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ASummer training Report

onTraining undertaked at

Hindustan Machine tools, ltd

Inventory &Material Control

Submitted in partial fulfillment for the award of degree of

MBA

Submitted by: Submitted to:Brijesh Dadhich

MBA Part 2nd

2009-2011

MANAGEMENT AND COMMERCE INSTITUTE OF GLOBAL

SYNERGY, AJMER

(Approved by AICTE, Affiliated to RTU Kota)



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Preface

The Seminar project is necessary part for the fulfillment of MBA degree course. It helps

the Students to gain knowledge about various practical aspects of the industry or

Organization Emphasizing on the development of skills of different department and

problems through the application of the concepts and theory practically.

In fact, it is the implementation of theory in practice, which is life force of Management. I

had privilege of implementing the theory in practice during my Project.

This project exposed me to a number of function and activities, which helped me in

getting a practical & theoretical touch of knowledge. I head an insight of daily coursethat takes to maintain organization on day -to±day basis.

The main objective of this project is to learn about the concept of ³Sales force

management´ and to get the knowledge of Managing the sales force and this study

helps to make this project to know about Purpose and process of Sales force .

This whole project gives the knowledge of Managing the sales force & help to achieve

organization goals.



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Acknowledgement

In pursuing our Master¶s degree of administration, I undertook the task of completing my

project report on the ³SALES FORCE MANAGEMENT´

Firstly thanks for God. I am grateful of many people for their insights and

encouragement. I cannot possibly mention the names of all those people who have

enriched and improved my thinking through their conversations. But without the names

of some people this project report would not be possible.

Finally, I take this opportunity to thank Miss. Prachi kanodia for showing faith in me

& giving me full freedom to work. She has been a great source of inspiration, guiding me

whenever I needed his help. Working on the project has been interesting and rewarding due to

support and freedom he has given me.

I would also like to thank All My Friends and seniors. For their time and concern,

guidance and support which helped me a lot during the project.

In the end I wish to thank all those names who have directly or indirectly helped me in

various ways in carrying out this project successfully.

Brijesh Dadhich

MBA ± I (Sem II)

EXECUTIVE SUMMARY



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Effective management of the sales force is needed to implement the company¶s chosen Sales

force design and achieve its sales objectives. Sales force management covers the steps in

recruiting and selecting, training, supervising, motivating, and evaluating representatives. Salesforce strength and qualification significantly affect both the ability to provide competitive service

level and the economic of the sales force. Each company needs to define the specific objectives

its sales force will achieve. A direct (company) sales force consists of full- or part-time paid

employees who work exclusively for the company. The sales force strategy has implications for

the sales force structure. Established companies need to revise their sales force structure as

market and Economic conditions change. The importance of sales reps¶ knowing their products,

together with the development of product divisions and product management, has led many

companies to structure their sales forces along product lines. Many companies are shrinking their

sales forces because the sales department is costly to maintain. Recruiting and selecting a new

sales force is an important aspect of the sales manager¶s job. The basic objective of sales force

planning is to balance supply and demand. The sales manager should prepare the job description

before recruiting the sales force.

New employees require detailed instruction and training for effective performance on the job.

Employees chose for higher levels jobs also training. Training employee can make the

achievement of organisation goals possible Training improves employee¶s performance the basic

human need is to possess job skills. In order to achieve the training objectives, an appropriate

training process is necessary. A training policy represents the commitment of to management to

employee training. Training goals should be fully integrated with the organization¶s human

resource training needs. Compensation plans for the sales force are designed to achieve several

objectives. A sales manager adopt different methods to motivate is sales force. It is helpful in

creating and maintaining a satisfactory level of performance by employees. Performance

appraisal is a useful indicator of training needs. There are ³effort-performance´ and

³Performance reward´ linkages to motivate an employee. Sales force is regularly assigned

particular territories. The sales manager is the most important person in a sales organisation.

Training of sales representatives is essential to make them skilled.

Contents



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1. Introduction To Sales Force

Management

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2 Steps In Designing Sales Force

Management

8

3 Sales force Structure 10

4 Sales Force Size And

Compensation

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5 Recruiting And Selecting Sales

Force

12

6 Training Procedure 20

7 Compensation And Motivation Of

Sales Force

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8 Performance Rating Of Sales Force 33

9 Conclusion 39

10 Bibliography 41

Managing the sales force:



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Effective management of the sales force is needed to implement the company¶s chosen Sales

force design and achieve its sales objectives. Sales force management covers the steps in

recruiting and selecting, training, supervising, motivating, and evaluating representatives .Sales

Force is Responsible for the Sale of Product of a company and to add Profit to the business

operations and fulfill social obligations. Sales force should be hardworking, result oriented, well

educated and competent to handle changing situations. Technical developments which are taking

place at a speed have made the task of sales force challenging.

