05.

DIRECTING AND CONTROLLING THE SALES FORCE

SUPERVISION
Management controls sales personnel through supervision. The aim is to improve their job performances. The
executive with supervisory responsibilities establishes working relations with sales personnel for purposes of
observing, evaluating, and reporting on performance; correcting deficiencies, clarifying responsibilities and
duties, providing motivation; informing sales personnel of changes in company policy; helping to solve
business and personal problems; and continuing sales training. Depending upon the company and its
organization, sales personnel may be supervised by home office personnel, branch or district managers, or
field sales supervisors.

COMPENSATION OF SALES FORCE

The sales performance of an organization depends largely on the efficiency of the salespeople. Salespeople
tend to increase and manage their performance by linking it to the compensation they receive from the sales
organization. Money has limited potential as a motivator. In Maslow's hierarchy, money loses motivating power
once an individual satisfies physiological needs and most safety and security needs, retaining only declining
residual motivating power in fulfilling esteem and self-actualization needs. In Herzberg's motivation-hygiene
model, money is a hygiene factor, contributing to the prevention of job dissatisfaction but otherwise not
motivating at all.
Sales compensation plans are aids to, rather than substitutes for, effective motivation. A sound compensation
plan will motivate salespeople to enhance their performance and achieve higher targets for the organization. A
properly designed sales compensation plan fits a company's special needs and problems, and from it flows
attractive returns for both the company and its sales personnel. Sales and growth goals are reached at low
cost, and profits are satisfactory.
A sales compensation plan, properly designed, has three motivational roles: (1) provide a living wage, (2)
adjust pay levels to performance, thereby relating job performance and rewards (in line with expectancy
motivation theory), and (3) provide a mechanism for demonstrating the congruency between attaining
company goals and individual goals (also in line with expectancy theory).
In established companies it is rarely necessary to design new sales compensation plans, and sales executives
concern themselves mainly with revising plans already in effect. Major changes in the compensation plan are
rare. There are two situations where total overhauling of compensation plans are in order. One is the company
whose sales force already has low morale, perhaps because of the current compensation plan. If the plan is at
the root of the morale problem, drastic change is appropriate. A second situation calling for a complete
revamping of the sales compensation plan occurs when a company is anticipating the cultivation of new and
different markets.
Objectives of a Good Sales Compensation Plan
Sales organizations design compensation plans with multiple objectives. One of the key objectives is to
attract quality salespeople. It will also help to improve the productivity level of the existing salespeople in
the organization. It also helps in optimizing the sales effort by the salespeople and maximizes the sales,
reducing the sales expenses and also the production cost. A good compensation plan helps in retaining
quality manpower and reducing the attrition rate in the organization. A good compensation plan also
establishes good rapport between the sales force and the sales supervisors/managers in the company.
Characteristics or Requirements of an Effective Compensation Plan
A good sales compensation plan meets several requirements. The reward system should address the
short-term as well as the long-term issues of the salesperson. While survival is a short-term issue for the
salesperson, recognition and growth in the company and career are the long-term issues.
An effective compensation plan provides a living wage, preferably in the form of a secure income. The
reward system should have future orientation. The remuneration should take care of the salesperson's
housing need, dearness allowance, conveyance, pension, provident fund, and medical needs. The plan
fits with the rest of the motivational program-it does not conflict with other motivational factors, such as
the intangible feeling of belonging to the sales team. The plan is fair - it does not penalize sales
personnel because of factors beyond their control-within the limits of seniority and other special cir-
cumstances, sales personnel receive equal pay for equal performance. It is easy for sales personnel to
understand-they are able to calculate their own earnings. The plan adjusts pay to changes in
performance. The plan is economical to administer. The plan helps in attaining the objectives of the sales
organization.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 2 of 15
DEVISING A SALES COMPENSATION PLAN
Whether contemplating major or minor changes or drafting a completely new sales compensation plan,
the sales executive approaches the project systematically. A systematic approach assures that no
essential step is overlooked.
Define the Sales Job
The first step is to reexamine the nature of the sales job. Up-to-date written job descriptions are the
logical place to start. Sales department objectives are analyzed for their effect on the salesperson's job.
