Nerolac Sales Force Management

Sales Force Management/Nerolac/Group8 Page 1

2011

A Report on

“SALES FORCE MANAGEMENT AT

NEROLAC PAINTS INDIA”

MASTERS OF BUSINESS ADMINISTRATION

SHRI JAIRAMBHAI PATEL INSTITUTE OF BUSINESS MANAGEMENT AND COMPUTER

APPLICATIONS, SJPI(NICM)

GUJARAT TECHNOLOGICAL UNIVERSITY,

AHMEDABAD

Submitted By:

Arvind Upadhyay (B-4)

Gaurav Verma (B-13)

Aditi Goyal (B-18)

Dimple Thandani (B-49)

Basant Bagchandani (B-51)

Submitted To:

Prof Krunal Joshi


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PREFACE

The India makes high progress on industrial levels. Due to liberalization and globalization

industrial and business opportunities are increasing. So to achieve this opportunities demand of

competitive management and skilled manager are also being increased. MBA Program is very

well for this necessity. Because it is well structure and integrated course of management

studies. In MBA practical knowledge is as necessary as theoretical knowledge.

Today in the age of globalization where cutthroat competition is prevailing in the

market, theoretical knowledge is not enough beside on this practical knowledge gives

experience and presents the true picture of theoretical knowledge.

As a part of the Sales and Distribution Course project we choose to study the Sales Force

Management at Nerolac, India.

Undergoing this study project at was very interesting and one of the finest experiences

during our study.


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ACKNOWLEDGEMENT

Over the year, we have received tremendous support from my teachers, parents, friends

and my guides. We am indeed thankful to them. We would take this opportunity to express my

gratitude for the sustained support we have received from Nerolac Paints Pvt. Ltd. for

providing us an opportunity to carry out this project.

Sincere thanks to our faculty and guide Prof. Krunal Joshi helped us throughout the

internship and guided in all the aspects of the project.

We wish to express my deep sense of gratitude to Mr. Vishrant Gandhi,(Zonal Sales

Officer, Industrial Sales) for supporting and guiding me. He was the one without whose

cooperation the project would not have been a success. His guidance, encouragement and

help were much indeed appreciated.

Besides, this project made us realize the value of working together as a team and as a

new experience in working environment, which challenges us every minute.

Lastly, we offer my regards to all of those who supported us in any respect during the

completion of the project.

We take sole responsibility for any errors remaining. Any comments, observation,

constructive criticism and suggestion for further improvement of the report are welcome.


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TABLE OF CONTENTS

PREFACE ................................................................................................................................................................ 2

ACKNOWLEDGEMENT ............................................................................................................................................ 3

1. INTRODUCTION ............................................................................................................................................. 5

1.1 HISTORY ................................................................................................................................................ 5

1.2 KANSAI NEROLAC PAINTS LIMITED ........................................................................................................ 5

1.3 CORPORATE VALUES ............................................................................................................................. 6

1.4 THE HR PHILOSOPHY ............................................................................................................................. 7

1.5 CULTURAL ETHOS .................................................................................................................................. 8

1.6 OPEN DOOR POLICY .............................................................................................................................. 8

2. MEANING & THEORIES OF SALES FORCE MANAGEMENT ............................................................................... 9

2.1. SALES FORCE OBJECTIVES ...................................................................................................................... 9

2.2. SALES FORCE MANAGEMENT AT NEROLAC ......................................................................................... 12

2.3. SALES STRUCTURE AT NEROLAC .......................................................................................................... 15

2.4. RECRUITMENT AND TRAINING ............................................................................................................ 16

2.4.1. RECRUITMENT AT NEROLAC: ...................................................................................................... 17

2.4.2. SELECTION AT NEROLAC ............................................................................................................. 19

2.4.3. TRAINING OF SALES PERSONNEL................................................................................................. 22

2.5. JOB ANALYSIS & JOB DESCRIPTIONs .................................................................................................... 24

2.5.1. JOB ANALYSIS ............................................................................................................................. 24

2.5.2. JOB DESCRIPTION .................................................................................................................... 24

2.5.3. QUALIFICATIONS, EXPERIENCE AND JOB DESCRIPTIONS AT NEROLAC ...................................... 25

3. DESIGNING THE SALES FORCE ...................................................................................................................... 27

