Strategic Sales Management in Procter and Gamble Company - Research Paper Example

Strategic sales management Table of Contents Strategic sales management 1 Table of Contents 1 About the Company 3 Recruitment strategy 3 Shortcomings in the recruitment strategy 6 Proposed reward and Sales Incentive Strategy 8 Skill Based Pay 9 Long Term incentives 9 Performance Bonus 10 Flexible Benefits 10 Merit Pay 11 Overtime pay rules 11 Team Incentive Systems 12 Conclusion 12 Recommendations 13 References 15 Bibliography 17 Introduction In the globalised business environment prevailing in the world, it has become extremely important for organizations to have a human resource base. Hence, it becomes essential for business organizations to have an effective recruitment policy that seeks to include employees who can actually add value to the organization. Therefore, it becomes important to have a talented and motivated workforce in the organization so as to bring about organizational benefits. The process of having a good human resource base does not end with recruiting people as it is equally important to have motivated employees who can easily align their personal objectives with the organizational objectives so as to bring about organizational efficiency and generate competitive advantage. In order to have motivated employees, it is necessary to ensure a proper job fit so as to align the objectives of the employees and the employers. This requires a good recruitment strategy that would actually help in selecting a set of individuals who would be able to align themselves with the job responsibilities as well as the working culture in the organization. This would also boost up the morale of the employees who would be motivated to take up the job responsibilities (Griffin & Moorhead, 2009, p.118). The present study would be based on analysing the recruitment and staffing issues for the FMCG giant Procter & Gamble. The choice of the organization assumes significance as the company is considered to be among the largest FMCG companies of the world having its operations in diverse geographies with a wide product portfolio. The study would analyse the present recruitment policy of the organization and would try to find out the possible shortcomings in the strategies of recruitment and staffing presently adopted and implemented by the company. It would also try to formulate a proper recruitment and staffing strategy for the organization which would also include the framework for compensation, incentives and reward programs so as to motivate the employees to provide their best effort at the organization. About the Company Procter and Gamble (PROCTER & GAMBLE) is one of the most coveted FMCG Company of the world. The organization has its headquarters based in Cincinnati, USA and successfully operates out of 180 different diverse geographic nations with a wide array of product offering. The strengths of the organization can be analysed from the fact that its market capitalisation is greater than the GDP levels of many nations. The company also has a well defined policy of serving the society through a well knit policy of corporate social responsibility. The organization also has a well defined recruitment and staffing policy that helps it to churn out the best possible employees. It also has a raining and development program that trains employees to meet the standards required to bring about efficiency in organizations like PROCTER & GAMBLE (Procter & Gamble, 2011). Recruitment strategy Procter and Gamble follows a highly rigorous and comprehensive framework for recruitment and selection. The candidates selected for the organization are generally asked to go in through a rigorous session of numerous rounds of interviews. In the initial strategy, the candidates are asked to appear for an interview that tests the candidate’s ability to produce high volumes of quality work. The candidates pass through two rounds of filtering after which a test of general knowledge and general aptitude is conducted. The extent of success in these tests determine the level of efficiency of the candidate following which they are asked to report at the headquarters where a daylong grilling sessions take place. The main motive behind the company with regard to the tough process is to analyse the extent to which the candidates can familiarise themselves with the situation and adjust according to the work culture of the organization. The company believes that a candidate who can deliver quality work after being grilled in a rigorous session within the organization can actually deliver results according to the desires of the organization. The candidates are also tested for their innovative ability which is a very important aspect, considering the fact that innovation constitutes the core value of the organization. The ability of the candidate to produce quality work in a tough environment helps in identifying the traits of the candidate. The organization can thus be in a better position to analyse whether the person would fit in with the responsibilities of the job profile. This would ensure a complete harmony between the abilities of the employees and the organization (Schuler & MacMillan, 1984, p.248). Ensuring job fit is essential because it helps in motivating employees who are important considering the direct correlation between job satisfaction and motivation. Job satisfaction is again directly linked to the ability with which an employee can fit in with the working conditions of a particular organization. In addition to this strategy, the company also has a separate strategy for hiring fresher’s or graduates. The recruitment policy for these candidates assumes importance considering the fact that they would be the people who would be actually doing the field work. The company also has a policy of having students as summer interns. This actually helps the firm to have a better overview of the candidate with regard to his/her abilities and the extent to which an individual can match the organization culture and deliver results accordingly. In addition to this, the company also goes in for campus hiring’s from reputed