Many efforts are under way to make Indian companies more competitive. Typically, the focus is

on internal processes and operational efficiency up to the factory gate, but no further.

Unaddressed challenges lie in factory forward´ process, often including competitive sales force

management. For example, success in the intensively competitive consumer electronics industry

today is decided at the dealer level , with each sales officer playing a crucial role in securing

shelf space and dealer attention. Even in industrial goods, quality and low cost alone are not

enough- an efficient and effective competitive weapon.

For many Indian firms, a fresh approach to sales force management holds the key to

translating efficiency gains in manufacturing to success in the market.

Successful sales force management means:

The right organisation and aggregation against product lines and geographic.

The right strength and qualification.

The right compensation and incentive system.

Organisation



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The key to sales force organisation is the right level of aggregation against product lines and

geographical coverage. The solution is not obvious. Even market leaders constantly experiment

with different approaches. For example, at one time BPL sold its consumer electronics and

refrigerator lines through the same sales force but has separated them recently.

Strength and Qualification

Sales force strength and qualification significantly affect both the ability to provide

competitive service level and the economic of the sales force. A successful approach takes

market requirements, competitive benchmarks as well as target efficiency parameters into

account. In order to be helpful, these have to be analyzed in considerable depth. For example a

major industrial company realized that its main competitor not only had 60% more sales peopleon the ground but had also achieved a 25% higher turnover per sales person .what seemed to be a

contradiction at first war explained by an efficient back office organisation which gave each

sales person more time for intensive interaction with the customer and allowed for deeper service

relationships.

Compensation and Incentives system

Compensation and incentives have a significant impact on the morale of the sales force and help

in retaining successful. Incentives allow-average compensation for the most successful sales

people while keeping overall compensation levels in check. An effective incentive system sets

aggressive but achievable targets, reflecting business priorities while being simple to administer

and easy to understand. A major stumbling block for the implementation of incentive system is

often the quality of the forecasting system.

In summary, sales force management holds the key for competitive success in India. The

imperative are

Tailor the approach to key segments. Start with differentiation for urban/rural markets,

but go further and adjust for sophistication levels of customers.

Provide the right strength and qualification levels at your frontline interaction with the

customers.

STEPS IN DESIGNING AND MANAGING A SALES FORCE



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Objective Setting

Each company needs to define the specific objectives its sales force will achieve. Increasingly,

companies are setting objectives for sales reps based not only on sales volume and profitability

targets, but also on their ability to create customer satisfaction. To implement the firm¶s sales

objectives, a common strategy is for sales representatives to act as ³account managers,´

arranging fruitful contact among various people in the buying and selling organisation. Selling

increasingly calls for teamwork requiring the support of other personnel, such as top

management, especially when national accounts or major sales are at stake; technical people,who supply technical information and service to the customer before, during, or after product

purchase; customer service representatives, who provide installation, maintenance, and other

services; and an office staff, consisting of sales analysts, order expediters, and administrative

personnel .Once the company decides on objectives and strategy, it can use either a direct or a

contractual sales force. A direct (company) sales force consists of full- or part-time paid

employees who work exclusively for the company. This sales force includes inside sales

personnel , who conduct business from the office using the telephone, fax, and email, and receive

visits from prospective buyers, and field sales personnel , who travel and visit customers. A

contractual sales force consists of manufacturers¶ reps, sales agents, and brokers, who are paid a

commission based on sales.

Training for sales representative

1. Objective Setting

2. Training for sales representatives

3. Designing sales force: structure and size

4. Deciding sales force compensation

5. Recruiting and selecting sales force

6. Guiding and motivating sales force

7. Performance rating of sales force



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Today¶s customers expect salespeople to have deep product knowledge, offer ideas to improve

customer operations, and be efficient and reliable. These demands have required companies to

make a much higher investment in training their sales reps. Companies use training to help sales

reps: (1) Know and identify with the company (2) learn about the company¶s products; (3)

know customers¶ and competitors¶ characteristics; (4) make effective sales presentations; and

(5) understand sales procedures and responsibilities. Training time varies with the complexity of

the selling task and the type of person recruited into the sales organisation. The median training

period is 28 weeks in industrial-products companies, 12 in service companies, and 4 in

consumer-products companies.

Sales force structure & size

The sales force strategy has implications for the sales force structure. If the company sells one

product line to one end-using industry with customers in many locations, it would use a

territorial sales force structure. If the company sells many products to many types of customers,

it might need a product or market sales force structure Major accounts (also called key accounts,

national accounts, global accounts, or house accounts) are typically singled out for special

attention. The largest accounts may have a strategic account management team consisting of

cross-functional personnel who are permanently assigned to one customer and may even

maintain offices at the customer¶s facility. For example, Procter & Gamble assigned a strategic

account team to work with Wall-Mart at its Bentonville, Arkansas, headquarters. Established

companies need to revise their sales force structure as market and Economic conditions change.