3.1. OBJECTIVES OF SALES FORCE AT NEROLAC .......................................................................................... 29

3.2. DEFINING THE SALES TERRITORY ......................................................................................................... 30

3.3. DETERMINING SIZE OF THE SALES FORCE ............................................................................................ 31

4. NEROLAC’S PERFORMANCE APPRAISAL SYSTEM ......................................................................................... 32

4.1. METHODS ........................................................................................................................................... 33

4.1.1. KRA AT NEROLAC ........................................................................................................................ 36

4.2. COMPENSATION AT NEROLAC............................................................................................................. 37

4.2.1. PLAN FEATURE ............................................................................................................................ 37


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1. INTRODUCTION

1.1 HISTORY

It was founded in 1920 as Goodlass Nerolac Paints Ltd. It was formerly known as

Goodlass Nerolac Paints Ltd. In 2006, Company changed its name to Kansai Nerolac

Paints Limited.

It has 5 paint manufacturing plants and about 6-7 contract manufacturers.

The Nerolac owned plants are at:

Jainpur (Uttarpradesh)

Bawal (Haryana)

Lote, Chiplun (Maharastra)

Chennai (Tamilnadu)

Hosur (Tamilnadu)

1.2 KANSAI NEROLAC PAINTS LIMITED

Kansai Nerolac Paints Ltd (formerly known as Goodlass Nerolac Paints Ltd) is largest in

industrial paint and second largest decorative paint company based in Mumbai. It is a

subsidiary of Kansai nerolac paints, JAPAN.

It is engaged in the industrial, automotive and powder coating business.

It develops and supplies paint systems used on the finishing lines of electrical

components, cycle, and material handling equipments, bus bodies, containers and

furniture industries.


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Kansai Nerolac has always believed that the key to its business is :

Technology

Research & Development

Innovations

Quality

KNPL has 5 Division :

Decorative

Industrial Coating. (General Industries & Automotive)

Powder Coating

High Performance Coating

Pre Treatment Chemicals

1.3 CORPORATE VALUES

Vision values and culture: In today’s dynamic business environment, no organization

can afford to survive without a well-articulated and carefully thought vision stating the

overall strategic direction and long-term future of its business.

“It is our vision to leverage global technology, for serving our customers with superior

coating systems built on innovative and superior products and world class solutions, to

strengthen our leadership in Industrial coatings and propel for leadership in

Architectural coatings, all to the delight of our stakeholders.”

The company firmly believe that it is not only the vision of where they wish to go which

will form a cornerstone of all their further growth, but also their conviction to the fact

that the values based proposition has to be ultimate foundation of their business.


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To this end they consciously have internalized and been practicing these values in all

their business transactions though human beings:

i) Innovation

ii) Entrepreneurial

iii) Responsive

iv) Simplicity

v) Team Orientation

1.4 THE HR PHILOSOPHY

At Nerolac, they recognize their human resources as extremely important and

critical assets. They honor the dignity of each individual, irrespective of position and highly

value the feelings and emotions of people.

Their Human Resource Policy is, to facilitate creation of synergy, mutuality and

interdependence between individual and corporate development and growth through total

employee involvement and building an enabling work culture in the organization.

Informality in interactions, transparency and openness in communications at all levels,

and an enabling work environment supporting high autonomy of work, transparency and an

objective subjectivity of Performance Management System, fair dealing, tremendous care

and concern for people are a few of the softer aspects of permeable people management

environment which represent the organizational climate and culture.


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1.5 CULTURAL ETHOS

Vision driven organization

Employees feel pride in being part of the organization

Recognition of human resources as extremely important and critical assets

High level of human dignity

Transparency and openness among employees at all hierarchical levels

Performance-linked reward system

Management and employee commitment to organization values is high

Autonomy in work is high

High commitment to quality products

1.6 OPEN DOOR POLICY

Working together requires that we have a friendly atmosphere based on trust and

respect amongst all of us.

At Nerolac we follow an Open Door policy. Any person is free and welcomed to

share good idea, suggestion, doubt, problem about job or work place, or

uncertainties about one’s future in the organization. An open and transparent

communication is appreciated.


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2. MEANING & THEORIES OF SALES FORCE

MANAGEMENT

"Sales force management is a distinct process, consisting of planning, organizing, staffing,

directing and controlling the selling effort by use of sales force to determine and accomplish the

sales force objectives".