Sales volume objectives, for instance, whether in dollars, units of product, or numbers of dealers and
distributors, are translated into what is expected of the sales personnel, as a group and individually. The
impacts of sales-related marketing policies are determined. Distribution policies, credit policies, price
policies, and other policies affect the salesperson's job.
Consider the Company's General Compensation Structure
Many companies use job evaluation systems to determine the relative value of individual jobs. Job
evaluation procedure is an orderly approach based on judgment. Its purpose is to arrive at fair
compensation relationships among jobs.
There are four job evaluation methods. Two are nonquantitative: simple ranking and classification or
grading. The other two are quantitative: the point system and the factor-comparison method.
Simple ranking. In this inexpensive job evaluation method, widely used by small businesses, an executive
committee sorts job descriptions in the order of worth. Only overall appraisals of the relative worth of
different jobs are made.
Classification or grading. This approach utilizes a system of grades and grade descriptions, against which
individual jobs are compared. The grades, sometimes called classes, are described in terms of job
responsibility, skills required, supervision given and received, exposure to unfavorable and hazardous
working conditions, and similar characteristics. Job descriptions are then classified into appropriate
grades-this is done by an executive committee or by personnel specialists. The basic process is to
compare job descriptions with grade descriptions. All jobs within a grade are treated alike with respect to
base compensation.
Point system. The point system is the most widely used job evaluation method. It involves establishing
and defining the factors common to most jobs that represent the chief elements of value inherent in all
jobs. The specific factors chosen differ from one company to another, but generally include mental and
physical skills, responsibility, supervision given and received, personality requirements, and minimum
education required. Each factor is assigned a minimum and maximum number of points, different ranges
being associated in line with the relative importance of the factors. Next, appraised factor scores are
combined into a total point value. Finally, bands of points are decided upon and become the different
compensation classes. Less arbitrary judgment is required than under the classification method; the use
of point values makes it possible to determine the gap, or distance, between job classes.
Factor-comparison method. This method resembles the point system but is more complex. It utilizes a
scheme of ranking and cross-comparisons to minimize error from faulty judgment. The factor-comparison
method employs selected factors and evaluation scales. However, the scale values are monetary, and
no upper limit exists to the valuation that can be assigned to anyone factor. A selected number of key
jobs, typical of similar jobs throughout the company, are then evaluated, factor by factor. This is done
by arranging them in rank order, from highest to lowest for each factor. As a check against this
judgmental evaluation, the compensation amounts actually paid for each job are allocated to the
factors; the allocation automatically establishes the relationship among jobs for each factor. On the
basis of the monetary amounts assigned to the several factors making up key jobs, additional jobs are
evaluated and their monetary values for each factor interpolated into the scale.
Consider Compensation Patterns in Community and Industry
Because compensation levels for sales personnel are related to external supply and demand factors, it
is important to consider prevailing compensation patterns in the community and industry. Management
needs answers to four questions: (1) What compensation systems are being used? (2) What is the
average compensation for similar positions? (3) How are other companies doing with their plans? and
(4) What are the pros and cons of departing from industry or community patterns?
Determine Compensation Level
Management must determine the amount of compensation a salesperson should receive on the
average. Although the compensation level might be set through individual bargaining, or on an arbitrary
judgment basis, neither expedient is recommended. Management should ascertain whether the caliber
of the present sales force measures up to what the company would like to have. Management should
determine the market value of sales personnel of the desired grade. Management weighs the worth of
individual persons through estimating the sales and profit that would be lost if particular salespeople
resigned. Another consideration is the compensation amount the company can afford to pay. The result
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 3 of 15
of examining these and other factors pertinent to the situation is a series of estimates for the total cost
of salespeople's compensation.
It is not unusual to find that two companies operate under similar selling conditions but with different
sales compensation levels. Sales personnel in one company earn more than those who do essentially
the same work in another company. Relatively speaking, the first group -of salespeople is overcompen-
sated. Sometimes, management does not know the true worth of individual sales personnel. In other
cases, management regards some sales personnel as indispensable, or managerial inertia prevents
adjustment of the compensation level to changed selling conditions. In still other cases, sales
managers are biased in favor of high compensation for selling jobs.
