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Recruitment, training, compensation


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Recruitment, training, compensation

  1. 1. Recruitment 1
  2. 2. Importance of Recruiting:  High Costs of Hiring & Training  Opportunity / Future loss in wrong recruitment  High Turnover (50% within 2-3 years)  Increased role of Salesperson.. Pre-recruitment Form  Build up a reservoir 2
  3. 3. Sources of Recruitment  Present Employees  Competitors: Premium to be paid  Non competing forms – vendors, customers  Educational Institutions  Employment Agencies  Voluntary applicants – Walk in  Miscellaneous Sources – Rotary, chambers 3
  4. 4. Recruitment Process  Job Analysis  Analysis of environment in which salesperson must work  Duties & responsibilities  Observe & record the various tasks of the job as they are performed 4
  5. 5. Recruitment Process  Job Description  Written job descriptor of what a jobholder does, how it is done, why it is done  Tool for hiring, managing and firing  Job Specification  Minimum acceptable qualification that a candidate needs for performing the job successfully  Ambition, enthusiasm, persuasiveness, discipline 5
  6. 6. Recruitment Process Attracting a Pool of Talents No. of applicants will generated by a firm will determine future success / failure. Selection Candidate who best meets the qualification & has the greatest aptitude for the job. 6
  7. 7. Criteria Used to Select Sales Personnel Requirements in Sales Personnel Mental Aptitude Dimensions Personality Dimensions Mental Alertness Honesty or character strength Sociability Business terms and memory recall aptitude Cynicism High energy levels Communication skills Dominance Numerical ability Competitiveness Mechanical interest Emotional maturity Work habits Work motivation 7
  8. 8. Selection Process Wide range of procedures / techniques. Simple one step system (personal interviews) to complex multiple systems (preliminary interview tests – final interviews) 8
  9. 9. 1. Initial Screening / Interview or Internal (conducted by staff member/subordinate 2. Formal application form (central record of all pertinent information collected during process) 3. Employment Tests  Intelligence Tests: learning / alertness / reasoning ability  Sales Aptitude Tests: Selling know how / Tact / Diplomacy  Interest Tests: Pattern of a sales applicant’s interest in selling  Personality Tests: Measure assertiveness, initiative & extroversion; both objective and projective tests (Myers-Briggs); Perceptual ability, emotional stability 9
  10. 10.  Honesty Tests (life insurance)  Psychometric tests: Mind of the individual, strength and weaknesses  Knowledge Tests: Knowledge about company, products, competitors, prices 4. Comprehensive Interviews (Both come to know each other) 5. Reference checks 6. Physical examination 7. Making the selection 10
  11. 11. Sales Training 11
  12. 12. Sales Training 1. Initial Sales Training  Varies between 3-9 months; ineffective if less than 3, more than 9.  Not intended for natural salespeople, or people who do not want to change; difficult to decide; so offered to all 2. Refresher Training  GE: 20 days a year  Forget 50% of learning within 5 weeks  Xerox: 87%  Reinforce skills in Initial Training 3. Buddy System  New accompanies old 12
  13. 13. 4. Training by manufacturer to distributor 5. Training by manufacturer to customer 13
  14. 14. Benefits of Training Faster Development Training Increase Sales Improve Morale Reduce Turnover 14
  15. 15. Designing Sales Training 1. Determine Objectives; minimizing times sales people have to be away from field  Increase sales: Efficient closing strategies  Increase profits  New accounts penetration: Improving time / account management  New distribution channel  Product training  Customer understanding  Report writing 15
  16. 16. Designing Sales Training 2. Review sales activities in the organization and prioritize them should relate to actual selling situations 3. Identify training needs 4. Decide on who should be trained 5. Extent of training (how much) 16
  17. 17. Implementing Sales Training Program 1. The Right Trainer  Staff Trainer  Outside Experts: (expensive, difficult to customize, but more effective)  Sales Manager (No Time) 2. Timing: (Initial / Refresher) 3. Place of Training a. Centralized Training b. Third Party Training c. Training Tours d. On Line Training e. On site training f. Postal training g. Satellite training 17
  18. 18. Methods of Training (Group) 1. Lectures: goods for basic applied knowledge, but ill suited for training; cannot convey act of selling 2. Discussions: Trainer leads, stimulates; case studies, useful when participants are experienced 3. Audio cassettes 4. Demonstration (Movie, Slide Presentations) 5. Role Playing (better result if done in front of experienced group). 18
  19. 19. Methods of Training (Individual) 1. On the job – Training (Telling – Showing – Practicing – Evaluating) 2. Correspondence: ‘Home Study’ 3. Personality Development 19
