Case study on Supplies – 4 – Gardens Devising Sales Management Plan
Academic Subject: Sales Management
Word Count: 2000
Submitted by: Student
Surviving and growing in the market place has become a major organisational aim for companies thus human capital administrations of organisations are currently using resources to examine the link between HRM strategies, rewarding systems, and organisational performance. This case study focuses on Supplies-4-Gardens salesforce which is severely lacking in motivation. The paper aims to analyse motivational theories in order to make them applicable to salesforce management. A case study is developed based on the examination of Supplies-4-Gardens current methods of motivation and how implementing the new methods will improve employee performance.
To aid Oldroyd a 6-month action plan has been devised based on motivational theories of Herzberg’s Two Factor Theory and Vroom’s Expectancy Theory. The newly improved sales management will have too look into the factors that are effecting the performance of the salesforce in order to overcome them.
The two-factor theory is based on the conviction that specific factors within an organisation are responsible for providing job satisfaction while dissatisfaction is caused by differing set of factors (Noltemeyer et al., 2012). According to Sachau (2007) the motivational factors change with passage of time, Bipp and Van Dam (2014) state, but common factors that are fundamental motivators challenging work and acknowledgement result in employee satisfaction while extrinsic hygiene elements such as rank, job security, and remuneration result in dissatisfaction.
Bonner and Sprinkle (2002) assert that Vroom presented the theory on the assumption that performance is prone to desire and far from discomfort with employees choosing an action they consider will aggrandize their desire and attenuate their discomfort. This theory is generally used to develop pay systems and is used to measure the usefulness of such systems (Heneman and Schwab, 1972).
From the current understanding of the two-factor theory, the factors that are involved in job satisfaction are overall motivational factors are currently detached and difference from those that lead to job dissatisfaction; known as hygiene factors. Based on this premise, lack of motivation that is found in the salesforce of Supplies-4-Gardens is from no application of motivational factors of achievement, recognition from peers and supervisors, the job itself, responsibilities, and career growth. Before the manager is to satisfy the employees he needs to rid the demotivating factors which includes poor working conditions, awful communication, lack of supervision that make up the negative factors which are developing the working environment. Furthermore, the company’s compensation plan is non-competitive and does not motivate employees to do their best. Since the value of reward given to employees is insufficient, there is very little effort put by them to perform causing a decrease in motivation which results in customer dissatisfaction which is evident from Vroom’s theory.
Some of the key issues that have arisen from Oldroyd’s investigation is that the salesforce is underperforming based on the margin in which sales are increasing and the total market share. The salesforce has only generated sales at an annual rate of 5% when total market share is increasing by 10% annually. The underlying cause of the problem is the lack of motivation and enthusiasm for producing sales. The reason that the sales force may not be hungry for sales seems to be their salary structure. The current salary of Supplies-4-Garden sales employees is straight salary that last averaged £22,500 and ranges from £18,500 to £28,300. Salary is paid based on age and length of time in the company. Additional incentive provided is a company car with expense that covers fuel and modest entertainment costs.
In order to motivate the salesforce, Supplies-4-Gardens will need to change the pay and incentive structure in order to motivate employees and make them eager to produce maximum sales.
The previous sales manager had organised the salesforce based on geographic categorisation. However, he also subdivided the tasks that were to be completed based on customer organisation. This has led the sales people to focus on a specific group of customers within their geographic region and ignore other customers within that region. Based on the organisation, sales personnel focused on ‘A’ account customers that were considered as major customers who would be visited on a weekly basis. Geographic division of line authority is not in itself a disadvantage for the purpose of selling. According to Vashisht (2006) division of line authority is favoured geographically by larger companies that need to conduct their selling work in far areas rather than in one city or area. This strategy is often used to increase the size of business which is done by adding new customers within a wider area of coverage (Vashisht, 2006). The issue that has arose from the previous manager’s salesforce organisation is the sub-categorisation of sales based on customer organisation. This has caused the unmotivated salesforce to focus on opening accounts that are of major customers within the region and ignoring other customers within the sales region. Instead, Oldroyd should take away organisation based on customers forcing the salespeople to focus on opening maximum accounts within the region.
There should also be a change in hierarchy to allow for job promotion. Firstly, salespeople that have maximum sales on a continuous basis within their region should be promoted to regional manager. The hierarchy that should be established for Supplies-4-Garden is illustrated below.
