Managing the Sales Force:

UNIT 11 COMPENSATION AND

MOTIVATION OF SALESFORCES
Objectives

The objectives of this unit are to enable you to :

• describe the importance of compensation
• explain types of direct and indirect compensation
• discuss compensation schemes used by different companies
• enumerate factors influencing design of compensation schemes
• explain the need for motivating salesmen
• discuss the different motivational techniques.
Structure
11.1 Introduction
11.2 Types of Compensation (Direct)
11.3 Types of Compensation (Indirect)
11.4 Case Studies on Compensation Schemes
11.5 Factors Influencing Design of Compensation Schemes
11.6 Criteria for Designing a Compensation Package
11.7 Motivation of Salesforce
11.8 Motivation and Needs
11.9 Salesperson and Motivational Technique
11.10 Summary
11.11 Key Words
1.1.12 Self-Assessement Questions
11.13 Further Readings

11.1 INTRODUCTION
The salesforce of any company needs to be compensated adequately to keep its
morale high and to enable it to contribute to its maximum. The direct salary and
allowances etc. are similar for all kinds of companies. However, the indirect benefits
(such as incentives and perquisites) provided by each of them may differ. The general
trend is towards increasing the indirect incentives of the salesforce.

A salesforce is the representative of the company's philosophy and business

principles. It is the medium which builds the company's perception among its clients.
The building of the salesforce is a phenomenal task but its maintenance, as you will
agree, is also important. This is possible through proper compensation schemes
including provision of indirect benefits in a planned manner. In this lesson we shall
study the methods adopted by companies in designing their compensation packages
and in keeping their salesforce motivated.

11.2 TYPES OF COMPENSATION (DIRECT)

As mentioned above, the direct compensation package for a salesman is more or less
the same in all companies. However, as you must have also seen in your experience,
a company employing technical person as salesman for selling, say, industrial or
electronic products may offer a high basic salary. Sometimes, when the product is in
the introductory stage the function of the salesman is to create new markets and make
customers understand how to use the product as in the case of a new consumer
durable product like Vacuum Cleaners or a new electronics products used by certain
32 industries; the basic salary of the salesman may be on the higher side.
 Compensation and
The direct compensation package of a salesperson thus consists of the basic pay + Motivation of Salesforce
allowances covering all travel and entertainment expenses etc. In case, the salesman
to stay overnight his boarding and lodging allowances are also provided for. All the
me expenses needless to say, are budgeted and controlled as per the salesman's route
into cycle of travelling. The salesman is normally required to present necessary
vouchers to get his; expenses reimbursed.

The basic salary and other allowances are revised from time to time. They also
increase with promotion of the salesman. More important than the basic salary are the
other benefits available to the salesman. We shall discuss these in the next section.

Activity 1.

Given below are four different kinds of product market combinations. Rank them
according to basic salary giving rank I to the combination which has a high basic
salary; rank which has lower than that and so on.
Product Market Rank
1) Industrial New
2) Consumer non-durable Competitive
3) Consumer non-durable Non-competitive
4) Banking/financial service Competitive
Study different types of companies you come into contact with respect to the
travelling allowance given to the salesman. Using this, answer the following to rank
the travelling allowances:
Type of selling activity Travelling allowance
1). A medical representative covering four suburbs
of a city.
2). An industrial product salesman visiting 1-2
industries a day in a particular geographical
area.
3). A door-to-door salesman selling/demonstrating
a new consumer durable product.

11.3 TYPES OF COMPOSENSATION (INDIRECT)

These consist of financial as well as non-financial incentives. The financial
incentives are again in more than one form:
i) salary plus commission on sales above a certain amount:
ii) Salary plus a share in profits.
i) Salary plus commission on sales above a certain amount

Herein, the salesman receives direct salary and a commission in addition to it. Every
salesman is assigned a fixed quota, territorywise/customerwise to be achieved in a
fixed period of time. The commission is awarded on achievement of the targeted
quota. Again, a fixed percentage of sales achieved over and above the target is also
set. This type of compensation scheme ensures a direct salary as well as an in-built
motivation system through incentives.