Provide for the Various Compensation Elements
A sales compensation plan has as many as four basic elements: (1) a fixed element, either a salary or a
drawing account, to provide some stability of income; (2) a variable element (for example, a commission,
bonus, or profit-sharing arrangement), to serve as an incentive; (3) an element covering the fringe or
"plus factor," such as paid vacations, sickness and accident benefits, life insurance, pensions, and the
like; and (4) an element providing for reimbursement of expenses or payment of expense allowances. Not
every company includes all four elements. Management selects the combination of elements that best fits
the selling situation. The proportions that different elements bear to each other vary. However, most
companies split the fixed and variable elements on a 60:40 to an 80:20 basis.
Special Company Needs and Problems
It is often possible to construct a plan that increases marketing effectiveness. If a company's earnings are
depressed because sales personnel overemphasize low-margin items and neglect more profitable
products, it may be possible, despite the existence of other managerial alternatives, to adjust the
compensation plan to stimulate the selling of better balanced orders. Specifically, variable commission
rates might be set on different products, with the higher rates applying to neglected products.
Or, as another example, a firm might have a "small-order" problem. It is possible to design compensation
plans that encourage sales personnel to write larger orders. Commission rates can be graduated so that
higher rates apply to larger orders.
As still another example, the presence or absence of point-of-purchase displays can spell the difference
between marketing success or failure. Securing retail displays is a task that sales personnel may neglect,
especially if they are paid commissions based on sales volume. To overcome this tendency, an incentive
payment for obtaining retail displays is often incorporated in the compensation plan.
Plans may assist in securing new customers and new business, improving the quality of salespeople's
reports, controlling expenses of handling complaints and adjustments, eliminating price shading by the
sales staff, reducing traveling and other expenses, and making collections and gathering credit
information.
Consult the Present Sales Force
Management should consult the present sales personnel. Management should encourage sales
personnel to articulate their likes and dislikes about the current plan and to suggest changes in it.
Criticisms and suggestions are appraised relative to the plan or plans under consideration.
Reduce Tentative Plan to Writing and Pretest It
For clarification and to eliminate inconsistencies the tentative plan is put in writing. Then it is pretested.
The amount of testing required depends upon how much the new plan differs from the one in use. The
greater the difference, the more thorough is the testing.
Pretests of compensation plans are almost always mathematical and usually computerized. Past
payrolls, perhaps for a year or two, are reworked to check operation of the proposed plan against
experience under the old system. Then a look is taken into the future. Utilizing sales forecast data, new
and old plans are applied to future periods. The plan is tested for the sales force as a group and for
individuals faced with unique selling conditions. Analysis reveals whether the plan permits earning in line
with the desired compensation level.
To conduct a pilot test, several territories representative of different sets of selling conditions are
selected. The proposed plan is applied in each one long enough to detect how it works under current
conditions.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 4 of 15
Revise the Plan
The plan is then revised to eliminate trouble spots or deficiencies. If alterations are extensive, the
revised plan goes through further pretests and perhaps another pilot test. But if changes have been only
minor, further testing is not necessary.
Implement the Plan and Provide for Follow-Up
At the time the new plan is implemented, it is explained to sales personnel. Management should convince
them of its basic fairness and logic. Details of changes from the old plan, and their significance require
explanation. All sales personnel should receive copies of the new plan, together with written examples of
the method used for calculating earnings. If the plan is at all complex, special training sessions are held
and aimed at teaching sales personnel how to compute their own earnings.
Provisions for follow-up are made. From periodic checkups, need for further adjustments is detected.
Periodic checks provide evidence of the plan's accomplishments, and they uncover weaknesses needing
correction.
