1. 17-1

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

3. Chapter 17 17-3

4. 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 17 17-4

5. 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 17-5

6. 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

7. 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

8. 17-8 The Basic Sales Management Functions

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

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

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

12. 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

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

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

15. 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

16. 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. 17-17 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

18. 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…

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

20. 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

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

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

23. 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

24. 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

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

26. 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

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

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

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

30. 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

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

32. 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

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

34. 17-34 The Basic Sales Management Functions, cont…

35. 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

36. 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