Motivation in Sales Management - Essay Example

Sales Management Motivation is one of the key elements in employee performance and productivity. Salespeople, being employees, needs motivation for them to perform well and be productive. Even when salespeople have clear work objectives, skills, and working environment, those may not be sufficient to achieve those work. As the demographics of workforce is changing, motivating employees has never been challenging (McShane & Von Glinow, 75). While most managers would like to think that figures the ultimate driving force for their team, it would only be rightful While salespeople are definitely motivated by the dollar, there is more to what drives them other than the cash itself (Butlinger, 2007). When Herzberg developed his motivation-hygiene theory, he found out that the factors causing job satisfaction (motivation) were different from those causing job dissatisfaction. Top six among the factors leading to job dissatisfaction are : company policy, supervision, relationship with boss, work conditions, and relationship with peers. On the other hand, top factors affecting job satisfaction are: achievement, recognition, work itself, responsibility, advancement, and growth < Herzbergs Motivation-Hygiene Theory, www.NetMBA.com>. If Herzberg theory holds, then management should recognize these other factors in order to find out what motivates people in their sales team. It is important for the motivation of salespeople to be sustained. As salespeople are considered the forefront people in the organization, it is important to get them going always. While money is not the by all and the end all of being a good salesman, it is relevant for the sales managers to take care of each individuals motivation in the team. 2.) It has been a fact that motivation is linked with performance. People are at their best when they are recognized by their bosses, have good interpersonal relationship in the workplace, and when they fins satisfaction in their work. Despite the many motivation theories, pay or salary is the most common method of rewarding employees and the behavioral approach remains important.  To understand the relationship between performance and pay more thoroughly, and therefore to make pay more motivating and reinforcing, performance-related-pay (PRP) schemes are often encouraged.  PRP can reflect an individual’s, a team’s or a company’s performance .  Company schemes are usually an organizational wide incentive scheme. For example employees who holds company shares or year end dividends. Tempting as it may sound but not all companies are capable of giving out these incentives.   Most commonly used for sales teams is team PRP because it encourages team members to support lower performers and individuals can see the results of their efforts far more than with company performance schemes. Team quotas and individual quotas are set thereby promoting teamwork. The downside, is it puts on pressure to the slow members causing them to leave. Here rivalry also develops between teams. Individual PRP on the other hand links individual effort and reward, which motivates individuals to achieve objectives. .  Futrell also formulated several motivational mix namely, sales culture, incentives, non-financial rewards, training, leadership style, and performance evaluation as the common methods or techniques used by sales manager on their salespeople. (Futrell, 2001) 3.) EPI is involved in the trading and manufacturing of imported surface coatings since 1994. I am the sales manager on a team of 3. EPI imported the paints directly from Etherchem Industries in Malaysia and carried the brand name of the Product ECHEM. It carries a wide line of surface coatings generally use for wood such as lacquers, topcoats, etc. It also provides color and technical assistance to furniture exporters. EPI aims to be the choice provider of total coatings Solutions to customers in the Asia-Pacific Region. It aims to provide products, services & solutions with the highest quality at the best prices. The products are founded with a very strong technology - established in 1975 - 28 years experience in the surface coatings industry. 10 years technology partnership with Guardsman (A Top surface coating and furniture care products manufacturer in the USA) from 1985 to 1995. It also experienced 6 years technology partnership with Salchi of Italy (A Top Polyurethane coating manufacturer in Italy) from 1989 to 1995. EPIs (To client: Please fill indicate location or branches according to where you are) Sales Force: The sales force is compose of the sales manager and 3 sales executives. Profile is shown in Table 1. Employees’ morale, motivation and job satisfaction are quite low. Even without the employees verbalizing it, the poor performance on sales or the lack of initiative of the sales force to increase its performance or the lack of efforts to convince customers to buy and repeatedly buy the company’s products, are indicators of the lack of comfort in the work environment or the lack of commitment to the company’s goals, factors which determine job satisfaction and motivation, respectively. Promotion. Sponsorship in trade and furniture local exhibits. EPI gives away free coatings and volunteers to coat display items for the show. Maintenance of close