TYPES OF COMPENSATION PLANS
Financial Compensation Non-Financial Compensation
 Straight-Salary Plan  Promotions
 Straight Commission Plan  Recognition Programs
Drawing Accounts  Fringe Benefits
 Combination of Salary-and-Incentive Plan  Expense Accounts
 Use of Bonuses  Perks
 Allied Methods  Sales Contests
Profit Sharing Plan
Special Remuneration Plan
Expense Allowance Plan
Financial Compensation
Sales organizations follow different types of compensation plans. One of the popular components is the
financial compensation plan. The financial compensation plan includes a fixed component, a variable
component linked to the salesperson's productivity, expenses, and fringe benefits. The fixed component helps
in providing basic support for the family of the salesperson. The variable component in the form of
commission, profit sharing, or bonus helps the sales manager in stimulating higher productivity from the
salespeople. Reimbursements of expenses help the salespeople to cover up travel and other incidental
expenses incurred while closing a sale for the organization.
Majority of the traditional public sector companies in India like HPCL, BPCL, ONGC, and HMT follow a
straight salary plan, where the salesperson is paid a fixed salary structure irrespective of his sales
performance. The commission system is preferred by the majority of private sector companies operating at the
lower end of the brand and market dynamics. Many of the pharmaceutical companies follow such a plan.
The four elements of compensation are combined into hundreds of different plans, each more or less
unique. But if we disregard the "fringe benefit" and "expense reimbursement" elements, since they are
never used alone, there are only three basic types of compensation plans: straight salary, straight
commission, and a combination of salary and variable elements.

Straight-Salary Plan
The straight salary is the simplest compensation plan. Under it, salespersons receive fixed sums at
regular intervals. The payments can be weekly, monthly, or fortnightly, representing total payments for their
services. Straight salary plan can take any of the following forms. It can be a fixed salary plan in which the
salespeople receive fixed payments in regular intervals for their services. It can also take the form of salary
and increment plan in which the salesperson receives payments on a grade at the time of appointment and
receives annual increments. The third category of plan is called as salary and allowances plan in which the
salesperson receives traveling allowance, meals, and medical allowance in addition to his monthly fixed salary.
Such plans are more common among industrial-goods companies than among consumer-goods
companies. Straight-salary plans are commonly used for compensating salespeople heavily engaged in
trade selling. These jobs, in which selling amounts to mere order taking, abound in the wholesale and
manufacturing fields, where consumer necessities are distributed directly to retailers. Frequently, too,
the straight-salary method is used for paying driver-salespersons selling liquor and beverages, milk and
bread, and similarly distributed products.
Sometimes the straight-salary plan is the logical compensation plan when the selling job requires ex-
tensive missionary or educational work, when salespeople service the product or give technical and
engineering advice to prospects or users, or when salespeople do considerable sales promotion work.
From management's standpoint, the straight-salary plan has important advantages. It provides strong
financial control over sales personnel, and management can direct their activities along the most
productive lines. If sales personnel prepare detailed reports, follow up leads, or perform other time -
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 5 of 15
consuming tasks, they cooperate more fully if paid straight salaries rather than commissions. Straight -
salary plans are economical to administer, because of their basic simplicity, and compared with
straight-commission plans, accounting costs are lower. The main attraction of the straight-salary plan is
that stability of income provides freedom from financial uncertainties inherent in other plans.
The straight-salary plan, however, has weaknesses. Since there are no direct monetary incentives,
many salespeople do only an average rather than an outstanding job. They pass up opportunities for
increased business, until management becomes aware of them and orders the required actions. There
is a tendency to under compensate productive salespeople and to overcompensate poor performers. If
pay inequities exist for long, the turnover rate rises; and it is often the most productive peo ple who
leave first, resulting in increased costs for recruiting, selecting, and training.
Straight-Commission Plan
The theory supporting the straight-commission plan is that individual sales personnel should be paid
according to productivity. The assumption underlying this plan is that sales volume is the best
productivity measure and can, therefore, be used as the sole measure. This is a questionable assump-
tion.
The straight-commission plan, in its purest form is almost as simple as the straight-salary plan, but many
commission systems develop into complex arrangements. Some provide for progressive or regressive
changes in commission rates as sales volume rises to different levels. Others provide for differential
commission rates for sales of different products, to different categories of customers, or during given
selling seasons. These refinements make straight-commission plans more complex than straight-salary
plans.