In our present context:

1. Planning implies determining sales force objectives, formulating a strategy and scientific

and systematic estimation of sales force requirements over a period of time.

2. Organizing means determining the necessary component tasks to achieve sales force

objectives and grouping and assigning responsibilities to them.

3. Staffing involves recruiting, selecting, training and compensating salespeople and

making plans for meeting future staff needs of the organization.

4. Directing means guiding, motivating and supervising the sales people.

5. Controlling involves those evaluative activities that are essential to ensure that

objectives are accomplished as planned.

2.1. SALES FORCE OBJECTIVES

Companies must carefully define the specific objectives they expect their sales force to

achieve. The old idea was that the sales force should “sell, sell, and sell”.

Salespeople have sales quotas, and the better salespeople met or exceeded their

quotas. Later, the idea arose that sales representatives should be skilled in customer problem

and propose a solution. More recently, some industries have begun to insist that the sales force

engage in “commitment selling.” Under this concept, salespeople do not initially try to sell a

specific product or solve a specific problem. Rather, they show a customer-prospect how their


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company can help the customer improve its profitability. They seek to join their company with

the customer’s company as “partners for profit.”

Regarding of the selling context, salespeople will have one or more of the following specific

tasks to perform:

PROSPECTING: Sales representatives search for prospects, or leads.

TARGETING: Sales representatives decide how to allocate their time among prospects

and customers.

COMMUNICATING: Sales representatives skillfully communicate information about the

company’s products and services.

SELLING: Sales representatives know the art of sales - approaching, presenting,

answering objections, and closing sales.

SERVICING: Sales representatives provide various services to the customers-consulting

on their problems, rendering technical assistance, arranging financing and expediting

delivery.

INFORMATION GATHERING: Sales representatives conduct market research and

intelligence work and fill in call reports.

ALLOCATING: Sales representatives decided which customers will get scare product

during product shortages.

Companies typically define the specific objectives they want their sales force to achieve.

To maintain a market focus, salespeople should know how to analyse sales data,

measure market potential, gather market intelligence, and develop marketing strategies and

plans. Sales representatives need analytical marketing skill and these skills become especially

important at the higher levels of sales management. Marketers believe that sales forces will be

more effective in the long run if they understand marketing as well as selling.


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On a whole it includes Designing the sales force, setting out the objectives of the sales

force, chalk out a strategy for the sales force, to define the structure and compensation, and

also the recruitment and training of the sales force.

Integral part for success of marketing strategy is management of the sales force.

The management of sales consists of following:-

1) Recruitment is at the centre of an effective sales force. Companies develop selection

procedure where behavioral and management skills are tested.

2) Training is essential to remain ahead of the competition. Sales force needs training before

entering the market as well as training at different stage of the product life cycle.

3) Supervision on sales force is decided on the profile of product portfolio. A general

supervision is maintained with respect to sales people dealing with potential clients.

Supervision is related to efficient time management from preparation of client call to

closing of the deal.

4) Motivation is a key aspect for management of the sales force. Here compensation plays an

important part in driving up the motivational level. Compensation can be assigned based on

sales quota. Other motivational tools are social gathering and family outing.

5) Evaluation is essential to management of a sales force. Sales reports sent by the sales force

serve a good starting point of evaluation.

6) Art of negotiation and relationship marketing these two are the important aspects of

successful sales representative and long term benefit for the company.


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2.2. SALES FORCE MANAGEMENT AT NEROLAC

The face of any organization is the sales force. Sales personnel are the company’s link to

the customers. Any company’s survival and existence depends on the market and hence the

sales force which maintains that link deserves the deepest thought in terms of setting

objectives for it, strategy for it and structuring it.

Companies spend a considerable amount of time and money on sales force rather than

on any other promotional activity. However, sales force is expensive and companies are looking

forward to managing them in an efficient and effective manner.

Sales Management which is concerned with the direction & control of sales force refers

to the management of sales personnel. Sales force management is “the planning, direction &

control of personnel selling, including recruiting, self selection, training (equipping, assigning,

routing), supervising, paying & motivating as these tasks apply to the personal sales force

management.” In addition to other responsibilities, controlling & guiding the sale force is one of

the important activities of management.