This method for compensation with an in-built incentive scheme is adopted by most
consumer non-durable as well as consumer durable companies. Certain industrial
product companies and financial service companies, insurance companies, also are
increasingly adopting this method.

ii) Salary plus share in profits

This is not a very prevalent method. It is generally suggested for a company stilling
high value items with high profit margins. The incentive here is based on profits
earned. Herein, 33
Managing the Sales Force:
the selling expenses to sell a product may also be large and this is incorporated in the
profit sharing scheme as acts as a control mechanism. Also salespeople working to
obtain contracts are generally given a share in profits rather than awarded on direct
sales.
Activity 2
Given below are certain types of selling jobs. Give a compensation plan which will
be the most appropriate in each case.
Compensation plan
1). Medical representative selling
2-3 formulations and tablets of
a pharmaceutical company.
2). Salesperson employed by a construction
company to get building contracts.
3). Salesperson employed overseas by an
export agency to develop overseas
market for the product.
4). Salesperson selling soaps of a reputed
company in a particular district in a
competitive market.
5). Salesperson selling refrigerators to company
dealers.
Non-financial incentives
The trend these days is to provide other non-financial incentives like :
a) Training programme
b) Awards, recognitions and prizes.
Most companies offer training programmes for their salesmen. On an average a
salesman has to undergo a training course every one or two years. These programmes
enable interaction between salesmen of different territories as well as provide them
with latest developments in the field. These training programmes are viewed as an
indirect benefit by the salesmen. They may be held in the company premises or
preferably at an outdoor locale. They break the monotony of the salesman's job as-
well as make him feel a part of the company team. A sense of belonging is cultivated
which also motivates him. Certain companies with foreign holding companies may
also send their salesmen for training abroad providing them with good opportunities
to learn about their field.
In addition to training programmes the award ceremonies for outstanding
achievements in sales are held in exotic locales like hill stations or five-star hotels.
The awards are presented through foreign dignitaries or important people in the field,
thus providing the salesman with the much needed recognition.
11.4 CASE STUDIES ON COMPENSAMN SCHEMES
Let us now take a look at the salesforce compensation scheme followed by Videocon
International Ltd. This company markets Televisions, VCRs, Washing Machines and
Audio products. The organisation structure of its marketing and sales department is
given below.
The group general manager for marketing is responsible for overall sales and
marketing of all the products of the company. There do not exist any separate product
marketing managers for the different products. The group marketing manager is
assisted by the deputy general managers who are two in number for all the four sales
zones. The deputy sales manager is in turn assisted by the regional sales manager. An
area sales manager reports to the regional sales manager. The field force under the
area sales manager consists of the senior sales officer who controls and directs a
battery of 6-25 sales officers depending upon the size of region allotted to them
which is generally a state. Thus, for example, Maharashtra has 25 sales officers,
whereas Delhi has about 6 sales officers.
34
 Compensation and
Motivation of Salesforce

The function of the sales officer is to follow on the dealers; look orders; look after
sales and service; report competitors activity, stock position with dealers etc.

Given the greater popularity of the company's products, the salesmen territorial
quotas are fixed on the basis of the production and supply capacity of the company
rather than the demand in that particular area. The demand for the product, according
to the company services is adequate in most regions and selling is more a function of
production rather than the selling skills or promotional tools employed by the
company. As such, there exists no reward system for compensating the salesmen on
achievement of targets although it is an important criterion in the evaluation exercise.
Every salesman has to report on the basic activities performed by him as a daily
routine.

The company has set aside certain budgeted entertainment allowances for its
salesforce to maintain and develop good dealer relations. These entertainment
allowances are generally very liberal and go a long way in providing the sales officer
with the additional incentive or indirect benefits which he expects. A direct reward
system is replaced by such an indirect system to keep the sales officer motivated.