Straight-commission plans fall into one of two broad classifications:
1. Straight commission with sales personnel paying their own expenses. Advances may or may not
be made against earned commissions.
2. Straight commission with the company paying expenses, with or without advances against
earned commissions.
The straight-commission plan is used in situations where nonselling duties are relatively unimportant
and management emphasizes order getting. Straight-commission plans are common in the clothing,
textile, and shoe industries and in drug and hardware wholesaling. Firms selling intangibles, such as
insurance and investment securities, and manufacturers of furniture, office equipment, and business
machines also are frequent users of straight-commission plans.
The straight-commission plan has several advantages. The greatest is that it provides maximum direct
monetary incentive for the salesperson to strive for high-level volume. The star salesperson is paid
more than he or she would be under most salary plans, and low producers are not likely to be
overcompensated. Straight-commission plans, in addition, provide a means for cost control -all direct
selling expenses, except for traveling and miscellaneous expenses (which are reimbursable in some
plans), fluctuate directly with sales volume changes and sales compensation becomes virtually an all
variable expense. However, the straight-commission method has weaknesses. It provides little financial
control over salespeople's activities, a weakness further compounded when they pay their own
expenses. Salespersons on straight commission often feel that they are discharging their full
responsibilities by continuing to send in customers' orders. They are careless about transmitting reports,
neglect to follow up leads, resist reduction in the size of sales territories, consider individual accounts
private property, shade prices to make sales, and may use high-pressure tactics with consequent loss
of customer goodwill Moreover, unless differential commission rates are used, sales personnel push the
easiest-to sell low-margin items and neglect harder-to-sell high-margin items. Under any straight-
commission plan, in fact, the costs of checking and auditing salespeople's reports and of calculating
payrolls are higher than under the straight-salary method.
Drawing accounts. A modification of the straight-commission plan is the drawing account method,
under which the company establishes separate accounts for each salesperson, to which
commissions are credited and against which periodic withdrawals are made. Drawing accounts
resemble salaries, since customarily individual sales personnel are allowed to overdraw against
future earnings. If sales personnel become greatly overdrawn, they may lose incentive to produce
and become discouraged with the prospects of paying back overdrawn accounts and quit the
company.
To forestall quitting by overdrawn salespeople, some firms use "guaranteed" drawing account plans.
These do not require the paying back of overdraws. Sales executives in these firms are conservative
in setting the size of guaranteed drawing accounts, for they are in effect combination salary and
commission plans. Drawing account plans include provision that covers the possibility of overdrafts.
Legally, an overdraft cannot be collected unless the salesperson specifically agrees to repay it.
Combination of Salary-and-Incentive Plan
Salary plus commission. Most sales compensation plans are combinations of salary & commission plans.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 6 of 15
Where the straight-salary method is used, the sales executive lacks a financial means for stimulating the
sales force to greater effort. Where the straight-commission system is used, the executive has weak
financial control over nonselling activities. By a judicious blending of the two basic plans, management
seeks both control and motivation.
Strengths and weaknesses of combination plans. A well-designed and administered combination plan
provides significant benefits. Sales personnel have both the security of stable incomes and the stimulus
of direct financial incentive. Management has both financial control over sales activities and the
apparatus to motivate sales efforts. Selling costs are composed of fixed and variable elements; thus,
greater flexibility for adjustment to changing conditions exists than under the commission method. There
are beneficial effects upon sales force morale. Disagreements on pay increases and territorial changes
are less violent than under a straight-commission plan. Further, if salespeople realize that the company
shares their financial risks, a cooperative spirit develops between them and the company.
The combination plan, however, has disadvantages. Clerical costs are higher than for either a salary or
a commission system. More records are maintained and in greater detail. Sometimes a company
seeking both to provide adequate salaries and to keep selling costs down uses commission rates so low
that the incentive feature is insufficient to elicit needed sales effort.
Use of Bonuses
Bonuses are different from commissions. A bonus is an amount paid for accomplishing a specific sales
task; a commission varies in amount with sales volume or other commission base. Bonuses are paid for
reaching a sales quota, performing promotional activities, obtaining new accounts, following up leads,
setting up displays, or carrying out other assigned tasks. The bonus, in other words, is an additional
financial reward to the salesperson for achieving results beyond a predetermined minimum.