Managing the sales force involves the implementation of personal selling strategy. The

sales force management has two key personal selling strategic decisions

Sales force size

Selling style

These decisions results from planning how to achieve the sales volume & related

company goals. The decision on selling styles determines the range and nature of activities

required for personal management or management of sales force. The decision on sales force

size determine the magnitude of these activities. Implementing these strategic decisions is sales

management responsibility.


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Sales force management is specialized type of personal management. The personal

management focuses upon sales, production or office workers but sales force management

focuses only upon sales personnel.

Sales personnel work away from their co-workers and superiors, so it is difficult to

develop a spirit of identity with and loyalty to the company and to manage them into a unified

team. Sales personnel’s necessity is to give freer rein then production or office workers. Up to a

large extent they are relied upon as individuals to plan and control their own activities. Most

sales personnel visit their home office only infrequently and centralize direction of their

activities mainly by phone and mail.


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The steps in sales force management are the same as those in general personnel

management.

Sales force management work, starts with job analysis-determining the job objectives,

the component duties and responsibility, performance criteria, and reporting relationships. The

output of job analysis is the written job description that is used in deriving the necessary

qualifications (job specifications) of the employee.

Qualified job applicants must be found, and this requires decisions on recruiting sources

and methods. From the supply of applicants, those meeting the job specifications are selected.

After hiring applicants undergo initial training and throughout their entire careers with

the company-receive continuing training through diverse delivery systems. Compensation plans

are designed to provide appropriate levels and methods of compensation.

When the salesperson is assigned to the field, other personnel activities come into play.

The salesperson is motivated to plan and make productive use of working time. To improve the

effectiveness of sales calls, salespersons are counseled on working habits and methods

controlling sales personnel require analysis of selling records and evaluations of sales

performance.


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2.3. SALES STRUCTURE AT NEROLAC

If the company sells one product line to one end using industry with customers in many

locations, the company would use a territorial sales force structure. If the company is selling

many products to many types of customers, a product specialized or market specialized sales

force structure may be more appropriate. The structure needs to be changed by established

companies as they expand and economic conditions change.

Chairman And BOD

Managing Director

Vice President

General Sales Manager

Divisional Sales Manager

Area Sales Manager

Assistant Sales Manager

Sales Officer

Sales Executive


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2.4. RECRUITMENT AND TRAINING

Recruitment is the process of identifying that the organization needs to employ

someone up to the point at which application forms for the post have arrived at the

organization. Selection then consists of the processes involved in choosing from applicants a

suitable candidate to fill a post.

Training consists of a range of processes involved in making sure that job holders have

the right skills, knowledge and attitudes required to help the organization to achieve its

objectives.

Recruiting individuals to fill particular posts within a business can be done either

internally by recruitment within the firm, or externally by recruiting people from outside.

At the stage of selection companies have to make sure they get the right persons that

subscribe to the company’s objectives and value.


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2.4.1. RECRUITMENT AT NEROLAC:

There are two types of Recruitment sources followed by NEROLAC:

Internal Sources.

External Sources.

INTERNAL SOURCE

Internal sources include personnel already on payroll of the organization filling a

vacancy. It can be done by means of promotions which increase the general level of moral of

existing employees and make them to provide more reliable information about the capable

candidates.

Following are included in this source:-

i. Present Permanent Employees.

ii. Employee Referrals.

iii. Former Employees.

EXTERNAL SOURCE

These source lie outside the organization, in Nerolac they consider following sources

Recruitment

1) Advertisement.

2) Campus Interview

3) Employment Exchange

4) Unsolicited Application


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Advertisement

For the recruitment, Nerolac consider this particular source. They give Advertisement in local

newspaper and other newspaper for the post in the sales department with complete job

description.

Campus Interview

This is second option that Nerolac consider. Recruiters are sent to educational institution where

they find suitable candidate. Nerolac go through this option. But this type of recruitment is

done for the upper level positions i.e. Assistant managers, managers etc.

Employee Exchange

An employment exchange is an office set up for bringing together as quickly as possible

Candidates searching for employment and employees looking for prospective employees.

Employee Referrals

Nerolac also considers this option for recruitment. Friends and relatives of present employees

are also a good source from which employee may be drawn.