A 6-month performance evaluation exercise is carried out to aid in promotion as well

as streamlining of salesforce. The parameters used are allotted a total of 1000 marks
which are allotted to :
• Target achievement
• Utilisation of material
• Personality
• Merchandising
• Dealer relations
•
Integrity
• Loyalty
• Rapport with Top Management
Target achievement is allotted a maximum of 250 marks followed by the last three
parameters which are subjective in nature. Thus both personal relations as well as
expertise in selling are considered important by the company.
From this case study we can see that the company being in a sellers market as of to-
day can afford to have a less complicated compensation structure with no direct
incentive system. The salesforce is motivated by providing them with a good life
style through entertainment allowances as well as treating them as a part of the
Videocon family, The human relations 35
Managing the Sales Force:
Form the basis of motivation rather than just comprehension in terms of money in
this company.
Activity 3
Critically evaluate the composition scheme adopted by viedocon .Is a change
required or is the present system adequate?
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11.5 FACTORS INFLUENCENCING DESIGN OF

COMPENSATION SCHEMES
Although the basic structure of a compensation plan may be similar across the
companies, some factors do predominantly shape the structure of the company's
compensation plan.
i) The Relation with product life Cycle
The amount of selling effort is directly related with the stage at which a product
is in its life cycle. The compensation structure is a function of selling effort. So,
in effect, the compensation structure is an indirect function of the selling effort.
When the precinct is in the introductory stage the company needs a dynamic
salesforce which can establish the product in the desired market. The salesforce
must be enterprising, willing to travel, take criticism easily, have a good
knowledge of the product, have good communication skills and last but not the
least, have tremendous stamina to work. To keep such a salesforce motivated,
adequate compensation is the basic need. So, in the introductory stage of a
product, the direct salary may be on a higher side but indirect benefits may not
be introduced at this point.
In the growth stage, the motivation of the salesforce has to be sustained to
exploit all the opportunities available in the market. They have to approach the
market with renewed vigour. At this point indirect compensation schemes which
are incentive linked play an important role. Incentives linked with achieving
targeted quotas; giving adequate feedback on market and competitor activities
will keep the salesforce happy and the same time help the product in its growth.
When the product has firmly established itself, the salesforce also needs a break
from the monotony Other indirect benefits like training programmes in good
environmental locales ; foreign trips for training and understanding markets;
promotions to much responsible positions are the requirements at this stage.
These programmes not only enhance their knowledge but lend a new direction
of looking at things.
With the break in monotony, certain problems with the product which may have
started emerging get due consideration. Schemes for sales promotion and dealer
promotion which are inevitable at this stage can be designed with a fresh
outlook. The basic increase in salary and incentives, however, are made as per
schedule.
When the product is in the decline stage some fresh incentive schemes may be
introduced in the compensation scheme to generate fresh interest in the product.
The number of people involved with the product has also to increase marginally.
The existing product managers who may be concentrating on a more successful
product at this stage would require added incentives to revive the declining sales
of the product concerned.
You are already familiar with the PLC curve. Incorporating the discussions we
have had above a PLC curve in relation to changes in compensation over time
36 would look like Fig. 5.1
 Compensation and
Motivation of Salesforce

ii) Compensation Related with Demographic Characteristic

You might be slightly surprised to know that in practical situations the compensation
package preferred by the salespeople depends upon their demographic characteristics
also. Their age and size of family or number of dependents play an important part in
the preference for a basic salary and/or incentives. However, this cannot be
generalised and depends largely on the individual. The table below classifies the
preference according to demographic data.

iii) Role of selling in Marketing strategy of the company.

iv) Competitor's practices.

Activity 4

A multi-product company is introducing a new product in a new market. Its existing

sales-force is managing the existing products which are in various stages of the PAC.
What are the alternatives available to the company with respect to the salesforce for
the new product? Given the salesforce what are the compensation scheme alternatives
available ? In the light of the factors discussed above, list all possible alternatives.