The company¶s worldwide marketing and sales were organized geographically, with sales reps

covering customers in a wide range of industries. Although IBM was known for educating

customers about technology²focusing solely on IBM¶s products²its ³one-size-fits-all´

presentations became a turn-off to increasingly computer-savvy customers. Ultimately, lost

market share and the huge cost of maintaining its sales force made IBM slim down and

reorganize its sales force vertically along 14 industry-specific lines, such as finance, petroleum,

retail, and e-businesses. This step created a mix of industry and product specialists. In another

change, IBM sales reps have taken on an active role as consultant and now seek to create

customer solutions, even if doing so sometimes means recommending a competitor¶s technology.

Sales Force Structures



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1. Territorial: Each sales representative is assigned an exclusive territory. This structure

results in a clear definition of responsibilities and increases the rep¶s incentive to cultivate

local business and personal ties. Travel expenses remain relatively low, because each reptravels within a small area.

2. Product: The importance of sales reps¶ knowing their products, together with the

development of product divisions and product management, has led many companies to

structure their sales forces along product lines. Product specialization is particularly useful

for product lines that are technically complex, highly unrelated, or very numerous. Kodak

uses one sales force for its film products that are intensively distributed, and another sales

force to sell complex products that require technical support.

3. Market: Companies often specialize their sales forces along industry or customer lines.

IBM set up a sales office for finance and brokerage customers in New York, another for

GM in Detroit, and stills another for Ford in Dearborn. Market specialization helps the sales

force become knowledgeable about specific customer needs, but the major disadvantage is

that customers are scattered throughout the country, requiring extensive travel.

4. Complex: When a company sells a diverse product line to many types of customers over a

broad geographical area, it often combines several structures, with sales forces specialized by

territory-product report to one or more line and staff managers. Motorola has four types of

sales forces: (1) a, territory-market, product-market, and so on. A sales representative might

then strategic market sales force composed of technical, applications, and quality engineers

and service personnel assigned to major accounts; (2) a geographic sales force calling on

customers in different territories; (3) a distributor sales force calling on and coaching

Motorola distributors; and (4) an inside sales force handling orders via phone and fax.

Sales Force Size and Compensation





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Introduction of Recruitment: Recruitment is the process of locating and attracting job

applicants. Recruiting and selecting a new sales force is an important aspect of the sales

manager¶s job.

The basic objective of sales force planning is to balance supply and demand. This requires

consideration of a wide range of variables, including (1) Market conditions such as increased

competition in the form of new goods and services (2) Economic conditions, such as increased

inflation or economic growth (3) Demographic conditions (4) Technological developments.

Characteristics of recruitment

1). Recruitment is an aspect of manpower planning.

2). It is a linking activity- bringing together those with jobs to fill and those seeking jobs.

3). It is a positive process because its objective is to increase the selection ratio

4). It is a process of activities rather than a single act or event.

5). Its purpose is to locate the sources of people required to meet job requirements and attracting

such people to offer themselves for employment in the concern.

Need and objectives of recruitment

The objective of the recruiting programme is to provide a sufficiently large group of qualified

candidates so that suitable employees can be selected from out of them. It influences how well

organisation meets its obligations to hire minority group members and women. Well planned

recruitment can lead to greater productivity, better wages, high morale, and better reputation.

Steps in recruitment process



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It consists of the following steps:

1). Recruitment process begins when the personnel department receives requisition for

recruitment from any department of the company. The personnel requisition contain detail about

the position to be filled, numbers of person to be recruited, the qualifications and duties of

persons, terms and condition of employment, etc.

2). Locating and developing the sources of required number and type of employees.

3). Identifying the prospective employees with particular combinations of skill, experience,

education.

4). Encouraging the identified candidates to apply for jobs in the organisation.

5). Evaluating the effectiveness of recruitment process.

Preparing the job description and specification

The sales manager should prepare the job description before recruiting the sales force. The

following factors are:

A. Title of the job

B. Duties and responsibilities

C. Reporting methods

D. Technical requirements

E. Territory to be covered

F. Degree of autonomy

Job description will act as the blue print for the personal specifications which describe the type

of applicant the company is looking for.

Recruitment sources





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These includes the following²

1) Advertisements 2).From inside ± the company¶s own staff

3).Recruitment agencies 4).Educational institutes

5).competitors and other industries

Some others sources:

a. Friends and relatives b. Previous staff

1). Advertisements: Advertisements are both a source of recruits and a method of reaching

them. Newspapers, magazines are the most widely used media for advertisements which

ordinarily produce large numbers of applicants in a very short time and at a low cost.

The following are a few good advertisements for recruitment of sales force:

a) Manikchand group recruitment for sales force

b).Times multimedia recruitment for sales force.

