Motivation, Compensation, Leadership, and Evaluation of Sales People

1. Motivation, Compensation, Leadership, and Evaluation of Sales People Chapter 17

2. 17 Chapter 17-2

3. Main Topics • The Tree of Business Life: Management • Motivation of the Sales Force • The Motivation Mix: Choose Your Ingredients Carefully • Compensation Is More Than Money • The Total Compensation Package

4. Main Topics • Nonfinancial Rewards Are Many • Leadership Is Important to Success • Performance Evaluations Let People Know Where They Stand • Sales Managers Use Technology

5. The Tree of Business Life: Management Guided by The Golden Rule: • Remember that, as a sales manager, you impact the lives of your salespeople and their families • Help make your salespeople successful by putting their interests above your own • Remember that people come before power, influence, and wealth (PIW) T T T Service Ethical T T T T T T T T Builds T r u e Relationships T C I

6. Motivation of the Sales Force • Motivating salespeople at two levels • Motivation of the individual salesperson • Motivation of the entire sales force • Motivation is the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period

7. The Basic Sales Management Functions

8. The Basic Sales Management Functions • Directing average • people to perform at • above-average levels • Motivational • Compensation • Leadership

9. The Motivation Mix: Choose Your Ingredients Carefully • The basic compensation plan • Special financial incentives • Nonfinancial rewards • Leadership techniques • Management control procedures

10. Exhibit 17-1: Sales Manager’s Motivation Mix

11. Compensation Is More Than Money • Sales performance can be rewarded in three fundamental ways • Direct financial rewards • Career advancement • Nonfinancial compensation • Although a sales reward system is not the only means of motivating salespeople, it is the most important

12. Exhibit 17-2: Examples of Various Salary Plans

13. Compensation Is More Than Money, cont… • Three basic plans of financial compensation • Straight salary plan • Straight commission plan • Combination plan

14. Compensation Is More Than Money, cont… • Straight salary plan • Advantages to the salesperson • Advantages to management • Disadvantages to the straight salary plan • When to use the straight salary plan

15. Compensation Is More Than Money, cont… • Straight commission plans • Three basic elements of straight commission • Pay is related directly to performance • A percentage rate of commission is attached to the unit • A level at which commissions begin or change is established • Drawing accounts combine the incentive of a commission plan with the security of a fixed income • Advantages of the straight commission plan • Disadvantages of the commission plan • Administrative problems with the commission plan

16. Compensation Is More Than Money, cont… Combination plans • Salary and commission • Salary and bonus: individual bonus or group bonus • Salary, commission, and bonus: individual bonus or group bonus

17. Compensation Is More Than Money, cont… • Bonus: individual or group • Across-the-board bonus • Performance bonus • Sales contests

18. The Total Compensation Package • People choose a sales career for both nonfinancial and financial reasons • The salesperson receives numerous forms of nonfinancial compensation

19. Exhibit 17-4a: Salary and Fringe Benefits for a New Representative

20. Exhibit 17-4b: Salary and Fringe Benefits for a New Representative

21. Nonfinancial Rewards Are Many • Achievement or recognition awards • Transfer to larger, more challenging sales territories or promotion to key account management • Sales manager’s praise

22. Leadership Is Important to Success • Leadership • The leader’s task and relationship behavior • Task behavior involves the leader in describing the duties and responsibilities of an individual or group • Relationship behavior is people-oriented

23. Exhibit 17-5: Four Basic Leadership Styles a Sales Manager Can Select From to Influence Salespeople

24. Leadership Is Important to Success, cont… • Leadership styles • Style 1 – Tells • Style 2 – Persuades • Style 3 – Participates • Style 4 – Delegates • Choosing a leadership style • On-the-job coaching • Coaching – main element is the joint sales call

25. Exhibit 17-6: A Sales Manager Can Choose One of These Leadership Styles Based on the Salesperson and the Situation

26. Sales Management Functions • Planning • Staffing • Training • Directing • Evaluating

27. The Basic Sales Management Functions • Evaluating the past toguide the future • Performance criteria • Conducting sessions

28. Performance Evaluations Let People Know Where They Stand • Management control system • Performance evaluation – what is it? • Reasons for performance evaluation • Who should evaluate salespeople? • When should salespeople be evaluated? • Performance criteria • Quantitative performance criteria • Qualitative performance criteria • Conducting the evaluation session

29. Exhibit 17-8: Quantitative and Qualitative Performance Criteria

30. Performance Evaluations Let People Know Where They Stand, cont… • Conducting the evaluation session • Both manager and salesperson should be prepared for the interview • Be positive • Actually review performance • Finalize the performance evaluation • Summarize the total performance evaluation • Develop mutually agreed-on objectives • Formalize evaluation and objectives

31. Sales Managers Use Technology to: • Manage customers • Manage salespeople

32. The Basic Sales Management Functions, cont…

33. Summary of Major Selling Issues • An important challenge of the sales manager is to motivate salespeople using financial and nonfinancial methods • Most firms today use a combination of salary and financial incentives rather than straight salary or straight commission plans • The sales manager needs to understand the principles of leadership and apply them to salespeople based on their individual personalities and territorial situations

34. Summary of Major Selling Issues, cont… • The performance of sales personnel is evaluated by comparing their quotas and objectives to actual sales and job activities to determine their success • To effectively evaluate salespeople, managers should develop procedures to ensure fair treatment