Bonuses are never used alone-they always appear with one of the three main sales compensation
methods. If used with the straight salary, the plan resembles the combination plan. If used with the
straight commission, the result is a commission plan to which an element of managerial control and
direction has been added. If used with the combination salary and commission plan, the bonus becomes
a portion of the incentive income that is calculated differently from the commission.
Certain administrative actions are crucial when a -bonus is included in the compensation plan. At the
outset, the bonus conditions require thorough explanation, as all sales personnel must understand them.
The necessary records must be set up and maintained. Procedures for keeping sales personnel abreast
of their current standings relative to the goals are needed.
Allied Methods
We will discuss the emerging methods of compensation under the broad heading of allied methods. One of the
popular methods followed in Indian industries is the 'profit sharing plans'. In this method, the company shares a
part of the profit with its sales staff and sometimes distributes the equity holding of the company in the form of
earned share to increase the stake of the salespeople in the organization. This method helps to establish a
sense of ownership and cordial relationship with the salespeople.
Many companies also follow a 'special remuneration plan' for specific salespeople who have to discharge
certain functions along with their normal selling activities, such as road shows, displays, public
relationship programmes, and solving customer problems. This method is very simple to understand and
the salesperson knows the reasons of additional compensation. The performance of the salesperson can
be evaluated easily and salespeople can be trained for additional responsibilities and managerial
positions in the future. In this method, there is no enforcement of the additional responsibility, as the
salesperson is expected to take up the responsibility on his own.
One of the popular compensation plans is called the 'expense allowance plan' in which the salespeople
are provided to and fro allowances to meet the expenses of travelling, lodging, and boarding. The quota-
based compensation plan is a combination model in which the straight salary and commission are linked
to the fixed quota given to each salesperson. Upon completion of the quota, the salesperson is paid
commission at a fixed rate along with his remuneration.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 7 of 15
Non-financial Compensation
Sales organizations also provide non-financial compensation for the salespeople to motivate them and
keep them in the organization to contribute towards the long-term goals of the organization. The non-
financial rewards include promotions, recognition programmes, fringe benefits, expense accounts, and
sales contests. Though these compensation methods are treated as non-financial, these are directly or
indirectly related to financial gain for the salespeople.
Promotions
Salespeople working in organizations for a longer period of time always look for higher job responsibility.
Majority of the salespeople need recognition in the form of promotion for their continued success and
commitment to the organization. Since there are fewer openings as one moves higher on the ladder, the
management has to plan the promotion programme in such a way that the higher positions seem worth
aspiring and achievable to the salespeople. The promotion policy should be open and clear so that it
serves as a motivational tool for the salespeople. Job enrichment and additional responsibilities across
the departments also enrich a salesperson's career and motivate him for higher goals.
Recognition Programmes
These are programmes designed to honour individual salespersons' contributions and recognize the
excellent performance. These programmes are organized in most organizations. The salespeople who
excel are awarded medallions for their outstanding contributions. These awards are presented in the
annual conferences and published in the company newsletters and websites. These programmes can
be either formal or informal programmes.
Formal recognition programmes are sponsored and are given high coverage by the company across
areas and departments and they are designed to award excellence among salespeople. Life Insurance
corporation has its crorepati agent scheme, which is a formal reward programme. Winners of such
recognition programmes are given trophies, titles, and rewards including travel packages at the cost of
the company. Some of these formal recognition programmes include cash awards, trips, and something
as simple as plaque. The success of an informal recognition programme largely depends on the sales
manager who recognizes quality work of the subordinate salespeople and provides praise for them. An
encouraging word by the boss, a pat in the social gathering, and recognition and thanks-giving letters
serve the purpose of non-financial recognition for the salespeople. Informal recognition needs minimal
efforts, yet the results are extremely positive because everyone likes to be told in public that he or she
is doing an appreciable work.
Fringe Benefits
Fringe benefits, which do not bear direct relationships to job performance, range from 25 to 40 percent
of the total sales compensation package. Some are required by federal and state law-for example,
payments for social security premiums, unemployment compensation, and worker's compensation.