2). From inside: the company¶s staff: The advantage of this source is that the candidate is

familiar with the working of the company and its products

3). Recruitment agencies: It provides bio data¶s of potential candidate for a fee. Normally

these agencies screen applicants for their suitability to various levels of sales positions.

4). Educational institutions: This source is used for placement at the entry level. Recruits

from educational institutions are more easily adaptable than their more experienced counterparts.

The advantages from this, that candidate are likely to be intelligent and possess the required

technical qualifications.

5). Competitors and other industries: The advantage of this source is that the salesperson

knows the market and its customers.

Friends and relatives: friends and relatives can also be hired if they meet the necessary

qualifications required for the job.

Previous staff : Many times previous staff which has served the organisation is willing to

return. It may be either that he finds it more convenient to work with the old employer now or he

is not adjusting with his present employer .



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Selection of sales force

Selection, as the name implies, involves picking and hiring a few people from the total number

of candidates applying for the sales job. Selection is done by comparing the requirements of a

job with the applicant¶s qualifications. The selection includes pertinent information on a recruit¶s

mental abilities, physical characteristics, experience and personal background. To collect that

information, firms may incorporate the use of assessment centers and several selection tools

including applications, resumes, interviews, testing and physical examination. Selection is a

part of the recruitment function. To select means to choose. Selection is the process of choosing

people by obtaining and assessing information about the applicants with a view to matching

these with the job recruitments. It involves a careful screening and testing of candidates whohave put in their applications for any job in the enterprise. It is the process of choosing the most

suitable persons out of all the applicants. The purpose of selection is to pick up the right person

for every job.

In the words of Keith Davis: ³Selection is the process by which an organisation choose from

a list of screened applicants, the person or persons who best meet the selection criteria for the

position available.´

Characteristics of selection

1). It is a process of picking out the best suited men.

2). Selection is like a sequence of hurdles. Successful candidates leap over them and arrive at the

finish line; the unsuccessful do not.

3). Selection begins only after an adequate number of applications have been secured.

4). It follows a standard pattern, beginning with an initial screening interview and concluding

with the final employment decision.

Selection procedure



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The selection procedure starts immediately after recruitment. It is a process of eliminating those

candidates who appear unpromising. It consists of a series of steps. It is not an easy process. It

requires the study of job description and application blank. The task of selection is to match theworth and merits of applicants with the requirements of the job at every stage. A wrong

selection means a heavy cost to an organisation in terms of money, time and efforts wasted.

The following are some common steps in any selection process:

1). Reception of applicants: Various job seekers send their applications to the employment

office & many personally come to deposit their applications. The selection process starts when

the applicants come to the employment office of the company. The receptionist¶s attitude

towards the applicants must be warming and positive.

2). Scrutiny of applications: all applications received are scrutinised by the personnel

department in order to eliminate those applicants who do not fulfill required qualifications. For

example ± where the minimum qualifications for the job are m.com, a person possessing B.A.

degree will be out rightly rejected.

3). Preliminary interview: It is done to limit the costs of selection. Its purpose is to

eliminate the unqualified or unsuitable candidates. It is a sorting process in which necessary

information is elicited from the candidates about their education, skills, experience, salary

expected, edict is generally brief. It is carried out by a junior manager across the counter or at the

reception office. Through this interview candidate is permitted for screening. It also helps to

decide whether it is worthwhile for a candidate to fill up the application form.

4). Employment tests: Selection tests are becoming increasingly popular these days. Tests

are based on the assumption that persons differ in intelligence, knowledge, skill, and motivation.

There are various types of test used for personnel selection:

i. Intelligence tests: Its aim is to test the mental capacity of a person with respect to

reasoning, word fluency, numbers, memory, comprehension.



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ii. Aptitude tests: These measures whether an individual has the capacity of latent ability

to learn given a job if given adequate training.

iii. Knowledge tests: These are devised to measure the depth of the knowledge and

proficiency in certain skills already achieved by the applicants such as accounting etc.

iv. Personality tests: at times, personality affects job performance. These determine

personality traits of the candidate such as co-operative ness, emotional balance etc.

v. Performance tests: In this test the applicants is asked to demonstrate his ability to do

the job. For example, prospective typists are asked to type several pages with speed and

accuracy.

5). Interview: It is the most widely used single method of selection. Studies indicate that over

90% of selection decisions involve interviews No selection process is complete without one or

more interviews. It is a method of seeking information from job applicants. It is face to face,

oral, & personal appraisal method. µInterview¶ is the most delicate aspect of the selection

procedure .It is the purpose of employment interview is ³to determine the suitability of the

applicant for the job and of the applicant.

Kinds of interviews:

a). Preliminary interview: It is of quite short duration to see the worth of a candidate.

