Chapter

Organizing and Staffing the

Salesforce

1
 Learning Objectives
• To understand the concepts of the sales Organization,
and the basic types of sales Organizations
• To know specialization within the sales Organization,
and alternative organizational approaches for major
accounts
• To determine the size of the salesforce by using various
methods
• To understand the major stages of salesforce staffing
process, consisting of planning, recruiting, selecting,
hiring, socialisation and assimilation
• To realise the importance of the various steps included in
planning, recruiting, and selection stages.
 Concepts of Sales Organization

A sales organzation assists the sales manager

to carry out needed tasks efficiently
a n d effectively to achieve results.

The basic concepts of the sales Organization are:

• Degree of centralzation
• Degree of specialization
• Line or staff positions
• Market orientation
• Effective co-ordination
 Basic Types of Sales
Organizations
Sales Organizations are generally classified
into four basic types:
• Line Organization
• Line and staff Organization
• Functional Organization
• Horizontal Organization
We shall discuss main characteristics,
advantages, and disadvantages of each
type of sales Organization
 Line
Organization

Head
Marketing

Sales
Manager

Area Sales Area Sales Area Sales Area Sales

Manager1 Manager2 Manager3 Manager4

salespeople salespeople salespeople salespeople

Characteristics: All managers have line authority to direct and

control subordinates. Used in small firms / departments
Advantages: Simple Organization, clear authority, quick decisions,
low cost
Disadvantages: No support to line managers from subordinates
who have specialised knowledge / skills. Less time for planning /
analysis
 Line and Staff Organization
Head-Marketing

Marketing Research Promotional Customer

Sales Manager Service
Manager Manager
Manager

Area Sales Area Sales Area Sales

Manager-1 Manager-1 Manager-1

Salespeople Salespeople Salespeople

Characteristics: Specialist staff managers are available for

senior marketing / sales managers. Staff managers’ role is to assist /
advise line managers. Used in medium and large size Organizations
Advantages: Better marketing decisions, superior sales performance
Disadvantages: High cost and coordination, slower decision
making, conflict may arise if staff managers’ role is not clear
 Functional Organization
Head-Marketing

Marketing Research Sales Manager Promotional Customer Service

Manager Manager Manager

Area Sales Manager #4

Salespeople

Characteristics: Each functional specialist has line responsibility

over salespeople. Used by a large firm with many products /
market segments, minimising line authority to functional managers
Advantages: Qualified specialists guide salesforce, simple to administer
Disadvantage: confusion due to more managers giving orders
to salesforce
 Horizontal
Research & Design Team:
Organization Operations Team:
•Customer Research • Production / Operations
• Product / Service Design •Quality Assurance
•Systems Engineering

Planning Team:
•Strategic Planning
•Accounts, Finance
• HR, Administration
•Chief Operation Officer

Customer Support Team: Customer Satisfaction

•Information Team:
•Service
• Sales & Marketing
•Training • Pricing, Promotion
•Channels, Logistics

Characteristics: Removes management levels &

departmental boundaries. Except planning team, all others are
members of cross- functional teams. Used by firms having
partnering relationships with customers.
Advantages: Reduction in supervision, unnecessary tasks, &
cost; Improved efficiency and customer responses.
 specialization within Sales
Organization
• Needed to increase effectiveness of salesforce
• Done by expanding basic sales Organization
• Basis of specialisation
• Geography
• Type of product
• Market
• Combination of above
• Criteria for selection – (1) nature of product,
(2) salesforce abilities, (3) demands of selling
job,
(4) customer and market facts
 Geographic Specialisation
Head-Marketing

Marketing Research General Sales Customer Service

Manager Manager Promotion Manager
Manager

Branch Sales Branch Sales Branch Sales Branch Sales

Manager-1 Manager-2 Manager-3 Manager-4

Salespeople Salespeople Salespeople Salespeople

Characteristics: salespeople, assigned geographic areas, are

responsible for all selling activities to all customers within assigned areas.
Branch sales managers adjust marketing plan to local needs
Advantages: Better market coverage and customer service, more
control over salesforce, quick response to local conditions & competition
Disadvantages: Limited specialization of marketing tasks. Hence, it
is combined with product / market sales Organization
 Product Specialisation
• Used when the company has many products and / or
brands
• Two types of product specialisation
(x). Sales Organization with product specialised salesforce
(y). Sales Organization withHead-Marketing
product managers as staff specialists