colleges and business schools so as to bring about the best candidates in the manifold of the organization. The company also conducts an annual conference and seminar named “Research and Training Careers in the Industry” (The National Academy of Sciences, 2007). This is a forum in which the organization provides an opportunity for individuals to have a glimpse of the working environment as well as the plethora of opportunities available at the organization. This forum acts as a platform where candidates and managers can come on a common platform and share their queries. The company also sponsors the doctorate level of education to some of the deserving employees. This would on one hand, bring about employee satisfaction and motivation and would also help in improving the learning curve of the organization so as to bring about organizational efficiency. This is also important considering the fact that employees are the ultimate resources with which an organisation sustains itself in the market. With the prevailing red ocean business environment, it has become absolutely essential to bring about organizational efficiency so as to induce greater sustainability in the highly turbulent business market. Employee retention is another area that derives considerable importance for business organizations. PROCTER & GAMBLE has a retention strategy in which the firm tries to create a congenial environment for employees. Emphasis is laid on mentoring and creating a home like environment that helps the employees to share their thoughts as well as grievances so as to help in creating a favourable environment and to boost the morale of the employees (The National Academy of Sciences, 2007). The company also has a framework for continuously improving the knowledge base of the employees by supporting learning programs like PhD degrees for candidates. This not only helps to generate motivation among the employees but also helps to create organizational efficiency in the long run. This helps the firm to maintain profitability and sustainability in the turbulent business environment. Shortcomings in the recruitment strategy The analysis of the present recruitment of PROCTER & GAMBLE shows a carefully designed policy that seeks to not only churns out the best possible talents but also helps in creating a congenial environment at the workplace. However, in spite of all these measures, certain shortcomings also exist in the recruitment policies of the organization. Some of these issues relate to the aspect of aligning organizational culture when the firm undertakes a merger and acquisitions strategy (Siman, 1986). High cost of training also emerges as a serious issue with employees resorting to job switching after completing their training modules. There are also certain issues with regard to the incentive structure and planning. Moreover, a long and tedious recruitment policy also leads to creating a negative attitude among the prospective employees. In addition, the PROCTER & GAMBLE only favours recruiting from elite educational institutions. The biggest problem associated with this is that the candidates have an attitude of easily switching between jobs once they have attained a certain level of experience. This calls for the need to ensure a condition in which the employees do not tend to switch between jobs. The present incentive structure of the organization is largely based on the principle of long term incentive strategy. Under this strategy, the organization drafted a uniform strategy for all its subsidiaries operating in different economies of the world. This led to a situation of non-uniformity of policies within the different subsidiaries of the organization. This aspect also assumes significance considering the fact that different geographies have different business environment which makes it increasingly difficult to have a uniform reward structure. This tends to have a de-motivating effect on the employees who feel discouraged to deliver results at the organization. This results in employee turnover which again emerges as a serious threat to the organization. High turnover rate leads to a chain of negative outcomes as it becomes increasingly difficult to hire new employees. Training costs also emerge as another possible threat as the company has to incur a significant amount of training for the new employees so as to make them fit for delivering results at the organization. This calls for the need to ensure region wise planning of HR policies like recruitment and reward program. This would ensure greater motivation to perform a task so as to generate organizational excellence. The company also relies on internal employee referrals for recruiting new employees. This sometimes creates a serious issue as external candidates do not get a chance and moreover, sometimes internal referrals may not prove worthwhile which again underestimates the need for hiring talented employees. As a part of its future recruitment strategies, the company should go in for campus recruitment as well as external hiring’s especially for its field level employees. Freshers are generally known to have greater motivation levels to perform at the organization. In order to address issues relating to turnover of trainees, the firm can take a strategy to include lower level colleges where candidates would have a comparatively lesser tendency to switch jobs. The recruitment process should also try to analyse the flexibilities of the candidates apart from general aptitude and communication skills. The process of hiring must also be shortened so as to make it less tedious and cumbersome for the candidates. The organization should also formulate policies that tend to analyse the candidates abilities to adjust themselves to the changing scenarios. They should look out for multiple talents that would help them in undertaking cross functional roles. Proper training should also include on the job training which would help the candidate to familiarise themselves with the nuances of marketing. This is even more important for field based jobs as employees need to have a good understanding of the market conditions before entering a