Its object is the elimination of the obviously unqualified.

b). Depth interview: It is used to go into more detail on a particular subject of an

important nature. For taking correct decision, the candidate¶s background and thinking are

examined in detail.

c). Group interview: It is an interview of certain applicants in a group rather than

individuals. It saves time of the busy managers.

d). Panel or board or round±table interview: It is meant for supervisory and

managerial posts, in which the applicant meets a group of interviewers.

6). Approval of the supervisor: At this stage in the selection process, a third interview is

conducted by the line supervisor to approve the work qualities, understanding and dedication of

candidate. Supervisor¶s appraisal is helpful because he is better acquainted with the actual job

conditions & the type of personnel at present in the department.



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7). Physical examination: It is a part of selection process for all those applicants who have

crossed the above stages. They are sent for medical check-up either to the company¶s physician

or to a medical officer approved for the purpose.

It is necessary due to the following reason:

a). many job require unusual stamina, strength, or to tolerance of unpleasant working

conditions. It reveals whether or not a candidate possesses these qualities.

b). It prevents infection by revealing contagious diseases in the people.

c). A proper matching of job requirements with physical abilities results in greater

utilization of manpower.

d).It ensures that the candidate is able to consistently perform with efficiency.

e). It avoids the possibility of an unhealthy applicant becoming a permanent liability to the

organisation.

8). Final employment decision: After a candidate is finally selected, the human resource

department recommends his name for employment. The appointment letter mentioning the post,

the rank, the salary grade, the date by which the candidate join and other terms and conditions of

employment. The probation period may range from three months to two years. When the work

and conduct of the employee is found satisfactory, he may be confirmed.

Training procedure

According to Edwin flippo: ³Training is the act of increasing the knowledge and skill of an

employee for doing a particular job.´

Training refers to the teaching and learning activities directed at helping employees acquire

and apply the knowledge, skills, abilities needed by a particular job and organisation.



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Characteristics of training

1). It is a learning process and experience.

2). In its widest sense, training is an aid to µself- development¶.

3). It bridges the gap between job requirements and employee¶s present specifications.

4). It involves the changing of skills, knowledge, attitudes, or social behavior.

5). It is an essential part of management.

Need and objects of training

Training has become a µnecessity¶ in industrial organisation on account of the following reasons.

1). Job requirements: New employees require detailed instruction and training for effective

performance on the job. New entrants also need to provide orientation training to make them

familiar with the working conditions and organisation.

2). Technological change: Technology is changing very fast, increasing use of fast changing

techniques and work methods requires training into new technology .New job requires new

skills.

3). Increasing compensation: due to economic liberalization and globalization the firms are

experiencing expansion and diversification of business and products. The keen compensation has

increased uncertainties and complexities in the market.

4). Change in job assignment: Training becomes necessary when an employee moves from

one job to another due to promotions of transfer. Employees chose for higher levels jobs also

training.



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5). Human relations approach: In this modern managers have to maintain human relations

besides maintaining sound industrial relations. Now training has become a right of employees.

6). Motivation and creativity:

Training programme foster the initiative and creativity

among employees. Training motivates employees to work harder. Employees who understand

their jobs are likely to have higher morale. Training provides a sense of assurance to employees

that they are valued members of the organisation.

Objectives

1). To establish a sound relationship between the worker and his job.

2). To ensure smooth and efficient working of a department.3). To train employees to increase his quantity and quality of output.

4). To promote a sense of responsibility, moral and cooperatives attitudes.

5). To bring down labour turnover and absenteeism.



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Importance of training

³Give a man a fish, he will eat it. Train a man to fish, he will feed his family.´ This saying

highlights the importance of training everywhere. Training employee can make the achievement

of organisation goals possible. A well planned training programme can provide the following

advantage:

1). Higher productivity: Training improves employee¶s performance. Trained employees

use better methods of work, sound knowledge and good awareness of his goals.

2). Better quality of work : Training helps in standardizing the methods of work and right

use of tools. It also results in elimination of possible mistakes.

3). Less learning time and cost: The learning time and costs are reduced considerably by

training. They need not waste their efforts in learning through trial and error.4). Less accident: It also helps in reducing accidents. Trained workers follow safety rules and

adopt right work methods.

5). High morale: The basic human need is to possess job skills. Training makes an

employee¶s work meaningful. It gives them security and ego satisfaction. Training reduces

grievances.

6). Job satisfaction: Dissatisfaction, complaints work tensions, fear, spoiled work, mental

stress can be greatly reduced when employees are well -trained.



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Training process

In order to achieve the training objectives, an appropriate training process is necessary.

1). Organizational objectives: An organisation must first assess its objectives. What

business are we in? What product do we wish to provide to customers? These questions will

decide what skills, knowledge, abilities and other personal attributes are necessary for

employees.

2). Training policy: A training policy represents the commitment of to management to

employee training. A training policy is required to guide the design and implementation of

training programme.

3). Training needs assessment: the assessment of training is perhaps the most important

step in the process. Assessment directs the whole training programme.