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37
Managing the Sales Force:
11.6 CRITERIA FOR DESIGNING A COMPENSATION
PACKAGE
We can now set a few important criteria which must be kept in mind while designing
a salesforce compensation package. These are primarily:
i) The budget set for the compensation of salesforce;
ii) A proper study of job requirements is the second step followed by a coincise job
description;
iii) Defining the organisational [Link] of the salesforce the role and function of
each responsible person in the structure;
iv) The current trend in the competitors selling similar products in the similar
markets;
v) The company's policy of motivating salespeople whether through an in-built
incentive system or through provision of indirect benefits like entertainment
allowance/liberal travelling allowances, other out of pocket expense
reimbursements;
vi) Formal and compulsory training programmes for all sales personnel to make
them feel a part of the company as well as to develop their skill and provide
them with the necessary break from the monotony of daily routine sales reports;
vii) Human resource development programmes to create a feeling attachment
towards the task at hand and imbibe the culture of the organisation.
The present day trends lay greater emphasis on the last two mentioned considerations
along with a direct compensation programme inclusive of direct salary. With selling
having become more and more difficult a satisfactory compensation package is a
must to avoid high turnover within the salesforce.

11.7 MOTIVATION OF SALEFORCE

Motivation is generally regarded as the process of getting people to work towards the
achievement of an objective. Ideally it should go beyond the achievement of
company objective, plans forecast or targets and help the -company win commitment
of salesforce to the company.
Salesforce is primarily responsible for achieving the sales targets and as already
mentioned the salesforce cannot be controlled, administered in the way factory
workers or office staff can be monitored. The salesforce is required to be self starters,
highly ambitious, result oriented and go-getters. All the sales situations cannot be
predicted and preplanned in view of the dynamics of the market place.
Effective selling, therefore, requires creative skills. Thus, the salesforce has to be
kept highly motivated and committed both externally as well as internally.
Attracting and maintaining a well motivated salesforce is a challenging task. The
confidence and motivation of a salesperson get worn out by the inevitable rejections
he suffers from customers as part of his everyday activities. In some situations such
as selling office automation products (Electronic typewriters, Computers, Xerox
machines), consumer durable (television, refrigerators, scooters etc.) rejections may
greatly outnumbers successes. Thus motivation of salesperson poses a major
challenge to the management. The challenge of motivation is magnified by the fact
that the salesperson and supervisor are normally geographically separated, as a result
the salesperson may feel isolated and even neglected. He is prone to frustration of
success and failure coupled with extra working hours. He requires. extensive
travelling, many days of separation from family and with sense of risk involved in
travelling. Above all he has to live in the environment of competitiveness with his
own colleagues to meet his targets. In market situation characterised by keen
competition he is constantly exposed to the offerings of the competing manufacturers
- in terms of their sales compensations packages, working conditions, etc.
All these peculiar conditions, therefore, require an understanding of the motivational
38 needs of salesperson by the management.
 Compensation and
11.0 MOTIVATION AND NEEDS Motivation of Salesforce

While studying motivational theory, behaviour research studies have revealed that
motivation can be created if needs can be studied, evaluated and predicted and
fulfilled. We know that various types of needs arise out of ambitions/dreams and all
needs create tensions leading to that extra bit of effort and activity which help fulfil
these needs and achieve the goals. Hence to study the motivational pattern of
salespersons/sales executive we need to study the process of creating ambitions,
leading to arousal of needs and hence to that extra activity.

Every salesperson has different types of needs, goals, and problems of his life and the
leader i.e. sales executive has to understand these needs of each individuals
salesperson of his team before applying the principles of motivations.

According to A.H. Maslow needs can be classified into five categories.

1). Physiological Needs Food, clothing, shelter are primary needs which are
ordinarily satisfied.
2). Safety Needs Protection ITOM threat, danger and deprivation etc.
3). Social Needs Need to feel that everyone belongs to a relationship, to feel as
being accepted as part of the society.
4). Ego Needs Needs which satisfy the enhancing of self-image, self-esteem, self-
respect and achievement. Salespersons in general has high level of ego needs.
5). Self-Actualisation Needs These are the desires of self-development, self-
fulfilment and self-growth.
As you all know that level of the needs and understanding of the sales personnel do
not remain stationary. As the sales personnel grows in life, in age and career, his
needs shift and to keep the motivational level high, the supervisors and sales manager
must be able to foresee such changing needs and desires and must manage for these
needs.