  20. 20. Evaluation Kirkpatrick’s four stage model:  Reaction (salesperson bias affects evaluation)  knowledge acquisition  behavior change / transfer of learning (can be measured through observation)  organizational outcome Methodology 1. Interview Salesperson for reaction 2. Interview Trainee 3. Interview Customer 20
  21. 21. Sales Force Compensations 21
  22. 22. Characteristics of Compensation Plan 1. Fair; Counting only sales volume & ignoring others like training novices, securing is not fair, comparable to industry 2. In sync. with co. objectives Should direct activities of sales people so as to achieve company aims, eg. If new business/servicing important then compensation should be based on new accounts 22
  23. 23. Characteristics of Compensation Plan 3. Flexibility must acknowledge disparities in territory; acknowledge pioneering activities, weaning customer away from competitor 4. Incentive and motivation Direct link between effort, results and rewards, Bonus/Commission 5. Security of Steady Income 6. Ease of administration & comprehension 23
  24. 24. Types of Compensation plans 1. Straight Salary: Used in organization require sales people to mainly sell and maintain customer relationships; also for team selling in industrial markets Benefits  Stable income, sense of security  Reduces costs in growth market  Better direction & control by management because sales people do not depend on sales for pay.  Switching territories / quotas does not rouse resistance  Related work is taken w/o grudge 24
  25. 25. Negatives  Complacency, no extra effort in selling  Sales are distorted in favour of easy to sell products  Capable sales people do not feel rewarded  Turnover rises 25
  26. 26. Types of Compensation Plans  Straight Commission Most effective for small and new organizations; may be different for different products, at different volumes etc. Benefits  Objective measure to judge performance  Incentive to sales people for volumes  Exodus among low performers  Helps in setting targets  Hinders transfer of sales people between territories 26
  27. 27. Negatives  Customer service / relationship building overlooked  Little control over sales people – become proprietarily do not give reports, do not follow up leads, shed prices, force sell  Focus is on sales not on profits  Hinders transfer of sales people between territories  Wide differences of pay leading to de- motivation  Difficult in declining stages of product life cycles  High turnover 27
  28. 28. Compensation plans 3. Sliding Scale Commission  Constant Plan  Regressive  Progressive 4. Combination Plans  Fair balance between security & incentive  Balance between sales activities & efforts  Becomes difficult to comprehend or account with complexity; involves a lot of calculations and administration  Have to be regularly analyzed and monitored in keeping with changes in external environment 28
  29. 29. Developing a Plan  Type of Industry and position of firm in Industry  Awareness of company objectives  Market share  New customers  Reduced expenses  Specific Objectives What does the comp. plan aim to achieve?  Income and security  Fair and equitable  Flexible  Describe the job  List all components  Measured with other similar jobs  Relative importance 29
  30. 30. Developing a Plan  Determining general levels of compensation  What system does competitor use?  What is average compensation?  How are competitors doing with their plans?  What are the risks of departing from industry patterns?  Skills / experience / education  Level of income for comparable jobs in industry  Level of income for comparable jobs in company 30
  31. 31.  Methods of Payment  Salary  Commission  Bonus  Employee Stock Options  Special Prizes  Drawing Account  Special Cash Incentives  Non Cash Incentives  Fringe Benefits  Sales Force Expenses 31
  32. 32.  Pre-testing plan Should be tested against possible, maximum and minimum sales  Administering the plan  Evaluating the plan Periodic monitoring is essential for taking into consideration changes within and outside the company 32
  33. 33. Some Compensation Tools Sales Contests 1. To encourage increase in sales volume 2. To give a push to certain products 3. Also for dealers, distributors and consumers 4. Necessary to pay attention to theme, timing, number of awards, expenses 5. Should be evaluated in terms of effect on various business functions (sales and profits, sales force motivation, customer relationships etc.) 6. Should be used only as promotional tool 33
  34. 34. Some Compensation Tools Sales Force Expenses 1. A good expense plan should be:  Beneficial to sales person  Beneficial to organization  Easy to administer  Easy to understand 2. Types of expense plan  Company pays all (usually expense quotas are given)  Sales person pays all; used in case of state commission plans  Company partially pays; fixed traveling/DA 34
  35. 35. Some Compensation Tools Fringe benefits: 1. Has become important in the sales function 2. Various FBs include  Social security  Pension and retirement  Insurance: Medical and accident  Holidays and Leave  Others like Company car, interest-free loans, subsidized housing and food, mobile telephones, customer entertainment expenses 3. Most FBs are non taxable; certain benefits like education and insurance are highly valued, sometimes more than commissions 35