Marketing General Promotion Sales Training

Research Sales Manager Manager Manager
Manager

Area Sales Managers Area Sales Managers

– Product Group ‘A’ – Product Group ‘B’

Salespeople – Salespeople –
Product Gr. ‘A’ Product Gr. ‘B’
 Head-Marketing

Marketing Research Promotion General Product Manager Product Manager

Manager Manager Sales Manager Product Gr. ‘A’ Product Gr. ‘B’

Area Sales
Managers

Salespeople

Fig. ‘y’ Sales Organization with Product Managers as Staff Specialists

In fig. ‘x’: Characteristics: Salespeople in each product group sell only the
products in that group
Advantage: Each product gets specialised attention from the salesforce
Disadvantage: Sometimes, more salespeople contact the same customer, resulting
in customer dissatisfaction and higher cost
In fig. ‘y’: Characteristics: Each product manager plans and implements
marketing plan, for a product group
Advantage: Corrects the problem of duplication calls on a customer by salespeople
Disadvantage: Lack of product specialization by salespeople
 Market Specialisation
General Sales
Manager

Sales Manager- Sales Manager- Sales Manager-

Sales Manager-
International- Commercial Government Consumer Markets
Markets

Area Sales Mgrs Area Sales Manager- Area Sales Manager- Area Sales Mgrs-
International Commercial Government Consumer Markets

Sales Executives Salespeople Salespeople Salespeople

• Characteristics: Desirable when customers are classified by type,

user industry, or channel. Salespeople carry out all activities for all
products only for specific customer groups
• Advantages: Meets needs of specific customer groups, implements
customer-centred philosophy of the company
• Disadvantages: Geographic duplication, high cost
 Combination Sales
Organization
Director – Sales
& Marketing

General Manager General Manager General Manager General Manager

Sales - North Sales - East Sales - West Sales - South

Regional Sales Regional Sales Regional Sales

Mgr. – Govt. Mgr. - Commercial Mgr. - Dealers

Salespeople Salespeople Salespeople

• Characteristics: Many firms use some combination of specialization

Organizations, called hybrid or combination sales Organization,
with a view to minimize disadvantages and maximize
advantages of specialization Organizations
• Figure above shows combination of geographic and market
specialisations
 Alternatives for Major Accounts
• Major accounts / customers are called by
various names like key accounts, corporate
accounts, house accounts
• They make up a large share of a firm’s sales
volume and profits
• Firms use the following alternative approaches
to deal effectively with them
• Create a position of major / national
account manager
• Use existing territory sales managers
• Create a separate division
• Create a separate salesforce
 Size of the
Salesforce
• How many salespeople needed (or salesforce
size) to achieve a firm’s sales and profit
objectives is a key decision
• Methods available to decide optimum
salesforce size are as follows:
• Workload
• Sales potential (or breakdown)
• Incremental
• We shall discuss these methods briefly:
 Workload
Method
• Assumption: All salespeople have equal workload
• Steps involved to calculate salesforce size are:
1) Classify customers as per their sales potential
2) Decide time per sales call and call frequencies for
each class of customers
3) Calculate total market workload = (1) x (2) in hours
4) Decide total work time available per salesperson
5) Divide total work time available by different activities
per salesperson in hours
6) Calculate total number of salespeople needed
=
total market workload (3)
total selling time available per salesperson (5)
 Workload Method (Continued)
• Advantages: simple method, conceptually sound, used for all
types of selling situations
• Disadvantages: Neglects sales productivity & salesforce
turnover
Sales Potential / Breakdown Method
• The formula used is: , where

