activity reports Combination methods

Focus of Measure

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Conduct of Performance AppraisalBiasesBase rate informationAvailability heuristicsAnchoringHindsight BiasRegression EffectsFundamental attribution error

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Performance AppraisalIndividual Versus Team AppraisalActual PerformanceFrequencyInfluence of External VariablesBarriers

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Assignment Time: to be submitted by 11th October’ 2011Explain nature & importance of Sales

Motivation.Explain in detail all theories of motivation.

(Content, Process & Reinforcement).Discuss in detail of Motivational ProgrammeDiscover the trends in compensation plan.Why it is difficult to evaluate salespeople

working in teams? Design a self evaluation form by using a rating

scale for a salesperson working in education industry?

End of the module 4By Prof. Raghavendran V