Unsolicited Application

Some candidates send in their application without any invitation from the organization. A

Recruiter can use these unsolicited applications for appointment and when vacancies arise.


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2.4.2. SELECTION AT NEROLAC

Selection either internal or external is a deliberate effort of the organization to select a

fixed number of personnel from a large number of applicants. The primary aim of employee

selection is to choose those persons who are most likely to perform their jobs with maximum

effectiveness and to remain with the company. Thus, in selection, an attempt is made to find a

suitable candidate for the job. In doing so naturally many applicants are rejected. This makes

selection a negative function.

Following are the steps followed are as under:

Application

Initial interview of the candidate.

Employment tests.

Interviews.

Checking references.

Physical or medical examination.

Final interview and induction.

During this, various steps like Education, Experience, Personal Detail, Aptitude Test, Interest

Test, Intelligence Test, Performance Test, and Personality Test are considered. Different types

of interviews are conducted like:

Preliminary interview.

Extensive interview.

Stress interview.

Discussion interview.

Structured interview.

Non -structured interview.

Group interview.

Final interview.


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The Selection Process in NEROLAC is as under

Vacancy In Any Department:

When there is any vacancy in any department of the organization, they give advertisement

in the newspapers.

Approval From M.D:

When there is any vacancy in any department, first step is to take approval from M.D to

give advertisement in newspaper. After getting approval the process goes further.

Advertisement:

After getting approval from M.D, advertisement is given in local newspaper for the related

post in the sales department.

Collection of Application:

All the direct applications are collected.

Securitization of applications:

After collection, applications are scrutinized in detail and incompatible applications are

rejected. Others are kept for further process. During this process, suitable applications are

considered on basis of criteria decided by Nerolac.

Interview:

Interview is being carried out by a panel of 3 to 4 members consisting of head of Sales

Department, M.D. and Manager of Administration. This panel will be rating on different aspects


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such as personality, knowledge of that particular field, general knowledge, written test etc.

They will be having a rating sheet consists of all such headings mentions and each panel

member giving marks and then after ranking will be done.

Selection:

At the end they give the appointment letter to the person and he/she is informed about

his/her Joining in the organization.

Induction:

Induction is introducing an employee to the job and to the organization. The primary

purpose of induction is to give information about organization about organization so that

he/she works comfortably.

Generally induction conveys three types of information:-

1) General information about the daily work routine.

2) A review of the organization history, objectives, operation, products, visiting different

department.

3) Detail information of the organization policies, work rules and benefits given to employee.

After a detailed induction program of a month’s duration, the trainees go through on-

the- job training for a year. They get placed at assistant manager level to start with.


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2.4.3. TRAINING OF SALES PERSONNEL

Now that the selection has been made, the organization provides adequate training so

that the applicant really becomes suitable for the job. Gone are the days when people thought

that "salesmen were born and not made". Research has clearly indicated that the person can be

trained to become a good salesman.

Researchers have clearly indicated that the following are some of the factors which exist in

case of a good salesman, i.e. a salesman properly trained as against one who was not so

trained:

He makes a more enthusiastic presentation.

He has the ability to clinch the order.

He has greater product knowledge.

He pays closer attention to ensure that services are rendered to the customers.

He has superior territory organization.

He answers objections better.

He can obtain more customer interviews.

The objectives of training are to give the following types of information to the salesmen,

namely:

Knowledge of the company, its background and history. This will give him a perspective

as to how he fits into the organization structure of the company.

Knowledge of the Company's products and more particularly the `selling points' or

advantages that he can emphasize with a view to close the sale.

Knowledge of customers, i.e. details about the types of customers and how they should

be handled.

Knowledge of sales and other procedure which is prescribed, such as how to get

orders, what forms to fill up, the sales reports required, etc.


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Training in the art of selling or salesmanship.

Specific skill development programs are conducted for employees in sales. They also

nominate their employees for external training programs and seminars.


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2.5. JOB ANALYSIS & JOB DESCRIPTIONs

2.5.1. JOB ANALYSIS

Job analysis is the process of examining jobs in order to identify the key requirements of

each job. A number of important questions need to be explored:

the title of the job

to whom the employee is responsible

for whom the employee is responsible

A simple description of the role and duties of the employee within the organization.