relationship with the local furniture and exporter association by being actively involved in coating seminars and training. work to deliver proven, value for money, environmentally responsible solutions. With our strong brands, unrivaled technologies, service and distribution, on top of our ongoing commitment to develop new products, concepts and services, we deliver to our customers "more than just paint". side from selling the coatings and paints of the company, EPI also provides technical assistance to their clients in using the product. They also augment their product by tailoring its color according to its customers’ specifications. Considering that the company’s brand of paint is still new in the market, its exposure to the target customers must be strong and frequent. However, because the company is experiencing operational losses for the past months in the fiscal year 2004, it may not have sufficient budget for this purpose. Price. Cost-based pricing and competitive quality of the product - It is cheaper because the technology is from Taiwan. The supplier of the product from Taiwan is the originator of the technology of Valspar, the leading global supplier based in the US. Although Valspar patented the technology and brand, EPI was still able to acquire an equally superior product from its Taiwan supplier since the formulation and processing of the chemicals are closely similar to that of Valspar. 4.) Based on Futrells sales motivation mix, below are my plan for my sales team: Sales Culture. Improving sales culture is a motivation for sales people. Weekly sales meetings could be a venue to reinforce the organizations or divisions purpose. Other than discussing reports and sales targets, it is also a good venue to talk about learning experiences while on the field. This will give them a venue to share common experiences and will reinforce them to do better. Monthly lunch out with other departments will also help them associate with other people in the organization. It will also promote a better working relationship for everybody. Support group and sales needs to be working harmoniously though most of the time conflict arises at work. Since the team is still small and the company is quite young, ceremonies and rites including story telling wouldnt work much for the team. Basic Compensation. Companies generally compensate their salespeople in one of three ways: straight commission, straight salary, or salary plus additional incentive. Straight commission compensation arrangements allows the salesperson to get a pre-agreed percentage of the selling price. The percentage of the commission differs from product to product, industry to industry, and business to business. In a research, there are approximately 15% of firms practiced this type of payment scheme in the United States. Most of these firms indicate satisfaction this type of payment. There are a few advantages for using straight commission scheme: (1) it motivates salespeople (2).rewards is directly dependent on the sales thereby saving the firm to give pay outs when sales are slow. The downside to it though are (1) salespeople may push easy-to sell products only and not giving profit specialty items (2) no further effort among sales person when desired income is attained. These downsides have solutions though. First, putting high premiums on profitable products will encourage them to balance product push. Second, putting additional premium on a certain income level would prevent lax attitude among salespeople. Straight salary on the other hand, is criticized for eliminating salespeople to perform. A comfortable base salary allows promotes complacency. Analysts however thinks that this can be alleviated by rewarding top performers with salary increases or other extrinsic rewards. Most common is salary plus commission. As to how much will be determined by the type of products and to which industry the firm belongs. Considering the nature of our business, I would go for the latest since it is my belief that it will work best for the team. Basic salary would be just above the minimum industry pay out plus an attractive commission scheme. Special Financial & Non Financial Incentives There are several financial perks managers used to increase motivation. Cash bonuses, paid vacations, electronic gadgets prizes are popular instruments used by sales managers and even owners to drive salespeople to perform well. However, it would be important to specify mechanics of such perks since it might be a source for misunderstanding and decreased job performance. Perks are intended to create a competitive environment. For EPI, perks incentives will be implemented to increase employee morale and to promote work-life balance. Trips for two outside the country will be given as yearly incentive to salespeople who have reach their individual quota for at least 10 months in each year. Should the group targets be surpassed, another trip for the whole sales team will be given. This is to promote teamwork. Cash bonuses will be given to employees who have hit 10% more of the set targets. The amount of the bonus will be a percentage from the amount of the excess target. Group bonuses (cash) will also be given if group will hit 25% more of the target quota. Amount will also be dependent on the performance of the team. Reward