17-1

Motivation, Compensation, Leadership, and Evaluation of Salespeople Chapter 17 Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

Chapter

Main Topics The Tree of Business Life: Management Motivation of the Sales Force The Motivation Mix: Choose Your Ingredients Carefully Compensation Is More Than Money The Total Compensation Package Chapter

Main Topics Nonfinancial Rewards Are Many Leadership Is Important to Success Performance Evaluations Let People Know Where They Stand Sales Managers Use Technology Chapter

17-6 The Tree of Business Life: Management The Golden Rule Guided by The Golden Rule:  Remember that, as a sales manager, you impact the lives of your salespeople and their families  Help make your salespeople successful by putting their interests above your own  Remember that people come before power, influence, and wealth (PIW) I T C Ethical Service Builds T r u e Relationships T TT TTTT TTTT

17-7 Motivation of the Sales Force  Motivating salespeople at two levels  Motivation of the individual salesperson  Motivation of the entire sales force  Motivation is the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period

17-8 The Basic Sales Management Functions

17-9 Directing average people to perform at above-average levels  Motivational  Compensation  Leadership The Basic Sales Management Functions

17-10 The Motivation Mix: Choose Your Ingredients Carefully  The basic compensation plan  Special financial incentives  Nonfinancial rewards  Leadership techniques  Management control procedures

17-11 Exhibit 17-1: Sales Manager’s Motivation Mix

17-12 Compensation Is More Than Money  Sales performance can be rewarded in three fundamental ways  Direct financial rewards  Career advancement  Nonfinancial compensation  Although a sales reward system is not the only means of motivating salespeople, it is the most important

17-13 Exhibit 17-2: Examples of Various Salary Plans

17-14 Compensation Is More Than Money, cont…  Three basic plans of financial compensation  Straight salary plan  Straight commission plan  Combination plan

17-15 Compensation Is More Than Money, cont…  Straight salary plan  Advantages to the salesperson  Advantages to management  Disadvantages to the straight salary plan  When to use the straight salary plan

17-16 Compensation Is More Than Money, cont…  Straight commission plans  Three basic elements of straight commission  Pay is related directly to performance  A percentage rate of commission is attached to the unit  A level at which commissions begin or change is established  Drawing accounts combine the incentive of a commission plan with the security of a fixed income  Advantages of the straight commission plan  Disadvantages of the commission plan  Administrative problems with the commission plan

17-17 Compensation Is More Than Money, cont… Combination plans  Salary and commission  Salary and bonus: individual bonus or group bonus  Salary, commission, and bonus: individual bonus or group bonus

17-18  Combination plans  Salary and commission  Salary and bonus: individual bonus or group bonus  Salary, commission, and bonus: individual bonus or group bonus Compensation Is More Than Money, cont…

17-19 Compensation Is More Than Money, cont…  Bonus: individual or group  Across-the-board bonus  Performance bonus  Sales contests

17-20 The Total Compensation Package  People choose a sales career for both nonfinancial and financial reasons  The salesperson receives numerous forms of nonfinancial compensation

17-21 Exhibit 17-4a: Salary and Fringe Benefits for a New Representative

17-22 Exhibit 17-4b: Salary and Fringe Benefits for a New Representative

17-23 Nonfinancial Rewards Are Many  Achievement or recognition awards  Transfer to larger, more challenging sales territories or promotion to key account management  Sales manager’s praise

17-24 Leadership Is Important to Success  Leadership  The leader’s task and relationship behavior  Task behavior involves the leader in describing the duties and responsibilities of an individual or group  Relationship behavior is people-oriented

17-25 Exhibit 17-5: Four Basic Leadership Styles a Sales Manager Can Select From to Influence Salespeople

17-26 Leadership Is Important to Success, cont…  Leadership styles  Style 1 – Tells  Style 2 – Persuades  Style 3 – Participates  Style 4 – Delegates  Choosing a leadership style  On-the-job coaching  Coaching – main element is the joint sales call

17-27 Exhibit 17-6: A Sales Manager Can Choose One of These Leadership Styles Based on the Salesperson and the Situation

17-28 Sales Management Functions  Planning  Staffing  Training  Directing  Evaluating

17-29 The Basic Sales Management Functions Evaluating the past to guide the future  Performance criteria  Conducting sessions

17-30 Performance Evaluations Let People Know Where They Stand  Management control system  Performance evaluation – what is it?  Reasons for performance evaluation  Who should evaluate salespeople?  When should salespeople be evaluated?  Performance criteria  Quantitative performance criteria  Qualitative performance criteria  Conducting the evaluation session

17-31 Exhibit 17-8: Quantitative and Qualitative Performance Criteria

17-32 Performance Evaluations Let People Know Where They Stand, cont…  Conducting the evaluation session  Both manager and salesperson should be prepared for the interview  Be positive  Actually review performance  Finalize the performance evaluation  Summarize the total performance evaluation  Develop mutually agreed-on objectives  Formalize evaluation and objectives

17-33 Sales Managers Use Technology to:  Manage customers  Manage salespeople

17-34 The Basic Sales Management Functions, cont…

17-35 Summary of Major Selling Issues  An important challenge of the sales manager is to motivate salespeople using financial and nonfinancial methods  Most firms today use a combination of salary and financial incentives rather than straight salary or straight commission plans  The sales manager needs to understand the principles of leadership and apply them to salespeople based on their individual personalities and territorial situations

17-36 Summary of Major Selling Issues, cont…  The performance of sales personnel is evaluated by comparing their quotas and objectives to actual sales and job activities to determine their success  To effectively evaluate salespeople, managers should develop procedures to ensure fair treatment