2.5.2. JOB DESCRIPTION

A job description will set out how a particular employee will fit into the organisation. It will

therefore need to set out:

the title of the job

to whom the employee is responsible

for whom the employee is responsible

A simple description of the role and duties of the employee within the organization.

A job description could be used as a job indicator for applicants for a job. Alternatively,

it could be used as a guideline for an employee and/or his or her line manager as to his or her

role and responsibility within the organization.


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2.5.3. QUALIFICATIONS, EXPERIENCE AND JOB DESCRIPTIONS

AT NEROLAC

2.5.3.1. SALES OFFICER- INDUSTRIAL

Ideal candidates will be B.Sc/ M.Sc in Chemistry,BE/B.Tec Chemical (MBA Preferred)

with 2-4 years of experience.

The incumbent should have an experience in paints/ lubricants / auto industry /

Powder Coating / Protective Coating/High Performance Coating.

Job Description:

The candidate shall be responsible for:

Achieving sales & collection targets,

Developing new business,

Maintaining the stock norms,

Generating information reports on market share, new products, upcoming

business opportunities etc.


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2.5.3.2. AREA SALES MANAGER

The ideal candidate should be a Graduate, Preferable MBA with 3-6 years of experience.

The incumbent should have an experience in Profitable Sales with market share gain.

Job Description:

The incumbent shall be responsible for:

Achievement of sales (volume / value) as per budget.

Manage accounts receivables as per norms.

Manage and control inventories and SMNM stocks as per budgets through

proper forecasting.

Managing the business in his division through a team of 30-40 people.

Training and development of sales and admin team and develop successors for

self and ASM.

Monitor, evaluate & provide feedback on performance of ASMs / PSMs

Implement channel incentive scheme and ensure control measures and cost

controls.

Channel management and expansion as per need of the business.

Implement marketing plan and promotion, pricing, product mix & distribution

policies of the company in the division

Gather information on competitors’ activities in the region and act upon it for

KNPL’s benefit.

Control entire accounting and all audit related queries


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3. DESIGNING THE SALES FORCE

Sales force is linking between companies and customer. Therefore, companies have to be

careful in designing and structuring sales force.

1. The first step is setting out an objective for sales force. Earlier companies had a

single objective increasing sale making it objective also for sales people. Sales people

are asked to perform a search for prospective clients or lead. Sales people are asked

to balance time between a prospective customer and current customer. Effective

communication of product and services is essential to close the deal. Sales people

also play an important role in after sales service and can make a difference for the

company. Sales people are eyes and ears of the company in the market gathering

information about competition and customer changing demands.

2. The second step is use sales people strategically. Sales people have to combine

efforts with other team members to achieve the objective. Sales people should be

aware how to analyze market data been provided and convert them into marketing

strategies.

3. The third step is deciding the structure of the sales force. The structure of the sales

is dependent on the strategy followed by the company. Common sales force

structures are as follows:-

Territorial structure is used where every sales representative is assigned

specific geographical area. This structure is preferred for building

relationships with locals.


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Product structure is used for complex and un- related product portfolio.

Here the sales people are directly associated with research and development

of the products.

Market structure is used if the companies are operating different industry or

market segments. Every sales force specializes in a definite market and helps

push a product efficiently across the given market. However, the

disadvantage would arise if customers are located over a wide geographical

area.

Complex structure is used when companies are in business of selling

complex product to different customer across a large geographical area. Here

sales force structure is a combination of other structures discussed.

Once the structure is designed companies need to make a decision with respect to

the size of the sales force. The size of the sales force is dependent on the market size

and number of customers.

4. The next step is to design compensation for the sales force. Compensation plays a

big motivational factor for sales people. Companies follow a structure of a fixed

amount plus a variable amount depending of success achieved in the market.

Allowances play an important factor in the salary owing to continuous travel and

market visits.


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3.1. OBJECTIVES OF SALES FORCE AT NEROLAC

Market mapping. ( Overall growth & to define market size)

Competitors movement ( To keep red eye on every movement of competitor)

Technical Approval( To get technical approval of Nerolac Products from customer )

To develop & maintain relationship with Applicators/ Contractors/ Pre Engineering

Building Constructors / Dealers / Consultants

To keep sales expense under control

To keep track on upcoming project in the allocated zone.

To forecast the requirement of every SKU's in terms of volume on every 22nd of month.

To see through that the material is dispatched well in time for every order as per

customer's instruction.