4). Selection of trainees: It is necessary to decide who is to be a trained new or old

employee; workers supervisors or managers. The methods to be used will depend upon the type

of persons to be trained. It is also necessary to create a desire for learning among trainees.

5). Training goals: Training goals should be fully integrated with the organization¶s human

resource training needs.

6). preparing the trainers:

The success of training depends to a great extent upon theinstructors or resource persons. The trainer must know both the job contents and how to teach

them.

7). Performance tryout: The trainee is asked questions in order to ensure that he really

knows and understands the job. He is also asked to do the job several times. His mistakes are

corrected. The trainee, through repetitive practice, acquires more skill.

8). Overall evaluation: Without monitoring the training process, it is possible that a well

designed training programme may be conducted improperly, or otherwise fails to accomplish itsgoals. At the bend of training, formal evaluation of the training programme is also necessary.

Evaluation involves a comparison of what was accomplished during the training the programme

with what was intended. The training process can also be understood through the systematic

training cycle.



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Compensation & Motivation sales force

Compensation: compensation plans for the sales force are designed to achieve several

objectives. Some of these are: To assist the company in meeting its sales projections, to bring the

earnings of the sales force to desire level and to reward individuals¶ salesperson in direct

proportion to their efforts and performance. There are a number of ways in which sales force can

be compensated. These range from salary to fringe benefits and perks. Each method can be

employed to aid a company in achieving the desired results.

Determine sales force and compensation objectives

The sales manager must consider many factors when developing an effective reward System.

Before embarking on a reward system it is important to establish the Objectives. A compensation

plan should have general and specific objectives for individuals¶ performance. Once the

compensation objectives are determined, the management should compare the compensation

structure of the sales force with that of the industry and the sales organisation. After salaries are

established, the procedures for administering compensation should be determined

Various modes of compensating the sales force

A) SalaryA straight salary payroll is by far the easiest for employer to handle. Deductions for provident

fund, income taxes and other fringe benefits are fixed and the work of accounting is reduced. In

many industries, the method of compensation is generally used. There is always an overriding

reason for choosing a salary plan .the following industries are:

o Highly seasonal industries

o High-tech industries

o Trade sales people

o Route sales people

o Group selling

The security of salary is a strong factor in lowering turnover in a sales force. Salary

compensation is especially effective when a balanced effort is required of a salesperson.

The following are the strengths of the salary compensation plan



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1). For the sales force

y Simple to calculate

y Fixed income

y

Job security2). For the company

y Reduce turnover in sales force

y Increase authority of sales managers in controlling sales force

The following are the weakness of the salary compensation plan

1). For the sales force

y Lack of incentive to excel

y Old sales force/ under achievers tend to be overpaid

2). For the company

y Fixed expenses, difficult to cut down expenses

y Requires excellent supervision which is not always available

B). Straight commission

Paying a commission is a variable expense rather than a fixed one. If sales are made, a

commission is paid-no sales no commission. This keeps sales expenses strictly in line. A straight

compensation pay plan gas many advantage. It is desirable for a company suffering from a

severe cash shortage since the commission need not be paid until proceeds are received from a

sale. Flexible commission rates can be a strong incentive and many organizations are successful

because the sales force enjoys a liberal commission schedule. Examples are real estate,

automobiles, securities and insurance industries. Success of the life insurance corporation is one

example where commission is paid to agents on the basis of policies received.



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C).Target commission

A straight commission is paid on sales volume. On a fixed commission base, a fixed percentage

of sales volume is paid to the sales force. Other plans call for increase in rates as volume

increases. Progressive commission rates accomplish a major objective of most companies: It is

provide a constant incentive to the sales force to do better.

D). Bonus

Paying bonus is a method that a company adopts to reward special contribution and as an

incentive to superior performances. Sales research indicates that more than 50 percent companies

paying bonuses pay them annually, one fourth quarterly and the balance pay half- yearly to earn

bonuses, and salespeople must work wholeheartedly for the entire year .

E). Profit sharing

Many experts in the field of sales management disapprove extending profit sharing to

salespeople. For once, companies agree with them. There may be an argument in favour of such

a payment if no bonus plan is established for excellence in sales performance. The company can

adopt a policy under which all managers ± regional divisional or branch receives a fixed

percentage of the profit made in their offices. They would be paid this irrespective of the

condition of the company.

Good sales compensation plans

For preparing a good sales compensation plan, the following essential steps should be taken.

1). Define the sales jobs.

2). Look to the company¶s payment scales to other staff.

3). Use grading or classification of jobs so that jobs may be compared.4). Find out how much other companies are paying for similar jobs.

5). Give importance to local factors like place of work, distance etc.



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Motivation to the sales force

Motivation is the force within us that directs our behaviour. Motivation is unique to every

individual. A sales manager adopt different methods to motivate is sales force. He should

examine individual¶s needs and use them as the basis for motivating his salespersons.