new job. The company should also increase its focus towards increasing the number of summer interns. This is important as a candidate who spends a significant amount of time within the organization has a greater chance of performing his/her job responsibilities in an effective manner. These candidates could easily gel with the organizational culture which would help them to take up job responsibilities very quickly. The company can also get more time to evaluate the abilities of the candidate which would help in creating greater job fit of the organization with the employee. The company should also formulate region specific recruitment plans. This assumes significance considering the fact that different regions have differences in organizational culture. Moreover, regional imbalances also exist in compensation and reward programs. This calls for the need to ensure greater region based policies which would help in generating greater job fit. The company’s approach to these strategic issues would be critical for defining its profitability and innovative ability in the turbulent business environment prevailing in the highly globalised and competitive business world. Proposed reward and Sales Incentive Strategy Globalisation has been the backdrop against which there has been overall growth of GDPs in nations. However, with the advent of the global financial crisis, companies have witnessed a gradual fall in the growth of their sales revenue. Such was the case with Procter and Gamble (P&G) which witnessed stagnant sales. The fall in the sales can be attributed to the economic slowdown which affected the cost sensitive consumers to shift their preference to the lower priced consumer goods. The human resource department has an important role to play in this regard. The aim is to design and develop an incentive and remuneration system which would help the employees and consequently, help in generating sales revenues. The sales performance rewards must be based on the following three fundamental aspects; Direct financial rewards, Career Advancement, and Non financial compensation (Texax A&M University, n.d., p.1). The following are some of the strategic reward system that the company may implement (University of Nevada, 2011). Skill Based Pay The company could introduce a skill based pay for its employees. Skill based pays are negotiated and introduced at the enterprise level. It cannot be designed at the macro or industry level. In this case, introducing a skill based pay would necessarily mean assessing the skills and expertise of the employees as per the requirements of the job. Since the project primarily concerns the sales department, skill based pays would differ according to positions, namely sales executives, sales team lead, sales manager etc. Moreover, the level of expertise would also be different according to the years of experience. Thus, a fresh sales executive would have a different and lower pay scale than an executive having a few years of experience (Silva, 1998, p.5). This would be effective to motivate the employee to attain greater expertise and skills to attain a higher scale of pay. Long Term incentives A long term incentive system could be devised for the higher level executives, like the sales managers, regional sales head, etc. Under this system, a bonus would be paid based on his long term performance. This would not only act as an incentive for enhancing performance but would also attain employees’ loyalty to a considerable extent. It would motivate him to stay with the organisation and contribute to its progress and growth (Silva, 1998, p.5). This scheme is predominantly used in Japan and the United States. Application of this scheme in the above countries has been associated with fall in employee termination. Performance Bonus This would be the most effective method of enhancing the performance of sales people. The calculation of bonus should be based on performance evaluation. Performance evaluation plays a major role in job assignments, promotions and for allocating intangible rewards. In this regard, implementation of a group bonus system would also play a crucial role. The company could distribute the monetary rewards when a candidate obtains a specific organizational objective or goal. This specifically helps in recognizing the achievement of the candidates which consequently helps to lift their confidence. The company could establish objective standards. In this case, the company could set sales targets for the salesmen in which the minimum number of products that would have to be sold would be fixed. This would be effective in measuring and evaluating performance of the employees and also enhance their performance (Gibbs, et al, 2005, p.5). Flexible Benefits The company could implement a flexible benefits program for the employees in which the employees would be given the choice of choosing their benefits. This would increase the likelihood of the benefits coverage to fit the needs of the employees. Following from the expectancy theory, flexible plans are expected to increase the perceived value of benefits received from the employee and therefore their benefit satisfaction. This plan would be specifically beneficial for an organisation working with a diverse workforce where there can be a lot of individual differences (Milkovich, Sturman, & Hannon, 1993, p.6). Merit Pay The merit pay system is specifically applicable for attracting, retaining and motivating employees. This system is also based on performance of the employees. The aim is to implement a merit salary increase budget and then distribute the budgeted funds among the employees which are based on the performance of employees. However, the incentive system under variable pay is more effective. Under the incentive system, employees have a greater motivation towards achieving greater results. The merit pay system, however, suffers from certain drawbacks. Merit pay plans requires annual evaluation of performance and are subjected to pay adjustments. “This long time frame makes it difficult for employees to connect the pay change with the behaviour that may have occurred many months