11.9 SALE PERSONS A MOTIVATIONAL TECHNIQUE

The simple motivational tools of early years such as only financial benefits prove to
be a poor method of motivation beyond physiological and satefy needs satisfaction
on account of the unique aspects of a salesperson's job.
The non-financial incentives, thus, become an important component of the
motivation mix of a company. These are especially relevant as Dawson has pointed,
"business is on the threshold of a new era of human and social concern, which will
inevitably r9sult in greater attention to total human resource development by sales
management."
Two Surveys
A study was conducted to analyse the factors which motivate salesperson employed in
the pharmaceutical industry in India and to examine the extent to which they perceive
their need -fulfilment their job. More specifically its objectives were to find out
39
Managing the Sales Force:
a) The kind of needs of salesmen which according to them must be fulfilled as per
their jobs and relative importance.
b) Salesmen's perception of their need fulfilment, and deficiency.
c) How the level of motivation of the salesforce could be improved.
The study is based on a sample of salesmen taken from 30 pharmaceutical companies
registered with DGTD, India. In order to measure the extent of motivation, a list of
need factors that a salesman was expected to satisfy through his job were selected.
The results of the investigation are summarised in the tables given below.

40
 Compensation and
Motivation of Salesforce

Institute of Marketing (PA Consultant, 1979) conducted a study into the salesforce
motivational practice by asking the sales managers to rank eight factors excluding
financial benefits (i.e. salary, bonus, commission) which could be effective in
motivating their sales-force to improve upon their usual performance.