Importance of motivation theories for sales force

The sales executive¶s job is to make decision and to see that others carry them out. The

performance of sales executives then depends upon the composite performances of the

individuals making up the sales force. Some sales representatives will put forth their best efforts

without any special coaching from the management. The majority of sales representatives require

encouragement and special incentives to perform at their best level.

i. Nature of job: A sales representative¶s job is usually tiring with irregular working

hours. They do not often have the authority to do what is necessary to win an account

and they some times lose large orders that they have worked hard to obtain.

ii. Human nature: Most people operate below capacity in the absence of special

incentives, such as financial gain or social recognition.

High productivity in a sales force comes about neither naturally or accidentally .It requiresmotivation.

Motivation Effort Performance Rewards Satisfaction

This model says that the higher the salesperson¶s motivation, the greater is his or her effort.

Greater effort will lead to greater performance and greater performance will lead to greater

rewards and this will lead to greater satisfaction which will reinforce motivation.

Specifically, for a sales force, motivation affects the amount of effort that the salesperson

desire to expend on each of the activities, or task associated with the sales job such as calling on

potential new accounts, planning sales presentations and filling out reports.



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Dimension of motivation

Motivation has mainly dimensions.

1). Intensity: It is the magnitude of mental and physical effort put in by a salesperson for his

or her activity or goal. As this inner drive becomes more intense, more effort will be put

in by him.

2). Persistence: It is the extension of effort over time. This works when first dimension

µintensity¶ is high and so the person has high persistence to expend the needed effort for

the time period .In such a case, the person is said to be highly motivated.

3). Direction: It implies that the individual can choose how his or her efforts will be spent.

Salespeople who are highly competitive and have high intensity and persistence will

attempt to determine what activities are required to reach that goal and direct their

behaviour .

Model for the motivation process

It consists of six steps:

1). Recognize need deficiency

2). Search for ways to satisfy needs

3). Establish goal- directed behaviour

4).Performance

5). Provide rewards or punishment

6). Process needs

I NTENSITY

PERSISTENCE

DIRECTION



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Motivation process

Process begins Recognise need

deficiency

Search for ways tosatisfy needs

Established goal

directed behaviour

Need reassessment

Provide rewards

Performance

Salespersons





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Importance of performance appraisal

It provides significant information in organizations.

1). Human resource planning: Performance appraisal generates data on the promotability

and potential of each employee. The evaluation information is useful in making provision for

succession and replacement in employees.

2). Enhancing employee performance: It is helpful in creating and maintaining a

satisfactory level of performance by employees. It serves as a means of telling an employee how

he is doing and suggesting changes in his knowledge, behaviour and attitudes.

3). Contributes to productivity: It creates a competitive sprit among employees. It

motivates them to improve their performance. It also promotes a positive work environment

which contributes to productivity.

4). Determining training needs: Performance appraisal is a useful indicator of training

needs. If an employee is not performing up to expectations, he may be sent for training. It also

identifies individuals with high potential who can be placed on higher productivity.

5). Rewards and punishments: It provides a basis for rewarding and punishments the

employee who receive favourable evaluations, tend to receive organizational rewards, such as

merit pay increases, incentives better pay scales, etc.

6). Motivation: µPerformance¶ is an important component of motivation. There are ³effort-

performance´ and ³Performance reward´ linkages to motivate an employee.

Important Performance appraisal methods

1). Easy appraisal: It is a narrative description of an employee¶s strengths weakness past

Performance, potential, and suggestions for improvement. Here, the rater describes the

Performance of employee in his ³own words´. He has to devote considerable time and thought to

writing his analysis.

Merits:

a). It is a simple method. It requires no complex forms or extensive training to complete

b). It provides detailed feedback to subordinates. It can be useful basis for personnel decision



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Demerits

a). It can be very time consuming. It is not possible to evaluate numerous employees by a single

rater.

b). The usefulness of the essay appraisal depends heavily on the writing skills of the supervisors.

c). It is provide only qualitative data.

2). Critical incident appraisal: This method is a variant of the essay method. It requires

the rater to maintain a record of key behaviors that may be critical to make the difference

between doing a job in ineffectively. It provides information based on systematic observation of

actual job performance.

Merits

a). It looks at behaviour.

b). IT emphasizes rating on objective evidence rather on the subjective evaluations of traits.

c). The supervisors finds counselling easier since he knows his subordinates weakness.

Demerits:

a). It is a time consuming and burdensome for appraisers to regularly write these incidents down.

b). It may lead too much supervision with the employees feeling constantly under ³watch´.

3). Graphic rating scale: It is one of the oldest and most popular methods of appraisal. In

this method, the appraiser, who is usually the supervisors, is supplied with a patient form, one for

each person to be rated. For lower employees, typical qualities rated are quantity and quality of

work, job knowledge, cooperatives, initiative, willingness to accept responsibility and attitude.