Figure 1- Sales Department with line authority subdivided geographically (Vashisht, 2006; p.76)
Room for growth within the department will motivate employees to produce maximum sales and improve their efficiency.
According to the case study, the salesforce has established salespeople that have been with the company for an average of 8 years. However, within those 8 eight years for each employee sales average has only increased by 5% annually. The company also employees only males. Due to the lack in diveristy within the sales the company is unable to reach out to a specific niche of customers. It is recommended that Oldroyd begin the process of recruitment and hiring for the sales department. With a greater number of salespeople working in the field; natural competition will develop between employees forcing them to outperform one another. Recruitment can be done by advertising the position in look newspapers, advertisments, and online using job search engines such as Monster.com. The selection of new salespeople will be based on qualities of:
It is obvious that these qualitites will only be discovered after the interview phase of the selection process. Oldroyd should include in the salesforce women as well as young people that have newly graduated to bring different perspectives and fresh energy within the sales department.
In order change the organisation of sales as suggessted, product training and knowledge of all of Supplies-4-Gardens will be necessary. The salespeople should also be given training on customer service and satisfaction. Oldroyd should have training conducted with each of the salespersons about building customers relations by engaging the customer and showing enthusiasm. Furthermore, metrics will need to be put in place to assess performance of each of the six sales personnel. This will include customer feedback through mail surveys and on location visits to interview customer. Additionally, a greater deal of pressure will be put on salespeople to achieve their target of opening customer accounts on a monthly basis by establishing a different pay structure. This pay structure will include bonuses/commissions for a target amount of accounts that are opened. The 6 month action plan will include the training of salesforce to better their product knowledge and improve their customer relationship skills. The training workshop will be conducted for 2 weeks. Interviews with the sales team will be conducted in the next week to comprehend the needs of the employees and learn about their job dissatisfaction and lack of motivation
It seems as though the overall salesforce can be described as “lazy” with their lack of interest in work that is resulting in such output. Douglas McGregor’s theory X and theory Y explains human motivation using two contrasting models of workforce motivation. Both theories describe the perceptions that managers hold on their employees and thus influence their management style.
According to Theory X, people are naturally lazy and are not happy with their jobs (McGregor, 1960). Therefore management asserts a more authoritarian management style which ensures that employees fulfill their objectives through close supervision using comprehensive systems of control (McGregor, 1960). On the contrary, theory Y assumes employees can be self-motivated and ambitious leading them to use self-control (McGregor, 1960). Employees under this theory enjoy mental and physical work duties and believe that work is as natural as play. Under this theory, managers believe that if such employees are given proper conditions they will look for and accept responsibilities to accomplish goals/objective to which they are committed to (McGregor, 1960). Based on theory, it can be assumed that Supplies-4-Garden salesforce has become lazy and needs supervision as they may not be enjoying their work. As the salesforce manager the underlying cause for the distaste in work needs to be investigated. This can be accomplished through employee job satisfaction questionnaires and one-on-one interviews with the salespeople to understand the lack of motivation.
Supplies-4-Gardens is currently experiencing a lack in motivation within their salesforce. Due to the lack in motivation, underperformance of employees is resulting in the company’s deficiet to overtake the market. It is recommended that management alter the compensation plan for salesforce, by allotting commission from a percentage of new accounts opened and sales conducted by the salesforce in addition to their basic salary and fuel/entertainment incentive. Once the sale organisation is changed based solely on region with no customer organisation, a bi-weekly and monthly sales target should be established. For example, sales personnel are required to open 20 new accounts in two weeks and 40 new accounts in a month; with sales of products within their region being 100 products sold in a month. Based on the achievement of target, for every product sold salespeople with get 1% commission. Bonuses are allotted for personnel that open new accounts with a fixed amount of money given to personnel that have opened a “n” number of accounts. For example, if 20 new accounts are opened, employee with get £200.
Afterwards, the above compensation plan will be included and monitored using a metrics system which includes monitoring sales production and customer satisfaction through sales records and customer surveys & interviews. In addition to monetary compensation, every month salesperson of the month award will be held in which the person with the most sales and accounts opened is allotted a plaque. On a 6 months basis, the salesperson with the most sales and accounts opened will be given a 3 days paid holiday as reward for aggressive selling. This will be conducted throughout the 6 month action plan. By the end of the 6 month plan at least 2 promotions need to take place in which sales representatives are promoted to branch sales manager. Furthermore, new hiring of personnel will take place as well to expand the salesforce to include diverse individuals including females and males from different ethnic groups and age groups.