The findings of the study showed that individual meetings between sales manager
and salesmen were thought to be the most effective of the eight factors taken. Sales
contest and competitions were ranked only sixth in importance, although a more
detailed analysis of questions revealed that this form of motivation was ranked first
among the consumer goods companies replying to the questionnaire.
Some of the unconventional factors that make a special mark on salesforce
motivation are discussed below.
1) Meeting between Manager and Salesforce
These are highly regarded by sales managers in the motivation of their sales
teams.
This provides opportunity to managers to meet their salesforce in the field, at
head office and at the sales meetings/conventions. This provides a number of
opportunities for improving motivation.
These meetings allow the sales manager to understand the personality, needs and
problems of each salesperson. The manager can then better understand the
causes of demotivation/frustration in individual salesperson and respond in a
manner which takes into account the needs, problems and personality of the
salesperson. Sales techniques can be improved and confidence boosted.
According to Likert, when the sales manager encourages an "open" style of
management, salesmen are encouraged to discuss their problems and
opportunities so that the entire sales team benefits from the experience of each
salesman. This results to a greater sense of group loyalty and improved
performance. The success of the marketing learn can be easily attributed to the
open door policy adopted by companies in India. As one manager put it, "I know
all my team of 166 sales representatives personally, by name and make it a point
to keep in touch with all of them. They can walk in any time with their problems
and they have got the confidence that most of their problems will be handled to
their satisfaction." 41
Managing the Sales Force:
2) Clarity of Job
Clarity of job and what is expected from the salesperson is a great motivator. The
objectives when duly quantified and well defined properly connected and linked
with the reward and recognition serve as source of motivation to the salesperson.
3) Sales Targets or Quotas
If a sales target or quota is to be effective in motivating a salesperson, it must be
regarded as fair and attainable and yet offer a challenge to him. Because the
salesperson should regard the quota as fair, it is usually sensible to allow him to
participate in the setting of the quota. However, the establishment of the quotas is
ultimately the sales manager's responsibility and he will inevitably be constrained
by overall company objectives. If sales are planned to increase by 10 per cent, then
salesmen's quotas must be altered in a manner consistent with this objective.
Variations around this average figure will arise through the sales managers
knowledge of individual salesperson and changes in commercial activity within
each territory; for example, the liquidation of a key customer in a territory may be
reflected in a reduced quota. Quotas can be set on Rupees sales, unit volume,
margin, selling effort or activity and product type. The attainment of a sales target
or quota usually results in some form of financial benefit to the salesperson.
4) Sales Contest
The sales contest is an important tool to motivate salesperson. The purpose of the
sales contest varies widely. It may encourage a higher level of sales in general, to
increase the sales of a slow-moving product or to reward the generation of new
customers. It provides an incentive to show better performance and secure more
satisfactory results. However, sales contest have a few disadvantages, one such
disadvantage is that it can encourage cheating. For example, in one company
which used a sales contest to promote sales at a series of promotional events
around country with its dealers salesperson "stored up" orders achieved prior to
the events in order to increase the apparent number of orders taken at the events.
Also, contests, by pitching salesperson against salesperson, militate against the
spirit of mutual help and cooperation which can improve salesforce performance.
5) Sales Conventions and Conferences
These are the devices of group motivation. They provide opportunities for
salesperson to participate, gain social satisfaction and express their views on
matters directly affecting their work. They promote team work, dissolve social
barriers, inspire and raise salesperson's morale. Most of the companies in India are
now-a-days adopting this method to motivate their salesforce.
6) Positive Affect
The positive affect method is also an important techniques for motivating the
salesforce to their best.
The proper application of praise, positive feedback, and human warmth and
understanding can impel others to perform up to their capabilities. This must be
done in a genuine way and not be perceived as overtly-self serving.
Another form of motivation through positive affect occurs via small group and
peer relations. Friendship, support and comradeship frequently serve as vehicles
for creating positive feeling towards the company and job.
7) Leadership Style of the Manager
Leadership style of the manager plays an important role in motivating the
salesperson. Inspirational leadership, which refers to influence through referrent
power, identification or charismatic charm is an important tool in the motivational
strategy of the management. It infuses the images and expectations for extremes of
effort, sacrifice, achievement and in general "the right stuff'. It is practiced through
the use of professional speakers special audio tapes and video tapes designed to
arouse and stimulate salesperson. It also tries to create and perpetuate certain
corporate myths and success stories, which indirectly motivates salesperson to
perform at their best.
8) Freedom to Work
In order to perform the onerous duties and responsibilities, the salesperson must
be given a reasonable amount of freedom and discretion in performing their job.
Likert in
42
 Compensation and
his studies has mentioned that lack of enough discretion has a negative impact Motivation of Salesforce
on employees job satisfaction. Discretion and freedom may be accomplished by
allowing salesperson to develop their own call patterns, more control over the
types of promotional packages that are offered to their customers etc.
Freedom or autonomy satisfies the psychological needs and is like power pay
(which is a reward), making the job of salesperson mere important in the
organisation.
9) Reward and Recognition
Although sales quotas, sales contests, conventions and conferences have positive
carry over effects, these are short lived techniques of motivating salesmen. On
the other hand reward and recognition on salesperson accomplishments are more
enduring and relatively economic methods of motivation. Some of the ways to
extend recognition and honour to salesperson include conferment upon the title
of "salesman of the month/ year." Congratulation telegrams from members of
top management, sales trophies, offering membership of social clubs, mention in
company newsletter, certificate etc. Recognition and honour satisfy salesperson's
need for self-esteem and self-respect. These are like status pay - a public
acknowledgement of the value that management places upon an individual.
10) Persuasion
One of the more common and recommended forms for inducing high levels of
to convince salesperson that it is in their own best interests to act in a preferred
way. Persuasion has the advantage of getting people to conclude that their
actions were performed out of their own free will. This leads to higher levels of
self direction than reward or coercive modes of influence where one perceives
he or she acts more as a function or external compulsion than internal volition.
Financial Incentives
Now we come to the financial aspects of the motivational technique.
Financial incentives are definitely a motivating factor, but it varies at the hierarchial
level of the salesperson. The need is great at lower end of the salesperson. It not only
keeps sales-person on the company rolls but also motivates them to contribute to the
growth of the company and thereby get grown individually. It is also important
managerial tool to control and direct salesforce to attain the sales objectives.
A poorly developed or administered financial plan may invite unions to organise
salesforce as happened in some of the pharmaceutical companies in India.
Therefore in the management and motivation of salesforce, a fairly reasonable
financial incentive plan plays a very important role and "a salesforce cannot be
considered soundly managed unless there is a well developed and well administered
compensation plan".
We shall not concentrate more on the financial aspects of the motivational strategy
because salient features of the plan has already been discussed in MS-6 dock 6.
Activity 5
A chart of some basic motivational needs is drawn here. Make a team of your friends
or colleagues and attempt a rating on the scale to identify the stronger needs within
each individual in the team. The rating scale 1-8 gives the weightage points in
ascending order, 8 being the highest rating.