points system will also be given to salespeople. Points will be awarded to each new acquired customers. This is to encourage sales team to be more aggressive in finding more clients. At the end of the year, points will be redeemed with items and treats. Sales Training. Experience does not necessarily mean skills. Education, being a lifetime process should still be present even at work thereby saying that sales training is a necessary tool to improve sales and personal skills. While product knowledge is a required training to produce, there are also other trainings necessary like personality development, communication and language training. More so because the team is so diverse in terms of age and nationality, these trainings will equipped them in the field. Since EPIs product is highly technical, the sale executives are always supported by technicians in order for them to provide excellent service to the customers. Nevertheless, the sales executives should be equipped with product knowledge. A comprehensive training program awaits EPIs sales executives. A newly hired sales personnel will undergo a product training for 2 weeks and will have a piggy back session for a week with an old sales executive. After 3 weeks, another week will be allotted for the fundamentals of selling. For sales supervisors, training will be the same except for the sales management training added for 3 days. Product training will be continuous and will be allotted 3 hours each week. This will also be part of the deliverables during performance appraisal. Major quarterly trainings will also be provided for all employees. Leadership Style. Leadership is motivation. Involvement of each team members is necessary especially in setting targets and establishing quotas. I also plan to be transparent giving my team a whole picture of what happened, whats going on, and what I plan to happen. From there, we will discuss individually, aligning our activities with corporate objectives. Below are the sales target for the year: EDP Sales Team Annual Sales Target (USD) Vanessa $ 1.0 million David $1.5 million Ben $750,000.00 These targets are based on the history sales and market potential based on research. Each month. The annual target are divided each month and that served as the basis for the monthly quota. Unlike most other sales team wherein targets versus actual are posted in the wall, I would like to go away from that culture. I feel like it is intended to put pressure especially on the weak one. Communication. Sales people are hungry for information and my experience has taught me that, in all but rare situations, can be trusted with corporate details. Unfortunately, too many organizations and their managers feel that people should only be given information that is relevant to their specific job. I would like to keep them aware of the progress theyre making in terms of achieving their sales targets. People are naturally curious and want to know how they are doing. Of course, confidential information will remain confidential but sharing safe information is important to them especially since its a small organization. Great leaders are always open to new ideas and methods of improving business and some of the best ideas come from the front-line staff. If sales are slow, then it is my responsibility to inform the sales executive that they need to focus on generating new accounts or business. Same also when costs are rising then it is a managers duty to tell them to be careful with their expenses. Regular meetings which I plan to hold every morning before they head to the field, email correspondence, broadcast voice mails are just some of the tools we can utilize in communicating with my team. Another effective method is through casual discussions. Communication must be clear and concise between employees especially when giving feedback because employees are sensitive with the issue. Sales people have a lot of knowledge and information and can often contribute important suggestions to improve the business and develop strategies against competition. I want to foster an environment where there is free flowing of ideas. Any ideas that will better of the systems and processes in the team will be rewarded with corresponding points. A sales manager should become a catalyst for change and make things happen. At the same time he should act as coach and a mentor. Gone were the days when working like a cow is equated to handwork. Efficiency and effectiveness should be given emphasis. I would like to provide work life balance among my people because there is more to life than work. Nothing nurtures the soul, boosts morale and keeps stress to a minimum like being able to spend time with friends and loved ones or engaging in activities that have nothing to do with work. Fairness is also one of the values I want to be in the team. Since its a small team, playing favorites would be so obvious and totally a no-no. Deadlines and polices will be implemented on everybody regardless of them being performers or not. Non-Financial Rewards People will work harder for someone who recognizes the effort they put into their work. Praising an employee is never a difficult process. In giving recognition though, it is important to be specific, be sincere, and giving it on time. Since my sales team is just