,
T )
N=Number of salespeople d or salesforce size
S=Annual sales forecast for the company in value (Rs. Million)
P=Estimated productivity of the average salesperson in sales
(Rs. Million)
T=Estimated percentage of annual salesforce turnover
• Advantages: Simple and straight forward
• Disadvantages: Conceptually weak; lead time needed for a
new salesperson to reach average productivity
 Incremental Method

• It is based on marginal analysis theory of

economics
• Basic concept: Net profits will increase
when additional salespeople are added, if the
incremental sales revenues exceed the incremental
costs
• Merit: Conceptually accurate, as it
quantifies relationships between salesforce size,
sales, costs, profits
• Demerit: Can not be used if historical data on
sales and costs are not available
 Salesforce Staffing
• It is one of the most challenging and
important responsibilities / activities of sales
management
• Salesforce Staffing Process includes
following stages:
• Planning
• Recruiting
• Selecting
• Hiring
• Socialisation
• We shall briefly discuss each of the above stages
 Planning
Stage
• It consists of three
steps:
• Establish responsibility for staffing process
• Decide number of salespeople needed
• Outline the type of salespeople needed
• Establish responsibility for staffing process
• Company management decides responsibilities for
various stages / activities of staffing process
• Generally in a medium / large size company, middle
and senior levels H.R. and sales managers
are responsible
• Proper coordination needed between
sales, marketing, and HR executives
 Planning Stage (Continued)
Decide the number of salespeople needed
• Steps followed by each territory sales manager to
plan requirement of sales people:
1) Decide optimum salesforce size (using
methods discussed earlier)
2) Add number of promotions, retirements, transfers out,
terminations, resignations expected from existing
salespeople
3) Subtract expected transfers into the territory and existing
salesforce
4) Make a total of new salespersons needed
• Territory sales managers submit their requirements to
national / general sales manager, who calculates the total
number of new salespersons to be hired
 Outline Type of Salespeople
Needed
The steps involved in the process are:
• Conducting a job analysis
• Preparing a job description
• Developing job qualifications / specifications
Conducting a Job Analysis
• It is done by a person from sales / H. R.
department, or a consultant. It consists of two tasks:
(1) Analize environment in which the salesperson
would work – E.G. nature of customers, competitors,
products.
(2) Determine duties and responsibilities of
the salesperson. Obtain information from
sales managers, customers, etc.

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 Preparing a Job Description

• It is a written document developed from the

job analysis
• The detailed job description is a useful tool
for recruiting, selecting, training, compensating,
and evaluating salespeople
• Some of the points it generally covers are:
• Job title, reporting relationship, types of
products / services sold, types of customers,
duties and responsibilities, location and
geographic area to be covered
 Developing Job Qualifications /
Specifications
• These are generally based on job description
• Job specifications / qualifications include education,
sales experience, skills, and personality traits
• Many studies done, but no generally accepted
job qualifications for selecting salespeople, due to
many types of sales jobs
• Some methods used for developing job specifications
are as under:
• Study job description. Useful for a new company
• Analyse personal histories of salespersons
• Ask customers
 Recruiting Salesforce
• Recruiting include activities to get individuals who
will apply for the job
• The general purpose of recruitment is to get
enough qualified candidates, to enable company select
the right
persons
• H.R. and sales managers must update information
on
government employment regulations
• Recruiting stage / process includes following activities:
• Finding the sources of sales recruits
• Evaluating and selecting recruiting sources
• Contacting candidates through the selected source
 Finding the Sources of Sales Recruits
• For identifying prospective candidates, firms use
internal and external sources. They include:
Internal Sources External Sources
• Employee referral • Advertisements in
programmes newspapers and journals /
• Current employees magazines
• Promotions and transfers • The Internet (job sites)
• Educational institutions
• Employment agencies
• Job fairs
• Other companies
 Evaluating and selecting Recruiting Sources
• Recruiting sources are evaluated based on the
database built over number of years
• Evaluating factors are:
• Performance rating of salespeople, after 2
years working
• Percentage of salespeople retained, after 2
years working
• Total cost of recruiting
• Selecting most effective source of recruiting at
least cost
• For a new company, selection depends on cost
• Contacting candidates through the selected source
is done by H. R. department
 Selecting Salesforce