For managerial personnel, the attributes included are analytical ability, judgment, leadership,

knowledge of work, imagination, planning and decision making abilities.

Merits

a). Rating scales are less time consuming to develop and administer.

b). Rating scales are easy to understand and require no detailed training.

c). They allow many employees to be rated.

d). In these scales, more than one performance dimension can be included.



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4). Confidential report: This is a traditional form of Performance appraisal, found in most

government organizations. IT is a report prepared by the employee¶s immediate superior. It

involves a lot of subjectively because it is a based on impressions rather than on data. NO feed back is provided to the employee being appraised. This method focus on evaluating rather than

developing the employee.

5). Group appraisal method: Under this method, a group of evaluators assesses

employees. This group consists of the immediate supervisors, head of the department and a

personnel expert. This group determines the standards of performance for the job, measures

actual performance of employees, analysis the causes of poor performance and suggest for

improvements.

The process of Performance appraisal

1). Establishing performances standards: The appraisal process begins with the

establishment of performances standards. These are developed with the job analysis and job

descriptions. These should be clear and objective to understand. These standards should with the

supervisors. These should be indicated on the appraisal form. Performances standards are

commonly based on individuals traits, cost related outcomes and behavioural criteria.

Performances standards will depend upon the objectives of the appraisal.

2). Communicating standards: Once performance standards are established, it is

necessary to communicate and explain these expectations to the employees. It is not the part of

employee¶s job to guess what is expected of them .The reactions of employees to the

performances standards should also be noted.



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The performance appraisal process

3). Measuring actual performance: We should be concerned with how we measure and

what we measure. This requires choosing the right method of measurement. The information

regarding actual performance of the employees is then acquired by personal observation or

reports which may be oral or statistical.

4). Comparing actual performance with standards: Actual performance is compared

with the predetermined performances standards. Such comparisons will the deviations between

the two. Positive deviation will take place when the actual, the performance exceeds the

standards. But when actual performance is below the standards performance, it represents

negative deviation.



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5). Discussing the appraisal: The result of appraisal should be communicated to the

subordinates so that they know their good as well as weak points. The discussion of the appraisal

can have negative as well as positive motivational consequence.

6). Taking corrective action: It can be of two types. One is immediate and deals with the

symptoms. It is ³putting out fires´ The action is basic and deals with causes. This corrective

action gets to the source of deviation and seeks to adjust the difference permanently.



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Conclusion

Sales management is generally referred to as the backbone of marketing. It is overall

management of selling activities and it refers to only as specialized application of the process of

management as whole. The ultimate objective of sales management is to influence the consumersof the target market to get sales orders. Sales force is regularly assigned particular territories. The

sales manager is the most important person in a sales organisation. All activities are based on his

functions and responsibilities.

The goal of recruiting is to find and attract with the best qualified applicants recruiting

begins with identifying the sources of candidates. Recruiting can be from within the organisation

as well as from outside the organisation. The selection of the right sales force is important for the

long- term future of an organisation. It is a task which does not always receive the attention it

deserves from sales managers. The selection process begins with the evaluation of recruited

candidates which can include multiple interviews, tests a day in the field and background

investigations. Psychological testing is used by many organizations as it determines intelligence,

aptitude, personality, knowledge and interests. After the physical and all other screening tools

have been implemented, the organisation selects the best candidate.

After selection, sales representatives should be given formal training which includes

planned programme complete with schedules, lesson plans, visuals aids, other teaching devices

and systematic reviews and evaluation. Training of sales representatives is essential to make

them skilled.

Motivation of the sales force is important because he has a monotonous job to perform

and he gets fed up very soon and wants a change. Through motivation, the salesman can be

stimulated to action so that he gets interested in the job and performs his duties to the best of his

capability. Motivation of sales force, which forms the other aspect of this unit, is among the

most important responsibilities of a sales manager. Behavioural scientists have classified

motivational needs. According to them each individuals is a different entity and hence, to

understand what would individually motivate the salespersons the nature, and needs the

individual have to be understood.

The sales manager must understand and conduct a proper performance appraisal of his

salespersons as it helps in motivation, cost reduction and reduces role ambiguity. The sales



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manager has two basis choices: outcomes behaviours. Outcomes are specific, measurable results

of selling efforts. Behaviour is a salesperson¶s activities that are related to accomplishing the

firm¶s sales objectives. Behaviour includes product knowledge presentation quality and other

activities measures. Every company, in accordance with its requirements, sets standards of

performance for specific criteria and develops a reporting system for comparing actual

performance with the norms.



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Bibliography

1. Gupta,D

r. S L, Sales andD

istribution Management2. Sudha, Dr.G. S., Human Resource Management

Documents

Sales Force Managment New