43
Managing the Sales Force:

11.10 SUMMARY
In this lesson we have studied the various dimensions a compensation scheme for a
sales-force can assume. Both direct and indirect compensation play a vital role.
However, indirect compensation is assuming greater importance, of late. Factors like
the PLC, demographic characters of the salesforce; sales strategy, competitors
practices, company policy on motivation and retention; budgeted amount for
compensation etc. A case study on Videocon Appliances, a growing consumer
durable company, indicates the strategy adopted in the-introductory stage. We can
say in the conclusion that maintenance of salesforce through adequate compensation
schemes is imperative for the growth of any company. A salesforce compensation
plan should be simple enough for every salesperson to understand and fair enough for
every salesperson to remain motivated.

Motivation of salesmen which forms the other aspect of this chapter is among the
most important responsibilities of salesmen. It is not something a manager adds after
the organisation has been set-up and is in operation. It involves basic relationship that
are built into the organisational structure.

Behavioural scientists have classified motivational needs. According to them each •

individual is a different entity and hence to understand what would motivate the
salesperson, individually the nature, character and needs of individual have to be
understood. Within the available resources of the organisation and the limitations
these have to be fulfilled to achieve the results with high productivity. The sales
manager/supervisor plays an important role in motivating his salesforce as he
interacts most with his salesforce and can understand empathise closely with the
salespersonnel. His role as a primary source of understanding his team and
motivating his team is of great importance. In order to be a good motivator, he has to
be a capable leader with the leadership style suiting the particular environment and
44 conditions.
 Compensation and
11.11 KEY WORDS Motivation of Salesforce

Bonuo: A payment made at the discretion of management for a particular achievement.

Combination plans: A compensation plan that uses salary, commission and/or bonus.

Commmxisniom: A payment based on performance.

Financial incentives: Direct monetary payment such as salaries and wages.

Fringe benefit: Indirect rewards such as paid vacations, pension plans, medical
reimbursement and insurance payments.

Motivation : The how-to aspect of getting salespeople to do their jobs well.

Non-financial incentives : Incentive techniques used for specific, special efforts

situation. Sales convention and meetings, sales contests honours and awards, special
privileges and favourable communication are the major forms of non-financial
incentives.

Varied commission plan: A compensation plan where higher commissions are given
for selling products with high profitability and lower commissions for products with
smaller profitability.

11.12 SELF-ASSESSMENT QUESTIONS

1). Why is it necessary to have an adequate compensation package for the company
sales-force?

2). How does the compensation package differ between the companies selling
different types of products ?

3). What are the basic components of a compensation package?

4). Describe your views on training programmes as an indirect incentive to

salesmen?

5). How do factors like PLC and demographic characteristics influence the
compensator scheme offered?

6). What are the factors affecting motivational needs of salesmen?

7). Comment upon the non-financial incentives given to salesmen?

11.13 FURTHER READINGS

S. Neelamegham, Marketing in India, Cases and Readings'Vikas Publishing House Pvt.
Ltd.

Richard R. Still, A.P. Govaui, Edward W. Cundiff, 1988. Sales Management, Decisions
Strategies and Cases, Prentice Hall of India Pvt. Ltd.: New Delhi.

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