relatively small, I think it wont be hard to give recognition to them. Many organizations promotes various career development or succession planning process. Talking with each staff individually about their career aspirations will help to make these programs more effective especially in a diverse environment with diverse team members. Showing interests on their career plans and showing support on their development will be greatly appreciated even if the organization does not have many opportunities for individuals looking for upward mobility. This will also enhance the image of the organization even if the employees leaves should there be no more opportunities for them Promotion shall be given every semester. Not necessarily promotion in ranks but providing them with challenging work roles. Lateral transfer or evaluation of job specifications will help me to identify which tasks could be taken away. Performance evaluation. Performance evaluation is basic to human motivation (Thomas, 8-11). Though a common misconception in organization is to link performance evaluation with salary increase, it is the role of the manager to make the employee understand that it is not so. If nothing else, performance discussions open the lines of communication between employees and supervisors and help them set mutually agreed upon goals. Having face to face discussions has become particularly important in an age when much corporate communication is done by cryptic voice or e-mail messages. Heavy use of technology seems to significantly limit the amount of time spent actually talking with employees. (Moulton, 2007) Communication systems between employee and the boss is important as well. Communication should be a two-way practice, handled with supervisors who are trained in performance discussion techniques and understand it’s an ongoing process. Training is absolutely essential in the performance of appraisal. Supervisors sometimes fail to include employees in the discussion process in such a way as to provide the average performer a way to self-identify development needs. Often, supervisors are not even prepared for discussions and feedbacks. The performance discussion system should provide a method for the supervisor and employee to have a meaningful discussion about how the employee has handled actual events against a set of clear expectations. (Moulton, 2007) Performance appraisal is done twice a year in EPI. Evaluation forms are given two weeks prior to the appraisal period for the heads to assess clearly the performance of each team members. The performance appraisal is competency-based since last year. In competency-based performance appraisal, ratings are based on the competency required from a sales executives. Unlike the previous years, performance management is based from job specifications. The disparity between competency rating and proficiency rating will serve as the things to work on of the employee. For example, planning & organizing skills standards is 4 and Ben got 3 in the proficiency rating, it means he has to work on the -1. However it is worked on will depend upon the agreement between me and Ben. EPI places importance on product knowledge skills as deliverable of sales executives. With this the scores of the product knowledge exam conducted within the semester period, will be part of the weight on her performance appraisal. Scores will be rewarded with reward points. This will encourage sales execs to really do good on product knowledge. In conclusion, the sales motivation mix presented by Futrel has relevance for the EPI sales team. Since the team is still small, it wouldnt be hard for the sales manager to work on things. The effectiveness of rewards system will be evaluated from time to time. Because the team is so diverse, it is important to be fair. Fair in the sense that there are times when decision on the implementation of policies will be carried without showing favoritism while recognizing differences. An example might be with sales reporting. Although within a department, and within the same job category, everyone is expected to submit their reports on time notwithstanding the level of positions or the length of service. Job sharing is also useful here. For example, if Vanessa has family issues to deal with, I should be able to consider those issues and determine whether or not exceptions are to be made while balancing the effect of making those exceptions and their impact on the overall performance of the group. Not an easy thing to do. Rather than try to develop the best idea alone, Solicit input from the employees involved and from other managers to determine what the most appropriate action is. Culturally diverse teams are capable of producing superior performance. Organizations around the world are recognizing the value of a culturally diverse teams and are actively promoting diversity. Utmost care should be taken to to ensure that the team can perform by promoting: trust, understanding, effective communication, involvement and participation. Diversity when well managed will produce a superior result. Works Cited 1. Futrell, C. “Sales Management” 2001. p 275 2. McShane, S.L and Von Glinow, M. “ Organizational Behavior. 2000, p 75 3. Motivation Theorist and Their Theories. 2008. 4. Herzbergs Motivation-Hygiene Theory 2007 Read More