To track that the forecasted material has been taken by plant for manufacturing.

To keep the inventory as minimum as possible.

To keep account receivable number of days as minimum as possible.

To develop new customer.


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3.2. DEFINING THE SALES TERRITORY

For this the following process is followed:

From the above approximately the centre area is selected which can cater to entire

region,

For example in Gujarat Nerolac has Sales Office at

Surat/Baroda(H.O)/Ahmedabad/Rajkot/Gandhidham.

Baroda region covers Nadiad, Anand, Vidhyanagar, Baroda, Manjusar, Savli, Jambusar, Halol,

Por, Karjan, Ankleshwar, Bharuch, Dahej etc.

MARKET SIZE MAPPING

Number of

Applicators/Consultants/Contractors/OEM/Projects in the

market.

Available capacity to meet the requirements


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3.3. DETERMINING SIZE OF THE SALES FORCE

For every 3 Cr of business – 1 Sales Person is allocated.

MARKET SIZE MAPPING

Number of

Applicators/Consultants/Contractors/OEM/Projects in the

market.

Available capacity to meet the requirements


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4. NEROLAC’S PERFORMANCE APPRAISAL SYSTEM

A performance appraisal, employee appraisal, performance review, or (career)

development discussion is a method by which the job performance of an employee is

evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding

manager or supervisor.

A performance appraisal is a part of guiding and managing career development. It is the

process of obtaining, analyzing, and recording information about the relative worth of an

employee to the organization. Performance appraisal is an analysis of an employee's recent

successes and failures, personal strengths and weaknesses, and suitability for promotion or

further training. It is also the judgment of an employee's performance in a job based on

considerations other than productivity alone.

Generally, the aims of a performance appraisal are to:

Give employees feedback on performance

Identify employee training needs

Document criteria used to allocate organizational rewards

Form a basis for personnel decisions: salary increases, promotions, disciplinary actions,

bonuses, etc.

Provide the opportunity for organizational diagnosis and development

Facilitate communication between employee and employer

Validate selection techniques and human resource policies to meet federal Equal

Employment Opportunity requirements.

To improve performance through counseling, coaching and development.


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4.1. METHODS

A common approach to assessing performance is to use a numerical or scalar rating

system whereby managers are asked to score an individual against a number of

objectives/attributes. In some companies, employees receive assessments from their manager,

peers, subordinates, and customers, while also performing a self assessment This is known as a

360-degree appraisal and forms good communication patterns.

The most popular methods used in the performance appraisal process include the following:

Management by objectives

360-degree appraisal

Behavioral observation scale

Behaviorally anchored rating scales

Trait-based systems, which rely on factors such as integrity and conscientiousness, are also

used by businesses but have been replaced primarily by more objective and results-oriented

methods. The scientific literature on the subject provides evidence that assessing employees on

factors such as these should be avoided. The reasons for this are twofold:

1) Trait-based systems are by definition based on personality traits and as such may not be

related directly to successful job performance. In addition, personality dimensions tend to

be static, and while an employee can change a behavior they cannot change their

personality. For example, a person who lacks integrity may stop lying to a manager because

they have been caught, but they still have low integrity and are likely to lie again when the

threat of being caught is gone.

2) Trait-based systems, because they are vague, are more easily influenced by office politics,

causing them to be less reliable as a source of information on an employee's true

performance. The vagueness of these instruments allows managers to assess the employee

based upon subjective feelings instead of objective observations about how the employee

has performed his or her specific duties. These systems are also more likely to leave a


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company open to discrimination claims because a manager can make biased decisions

without having to back them up with specific behavioral information

Nerolac had a workforce of 1900 professionals and distribution network of 11,000

dealers serviced by 66 company depots spread across the country in 2004.

Apart from its focus on brand building and distribution, Nerolac also focused on

instituting suitable HR policies and systems to attract and retain employees of all

divisions, including the sales and marketing divisions.

As part of its HR strategy, Nerolac devised an effective performance appraisal system

based on Key Result Areas (KRA's) for its sales professionals. The compensation was

linked with the assessment of employee performance based on the KRA's.

In this kind of performance appraisal system, every employee was asked to specify the

Key Result Areas based on the job profile. These KRA's were reviewed by the respective

superiors to arrive at the final KRA's. Employee performance was assessed in terms of

KRA's on a quarterly basis. At the end of each year, the compensation and rewards were

decided in accordance with these appraisals.

