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Organization of Sales Force& Sales Leadership

Chapter 11 &15

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Three basic tasks must be accomplished by all organizations

1. Maintenance of Order in achieving sales forces goals & objectives

2. The assignment of specific task & responsibilities

3. Integration & Coordination with other elements of the firm

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Developing a Sales Organization

1. Formal and informal organization

2. Horizontal and vertical organization

3. Centralized and decentralized organization

4. The line and staff components of the organization

5. The size of any company

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1. Formal vs. Informal Organization

Formal Organization is a management created relationship between department and individuals.

Informal Organization is a communication pattern form from the social relationships existing within the formal Organization.

(Grapevine: It’s a Communication pattern of the informal Organization. It only exists in an informal Organization).

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2. Horizontal vs. Vertical Organization

Horizontal Organization is one in which the number of management level is small & the number of managers in each level is large. (figure 11-4, pg 240)

Vertical Organization is one that has several levels of management, all reporting upward to a higher level (figure 11-3, pg 240).

The factor that determines whether a vertical or horizontal organization structure should be employed is the effective span of control; number of employees reporting to the next higher level.

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3. Centralized vs. Decentralized Organization

Centralized organization is one in which responsibility & the authority is concentrated at the higher level of management.

Decentralized organization is one in which the responsibility & the authority are delegated to the lower level of management.

There is usually a higher degree of decentralization as an organization grows in size. Increased size results in top executives being less able to deal with the range of decisions that they handled when the firm was small. By necessity responsibility for making these decisions in then shifted downwards.

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4. The Line vs. Staff components

Line function is the primary organization activity.

Staff function is the supporting organizational activity.

In marketing organization, the selling function is the line component, whereas advertising, marketing research, marketing planning, sales training and distributor relations are considered staff roles.

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5. The size of the Company

Size of the company is a major factor influencing the organization structure.

For a small company there is likely to be no formal organization structure.

If the firm grows beyond the small scale entrepreneurial stage, the top management must devote more attention to overall policy and planning and less time to daily operations.

Middle level management should be developed to take over the specialized functions of the growing business.

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Basic Types of Organizational Structures

The Function Organization is the organization based on the primary activities of the company. It includes various departments for e.g. marketing, sales, finance, production etc.

Geographical organization is the one in which selling personnel are given the responsibility for direct selling activities in a geographical area. The sales rep is responsible for selling the firm’s full line of products.

Customer Specialization is the sales organization in which selling personnel are organized by particular customer or industries.

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Product specialization is one in which selling personnel concentrate their efforts on particular brand lines or individual items.

Combination organization Geographic, customer, and product specialization are the basic approaches to sales organization. The structure of most sales forces combine two or more of them. These new combination organizations is the ‘Matrix Organization’.

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Leadership and Motivation

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What is the Difference Between Leadership and Supervision?

Leadership:The use of influence with other people through communications processes to attain specific goals and objectives

Supervision:The day-to-day control of the salesforce under routine operating conditions

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Sales Force Socialization

Task-Specific Self-Esteem:The extent to which an individual believes s/he can perform a task competently

Organizational Commitment:The extent to which an individual feels a bond to the organization

Formalization:The extent to which work activity is directed by rules, regulations, and commitment

Work Alienation:An individual's psychological separation from the activities of the job

Job Involvement:An individual's psychological attachment to the job itself

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Power and Leadership

Five types of power which may be present in interpersonal relationships:

Referent Power

Legitimate Power

Reward Power

Coercive Power

Expert Power

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Trait Approach

Behavior Approach

Contingency Approach

Leadership Approach

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Sales Manager’s Leadership Roles

Inspirational leader: the sales manager is the emotional catalyst for subordinates.

Innovator: a leader is the source of problem-solving ideas for followers – how to win the big account, how to cover the territory more effectively, how to reduce expenses.

Superior performer: ideally the supervisor is a proven salesperson and knows a great deal about selling, salespeople respect the supervisor order and advice.

Guardian of the status quo: sales manager speaks for and represents the company; he is the source of information about firm’s policies, procedures etc.

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Individual Leadership Skills

Perception: a sales manager must be skilled at perceiving the meanings and causes of individual and group behavior.

Conceptual ability: it is the process by which one relates to and understands everything that happens.

Self-awareness: it is a person’s ability to recognize that a leader is an integral part of the management process.

Human relations skills: art of creating and maintaining organizational cooperation for maximum efficiency, low cost and high personal job satisfaction.

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Take a we approach Address only one or two problems at a time Don’t focus on criticizing poor performance, reinforce good

performance Foster involvement Recognize differences in salespeople and coach accordingly Coordinate coaching with more formal sales training Encourage continual growth and improvement Insist salespeople evaluate themselves Obtain agreement with respect to punishments and rewards Keep good records

Coaching

The continuous development of salespeople through supervisory feedback and role modeling.

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Motivation

The core of sales management – is simply the “how-to” aspect of getting salespeople to do their jobs well.

To determine the proper incentives to use, sales managers must understand the needs of their sales people. This is not easy because each salesperson is different and has different needs.

Research also suggests that salespeople’s psychological and sociological needs differ according to career stage.

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Types of Needs

Primary needs: physical needs that must be satisfied immediately.

Secondary needs: psychological needs that are satisfied at a later stage.

Rational needs: are those based on reasons.

Emotional needs: these are based on emotions or may result from desires for status and prestige.

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Maslow’s Hierarchy of Needs

The theory states that needs on the lowest level must be identified and satisfied before higher-level needs become important motivating forces:

1. Physiological needs – basic requirements2. Safety needs – protection from various kinds of threats,

dangers and uncertainties3. Social needs – significant relationship with other people4. Ego needs – feelings of self-esteem, self respect, self

confident and achievement.5. Self-actualization – desire for self-fulfillment and a wish to

succeed simply for the sake of accomplishment, not for material gain/recognition

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Expectancy Theory of Motivation

Theory that people decide how much effort to put into their work based upon what they expect to get out of it.

Salespeople will be motivated to do well if they belief that their efforts will result in appropriate rewards.

High motivation occurs when a salesperson values the specific outcome (reward) that results from successful performance.

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Path Goal Theory

Concept that a salesperson’s motivation stems from the supervisor setting the tasks, and expected performance levels, then providing the support required for their accomplishment.

It is extremely important that a salesperson understand his/her role in the firm (Role Clarity).

Path-goal theory is a leadership model that says the supervisor’s establishment of tasks and expected performance levels and the provision of needed coaching guiding, support, and rewards will motivate subordinates towards higher levels of performance and greater job satisfaction.

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Theory X and Y

Theory X : People are generally lazy to work and need to be pressurized

Theory Y : People like to work and are motivated