Salesforce Recruitment and Selection Sales and Distribution Management Marketing 3345

Sales Force Turnover Rates* Consumer Industrial Services 18% 34% 21% 17% 26% 21% 45% 53% 65% More than 10% 0-5% 5-10% *Turnover rates per annum Source: Dartnell’s 30th Sales Force Compensation Survey (2009), p.187.

Turnover Rates in Selected Industries Industry 1999 Construction 13.8% Office Equipment 47.0 Insurance .8 Retail 51.2 Wholesale (Consumer Goods) 18.5 Electronics 14.1 Business Services 26.2 Pharmaceuticals 8.3 Banking 4.3 Real Estate 11.9 Source: Dartnell’s 30th Sales Force Compensation Survey (1999), p.187.

First Year Cost of a Salesperson in the U.S. Compensation (trainee average) $35,500 Benefits (approx.21.5% of compensation) 7,600 Field Expense 16,000 Direct Expense $59,100 Training Costs 7,100 Total Costs $66,200 Source: Dartnell’s 30th Sales Force Compensation Survey (2009), p.187.

The Recruiting Process Mark W. Johnston and Gary W. Marshall, Sales Force Management, McGraw Hill, 2006

Who is Responsible for Recruiting? Depends on size of sales force and kind of selling involved First-level sales managers often handle recruiting for: Straightforward sales jobs Jobs where new recruits need no special qualifications Jobs where turnover rates are high

Who is Responsible for Recruiting? When a firm must be selective, a recruiting specialist may assist in the recruitment process If the sales force prepares individuals to be sales or marketing managers, personnel executives or top-level managers often assist with recruitment

Job Analysis and Selection Criteria Conduct a job analysis to determine what activities, tasks, responsibilities and environmental influences are involved Write a job description that details the findings of the job analysis Develop a statement of job qualifications describing the personal traits and abilities needed to perform in the job

Who Conducts the Analysis and Prepares the Description? Current occupants of the job Sales managers who supervise people in the job Current staff should be observed and interviewed to determine what they actually do Use the job description creation process as a means of reaching consensus on job content, activities and training needs.

Content of the Job Description Nature of the product(s) or service(s) being sold Types of customers Specific tasks and responsibilities Relationship between the sales position and other positions within the organization Mental and physical demands of the job Environmental pressures and constraints

JOB DESCRIPTION FACTORS Selling Requirements: Degree of Responsibility New account vs. established and Authority: account Negotiations of pricing Selling through distributors Entertaining customers Career Paths: Level of buying authority Compensation plan Physical activity required Promotion timing Weekends away from home Relocation Non-selling Tasks: Reports to management Customer service and training Sales promotion

JOB DESCRIPTION FACTORS Performance Expectations: Performance Expectations: Activity level requirements Travel and entertainment Written proposals Earnings potential Individual vs. team selling Promotion leaders One time vs. systems selling Minimum sales volume or Type of prospects and customers profits One-on-one selling vs. groups Travel--how much and what kind Program or concept selling Technical knowledge Educational seminars Collecting receivables Marketing plans

Determining Job Qualifications and Selection Criteria This is the most difficult part of the recruitment and selection process Need specific criteria to guide the selection Methods deciding on criteria include: Examining the job description Evaluating personal histories of the current sales force to identify differentiating characteristics among high performers

Characteristics of Salespeople who Fail Instability of residence Failure in business within the past two years Unexplained gaps in the person’s employment record Recent divorce or marital problems Excessive personal indebtedness; for example, bills could not be paid within two years from earnings on the job

Recruiting Applicants Successful firms depend upon a well-planned and effectively implemented recruiting effort. Recruiting should be step one in the selection process. Internal sources of candidates consist of employees in other departments within the firm.

Recruiting Applicants External sources of candidates include: people in other firms educational institutions others attracted through advertising or employment agencies. Recruiting issues facing sales managers grow exponentially as companies expand globally and seek salespeople in new international markets.

External Resources Classified Ads Reaches wide audience Used if high turnover Tend to over-produce under-qualified candidates Internet Resume Sites Too new for significant data Will continue to grow in importance because of screening options and ease of access

External Resources LinkedIn Employment Agencies best if company pays Schools & Colleges Poised & easily trained Lack experience & become bored Customers, Suppliers & Competition Good if need w/out much training Legal & ethical issues Common: insurance, stock broker, office equipment, clothing

Inside Recruiting Advantages: Company employees have established performance records and present themselves as a known entity Recruits from inside require less orientation and training due to familiarity with current products, policies and operations Recruiting within bolsters company morale because employees see opportunities for advancement Facilitating internal recruiting starts with fully informing human resources of sales staff needs

Selection Tools and Procedures Application blanks Personal interviews Reference checks Physical examinations Psychological tests intelligence personality aptitude/skills

Selection Tools and Procedures Composites of psychological test scores offer the greatest assessment validity and predictive value for evaluating a candidate’s potential and possible future job performance. Personal interviews offer the lowest predictive potential but often carry the greatest weight.

Personal Interviews Structured interview applicants are asked the same predetermined questions potential weakness is that interviewer may fail to identify or probe a candidate’s unique qualities or limitations

Personal Interviews Unstructured interview induces free discussion on wide ranging topics afford the applicant opportunity to talk freely with minimal direction and may yield unexpected insight requires experienced interviewers with interpretative skills

Background and Credit Check Previous Employer Reference Check Dates of Employment? What was the Job? What type of selling was involved? How did the applicant get along with his/her manager? Customers? Fellow salespeople? How did his/her job performance compare others? Applicants strongest points? Weaknesses we should help him/her overcome? Why did s/he leave your company? Would you rehire the applicant? Why?

Physical Examinations Sales jobs require sound basic health, stamina and the physical ability to withstand stress Caution should be exercised in requiring medical examinations and other specific tests for such things as drug use or the HIV virus A physical exam can be performed only after extending a job offer Managers deem using a standard physical examination for all positions ill-advised

Tests Well designed, validated and administered tests provide a valid selection tool Possible reasons to use test cautiously Tests may not validly predict future success in a specific firm Some creative and talented people may deviate from expected norms Intelligent and “test-wise” individuals may be able to manipulate results Some tests may discriminate against people of different races, genders, et al – thus becoming illegal

Guidelines for the Appropriate Use of Tests Test scores should be considered only a single input of several in the selection process Applicants should be tested only when abilities and traits tested hold relevance to the job When possible, tests with internal checks for validity should be used The firm should conduct comparative, longitudinal studies to validate the predictive value in their setting

Validity of Predictors for Entry-Level Jobs TESTING VALIDITY Validity of Predictors for Entry-Level Jobs Predictor Validity Ability composite (tests) .53 Job tryout .44 Biographical inventory .37 Reference check .26 Experience .18 Interview .14 Training and experience ratings .13 Academic achievement .11 Education .10 Interest .10 Age .01

Legislation Impacting Recruitment Mark W. Johnston and Gary W. Marshall, Sales Force Management, McGraw Hill, 2006

Illegal/Sensitive Questions Nationality or race Religion Sex and marital status Age Physical characteristics Height and weight Financial situation Arrests and convictions

Key Terms job description internal sources external sources selection tools and procedures structured interview unstructured interview