Apart from the KRA's-based performance appraisal, Nerolac also implemented various

other performance measurement systems designed for different levels of employees.

Nerolac launched the 360-degree feedback initiative. However, this technique was

different from the conventional techniques followed by the corporates.

Nerolac followed the self-evaluation method instead of the usual process of

management evaluating the employees. The objective behind this initiative was to

empower the employees and bring in transparency to the assessment of employee

performance.

In this technique, employees were allowed to evaluate themselves on their

performance. The company then conducted open meets called 'feedback-sharing

initiative' at which employees could share their problems and solutions.


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For example, if one employee admitted an inability to communicate, the other

employees tried to develop an action plan to help him/her overcome that inability. The

company also consolidated and uploaded this feedback onto a knowledge portal

developed for employees.

Nerolac introduced a flexible compensation structure called 'Corporate commission for

corporate performance. Generally, the managers' commission was decided based on the

achievement of individual targets. Apart from such performance-linked variable pay,

they were also entitled to commission based on the company's overall performance.

The company planned to accomplish two objectives by this initiative. First, it wanted to

make the employees aware of the larger interests of the company while performing

their duties. Second, this structure provided another measure of performance that

linked the individual performance to the overall performance of the department.


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4.1.1. KRA AT NEROLAC

As part of its HR strategy, Nerolac devised an effective performance appraisal system

based on Key Result Areas (KRA's) for its sales professionals.

In this kind of performance appraisal system, every employee was asked to specify the Key

Result Areas based on the job profile. These KRA's were reviewed by the respective superiors to

arrive at the final KRA's. Employee performance was assessed in terms of KRA's on a quarterly

basis. At the end of each year, the compensation and rewards were decided in accordance with

these appraisals.

Quantitative KRA:

KRA Key indicators Weightage

Value and Volume Achievement of Budgeted Sales Value for segment 50%

Collections Achievement of min 50% C EI or any

Specific target given from HO. whichever

Is higher.

50%

Qualitative KRA:

KRA Key indicators Weightage

Systems Regular updation and usage of CRM 25%

Customers (a) Early identification of issue which could

lead to dissatisfaction along with resolution

(b) Identify & develop new accounts in and around.

50%

Customer

Administration

Generation of Customer opening form Closure of

unlinked items in the system Statement of Accounts -

sent by 10th every month Balance Confirmation - once

every 3 months and c Forms collections"

25%


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4.2. COMPENSATION AT NEROLAC

A well-balanced system of compensation with rewards linked to performance has created

an effective performance orientation all through the organization. It is sustained perpetually

with conscious, proactive systems such as ‘Balanced Scorecard’, ‘Performance commission

dependent upon key Result Areas’, ‘Corporate Commission for corporate performance’

‘Annual awards to technical personnel’ for excellence etc.

Well, there is hierarchy and organization structure based on functional responsibilities. But

there is an excellent amount of informality, cordiality and flexibility all through the organization.

4.2.1. PLAN FEATURE

Design, Communication, And Administration Methodology

Sales compensation design begins with tying sales compensation goals to the business

objectives of the company in a direct way. The selling job is subsequently carefully defined in

terms of responsibilities, accountabilities, and goals. Communication and administration is the

responsibility of Sales supervisor with frequent executive sales performance audits conducted.

Application Of Performance Yardsticks

Both qualitative and quantitative performance measures are used to communicate

performance priorities for upcoming performance period. Often profit is used as a

supplementary yardstick to revenues.


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Measures directly extend corporate sales goals to sales job and tie sales representative

into the overall business plan of the company. Team measures are often used to reward

cooperation and team selling.

Mix of Fixed and Incentive Compensation

Prime emphasis is on the economics of the selling task rather than competitive

compensation. Incentives offer very high cash compensation for excellent selling performance.

Little emphasis on competitive compensation and base salary or draw is measurably below

competitive compensation for industry, emphasizing on paying for sales success.

Actual Total Cash Compensation Paid

Total cash compensation varies dramatically based on sales performance. Over 25% of

sales representatives earn more than competitive cash compensation and 20% earn less than

competitive.

Documents

Nerolac Sales Force Management