• Selection process consists of seven major

selection steps / tools
• Companies differ in using selection tools, depending on
expenditure budget and time available
• Major selection tools / steps are:
• Screening resumes
• Application blank
• Initial interview
• Intensive interview
• Testing
• Reference check
• Physical examination
 Screening Resumes
• It is done when the company receives many resumes
• This step / tool not required, if somebody else
like employment agency does initial screening
• Initial screening of resumes are done by comparing
with job specifications
Application Blank
• Widely used, it is a methodical way of collecting
relevant information from the applicant
• Advantages of using application blank (also
called “formal application form”) are:
(1) Easy comparison of many applicants
(2) Useful for asking question during interview sessions
 Interviews
• Widely used selection tool
• A good predictor of the candidate’s performance
• Initial interviews are used for screening candidates
• Intensive interviews are conducted to get indepth view
of candidates
• Interview structure / type of interviews:
• Structured / patterned / guided interviews
• Unstructured / non-directed / informal interviews
• Semi-structured interviews
• Behaviour and performance based interviews
• Stress interviews
• Purpose is to decide a candidate’s fitness for a job
 Testing
• Many firms use tests as a selection tool – EG P&G, IBM
• Purpose of testing: To find whether applicants have traits /
characteristics that lead to success in sales job
• Type of selection tests:
• Aptitude tests measure ability for selling and learning
• Intelligence tests find out mental intelligence or
intelligence quotient (IQ)
• Interest tests find out level of interest in a sales career
• Knowledge tests measure knowledge of products,
markets, etc
• Personality tests find out attitude or traits like empathy,
self-confidence
• Tests must have reliability and validity
• Tests should be one of the selection tools and not the only tool
 Reference Checks
• They are important due to possibilities of resume frauds
and false personal information
• They are done by letters / e-mails, telephones, or
personal visits
• Instead of candidate’s references, previous
employers / customers to be included for reference checks

Physical Examination
• Objective is to find a physical problem that may prevent
job performance of an applicant
• Most companies want their prospective employees to
undergo physical examination
• Increasing number of firms ask applicant to complete
the health information form without seeing a medical doctor
 Hiring Stage
• After completing selection process, a list of candidates to
be hired is made
• In hiring stage, two activities are performed:
(1) The company making the job offer
(2) Persuading the applicant to accept it

Socialisation Stage
• It is the process through which new salespeople learn
values, norms, attitudes, and behaviour of people working in
the firm
• Socialisation process starts before the new
salesperson accepts the job offer and continues until
the person is assimilated into the company culture
• Assimilation is the second stage of socialisation process
• Companies have this process, in order to retain
new salespeople
 Key Learnings

• A sales Organization assists a sales manager to

carry out needed tasks efficiently and effectively
• Basic types of sales Organizations are : (1) line, (2)
line and staff, (3) functional, (4) horizontal
• specialization within sales Organization, which
are needed to increase effectiveness of salespeople,
are: (a) geographic, (b) product, (c) market, (d)
combination
• Companies use alternate approaches to deal effectively
with major accounts
• Methods available for deciding optimum salesforce size
are: workload, sales potential, and incremental
 Key Learnings (Continued)
• Salesforce staffing process includes five stages: planning,
recruiting, selecting, hiring, socialisation
• Planning stage includes (1) establishing responsibilities,
(2) deciding number of salespeople needed, (3) profiling the
type of salespeople needed
• Recruitment stage consists of (a) finding sources of sales
recruit, (b) evaluating and selecting recruitment sources, (c)
contacting candidates
• Selection process consists of seven steps / tools: (1)
screening resumes, (2) application blank, (3) initial interview,
(4) intensive interview, (5) testing, (6) reference check,
(7) physical examination
• Hiring stage includes (a) making the job offer, (b)
persuading applicant to accept it
End