ago” (Bellavary & Allen, 1995, p.2). This creates a situation in which the individuals’ compensation cannot be related to their performance. The situation has different effects for employees whose performances are exemplary and those employees whose performances are average. It is not able to motivate both to the same extent. It implies that too much money is gained by the average performers while too little is gained by the top performers (Bellavary & Allen, 1995, p.2). Overtime pay rules Since the sales employees are required to make extensive travel across various places, they do not have a fixed number of working hours. It is recommended that they must be paid a certain amount for working above the maximum numbers of hours. This is not regarded as a method of motivating them, but rather giving them the convenience for working the extra time. This would reduce the grievance for working more number of hours and not being paid adequately. Team Incentive Systems The organisation should emphasize more of team incentives. This would involve introducing a gain sharing and profit sharing system. Under the system, the team incentives would be aligned with the organisational outcomes (Hoffman & Rogelberg, 1998, p.1). The organisational outcome is measured based on financial grounds. When the organisation makes a certain amount of profit, it is shared among the team members. This system would necessarily achieve greater team work and introduce more team spirit. Employees would also put forward the interest of the team and the organisation than their individual gains (Hoffman & Rogelberg, 1998, p.1). The company can also introduce a gain sharing system in which the non-financial outcomes like quality improvements, customer satisfaction and productivity can be shared in terms of bonuses. Conclusion The analysis of the topic of study reveals considerable importance of organizational excellence in the globalised competitive environment. P&G is one of the largest known FMCG brands of the world operating in diverse geographies with a wide range of product portfolio. The analysis of the recruitment strategies of the organization reveals considerable areas of strengths. The well drafted recruitment policy ensures the supply of quality and talented workforce for the organization. The company’s stringent hiring norms ensure a good analysis of a potential candidate before being selected for a job. The organization also has a good policy of training and development which helps to train employees so as to ensure greater dedication which subsequently generates motivation among the employees to perform at the organization. The analysis also reveals a few loopholes in the recruitment policy of the employees. The most important of these constitutes a single strategy for recruitment in all its subsidiaries based in different regions. This emerges as a significant threat as different regions have a difernt cultural and organizational barrier which renders the immediate need for creating region specific recruitment plans. The reward system of the organization should also be based on a regional basis as different regions have different business environments and competitive framework which creates confusion among the employees. This ultimately leads to de-motivation which results in employee turnovers. The company also has adopted measures towards creating a platform for individuals to put forth their doubts and suggestions which are shared on a common platform. This reduces instances of confusion and grapevine communication which leads to employee motivation and low turnovers. The rewards policy framework is one of the biggest motivators which call for immediate attention from the policy makers of the organization. Adopting such strategies would lead to the creation of long term sustainability and organizational excellence. Recommendations It is recommended that the system of recruitment of the sales team is done on ethical grounds. This is because the sales staffs remain directly accountable for the revenue earned by the company. Recruitment done on the basis of employee referrals might not be fair and would not yield the required results. Employees must be recruited as per their performance and merit. Since P&G is a reputed organisation, it should put special emphasis on prior qualification and expertise and experience and least importance should be given to employee referrals. In addition, the incentive system in the organisation must also be developed on fair terms. Clear distinctions must be made between the employees yielding high performance and employees with average performance. An incentive system which has biasness or loopholes is sufficient to de-motivate the employees. Also, the system of incentive should be such that motivates the employees to improve their performance and not put excess burden on the employees’ shoulders. The targets set for the sales people should be reachable and attainable. It would be useless to bog down the employees with excessive pressure. There should also be a system of performance evaluation based on which the incentive system would be framed. Along with this, a system of training could be developed which would be aimed at improving efficiency and fairness (Rahman, et al., 2010, p.1). Employees must also be given the right to voice their opinion with regard to the benefits and incentives they enjoy. This would be useful in ensuring that the incentives they receive match their requirements. This would not only help to enhance employee loyalty but also be effective in gaining goodwill for the company. It must be realized that cash incentives might not always be effective in motivating and increasing efficiency significantly. At times, even a token of appreciation or a reward for having achieved a particular target would be effective in motivating them. In other words, the incentive system should be such as to make the employees feel that they are valued by the organisation and are not mere generators of revenue. References Bellavary, J. R. & Allen, R. W. (1995). Rewarding Performance: The Role of Variable Pay. [Pdf]. 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