Organization of Sales Force & Sales Leadership: Chapter 11 &15

Organization of Sales Force
& Sales Leadership
Chapter 11 &15
1
Three basic tasks must be accomplished by all
organizations
2. Maintenance of Order in achieving sales forces

goals & objectives
4. The assignment of specific task &

responsibilities
6. Integration & Coordination with other elements

of the firm
2
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
3
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).
4
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.
5
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.
6
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.
7
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. 8
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. 9
 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’.
10
Leadership and Motivation
11
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
12
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
13
Power and Leadership
Five types of power which may be present in interpersonal

relationships:
Expert Power
Referent Power
Legitimate Power
Reward Power
Coercive Power
14
Leadership Approach
 Trait Approach
 Behavior Approach
 Contingency Approach
15
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.
16
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.
17
Coaching
The continuous development of salespeople through supervisory

feedback and role modeling.
 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 18
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.
19
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.
20
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 requirements

2. Safety needs – protection from various kinds of threats,
dangers and uncertainties
3. Social needs – significant relationship with other people
4. 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
21
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.
22
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 23
satisfaction.
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
24

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Organization of Sales Force

& Sales Leadership

2. Maintenance of Order in achieving sales forces

4. The assignment of specific task &

6. Integration & Coordination with other elements

1. Formal and informal organization

 Formal Organization is a management created

 Informal Organization is a communication pattern

 Horizontal Organization is one in which the number of

 Vertical Organization is one that has several levels of

The factor that determines whether a vertical or horizontal

 Centralized organization is one in which responsibility

 Decentralized organization is one in which the

There is usually a higher degree of decentralization as an

 Line function is the primary organization activity.

 Staff function is the supporting organizational activity.

In marketing organization, the selling function is the line

 Size of the company is a major factor influencing the

 For a small company there is likely to be no formal

 If the firm grows beyond the small scale entrepreneurial

 Middle level management should be developed to take

 The Function Organization is the organization based on

 Geographical organization is the one in which selling

 Customer Specialization is the sales organization in

 Combination organization Geographic, customer, and

Five types of power which may be present in interpersonal

 Inspirational leader: the sales manager is the emotional

 Innovator: a leader is the source of problem-solving ideas for

 Superior performer: ideally the supervisor is a proven

 Guardian of the status quo: sales manager speaks for and

 Perception: a sales manager must be skilled at perceiving the

 Conceptual ability: it is the process by which one relates to and

 Self-awareness: it is a person’s ability to recognize that a leader

 Human relations skills: art of creating and maintaining

The continuous development of salespeople through supervisory

 The core of sales management – is simply the “how-to”

 To determine the proper incentives to use, sales

 Research also suggests that salespeople’s psychological

 Primary needs: physical needs that must be satisfied

 Secondary needs: psychological needs that are satisfied

 Rational needs: are those based on reasons.

 Emotional needs: these are based on emotions or may

The theory states that needs on the lowest level must be

1. Physiological needs – basic requirements

 Theory that people decide how much effort to put into

 Salespeople will be motivated to do well if they belief that

 High motivation occurs when a salesperson values the

 Concept that a salesperson’s motivation stems from the

 It is extremely important that a salesperson understand

 Path-goal theory is a leadership model that says the

 Theory X : People are generally lazy to work and

 Theory Y : People like to work and are motivated

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