Most, however, the company provides for other reasons: to be competitive with other companies in the
industry or community, to furnish reasons for employees to remain in the company's service, and to
comply with what employees expect as fringe benefits.
These are employment benefits in addition to the salary and wages paid to the sales staff. These
include medical benefits, retirement benefits, life insurance, and other forms of employee motivation
tools like stock options and profit sharing. The medical benefits include reimbursement of all the
running medical expenses and in many organizations also the cost of hospitalization in case of any
emergency. Companies also pay for the mediclaim policies of their employees. The retirement plans in
the Indian context include the retirement pension provisions, gratuity, and provident funds. The gratuity
amount is now linked to job as well as pension. The employee receives some amount of gratuity money
for the number of years he completes in the organization and it contributes towards the pension.
Sometimes, a percentage of the organization's profits are paid to the employees if the organization
makes significant profit in a certain year. In this case the employees have the option to buy the
company shares at a discounted price. This is a successful option for companies having fast growth in
the industry. Companies like Infosys and Wipro give stock options to its employees. The other fringe
benefits include the leave travel concessions (LTC), paid vacations, sick leave, and maternity or
paternity leave. The amount and nature of the leave varies from company to company but most of them
practice such compensation methods in some other form.
As the variety of fringes has expanded, individual fringes have been added that appeal more to some
groups than others - people with bad teeth are the ones most interested in dental insurance, while those
with children are the ones most interested in plans for paying educational tuition fees for dependents.
Similarly, given a choice between supplemental life insurance and increased retirement benefits from the
savings plan, a fifty-nine-year-old probably would pick the latter, but a thirty-six-year-old father of two
might opt for the life insurance.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 8 of 15

An increasing number of companies offer a "cafeteria" approach to fringe benefits. In this approach, the
company offers a core of basic benefits - the benefits required by law plus other traditional benefits,
including paid vacations, medical, disability, and death benefits and a retirement program. Employees
then use credits (based on age, pay, family status, and years of company service) to obtain optional
benefits not included in the core; this lets employees select those benefits that best fit their needs.
Because needs for benefits change, employees are given opportunities to change their selection of
those benefits that best fit their needs. Companies using the cafeteria approach also have ‘awareness
programs’ aimed at making employees aware of the benefits available.
Expense Accounts
Companies in many parts of the world reimburse expenses of the field sales force. Expense accounts
are compensation plans that are designed to compensate sales personnel for the expenses they incur
on the job. Almost all companies cover up some part of the job expenses in their compensation plan.
The sales managers tend to check the expense accounts and make provisions for reimbursement as
long as the sales staff does not abuse the method of compensation. The organizations require the
salespeople to submit the expense details and receipts of their expenses so as to prevent padding.
Padding is a phenomenon in which the sales staff overcharges the organization for his expenses in
order to gain from the reimbursement.
The sales expense plan should be designed in such a manner that it should be fair enough for the
salespeople to cover up all their expenses required for their business activity. It should also be fair to
the company so that the company does not lose much in the process of reimbursing the expenses. The
expense plan should be cost- effective, easy-to-comprehend, and convenient to implement in the
organization. There are three types of expense plans followed in sales organizations: the company pays
all the expenses, the salesperson bears all the expenses, and the company partially pays the expenses.
Perks
Perks are a special category of compensation available to employees with some special status or
expertise in the company. There are a number of perks, which are considered part of the compensation
plan by the company. They include the provisions for a car, housing, driver, gardener, club membership,
and educational opportunities.
Perks are classified as status perks, financial perks, and personal growth perks. The status perks
include office location, job title, parking space, and other visible company contributions which reflect the
status of the salesperson. They are based on the performance and have a higher motivational power
than other categories of perks in the sales organization. The financial perks include the use of the
company vehicle, expenses of their support staff, such as drivers and gardeners, and club memberships.
Many companies also pay for the vehicle fuel and the insurance and maintenance cost for the
salespeople. The personal growth perks include paying for additional education or sending the
salespeople for motivational or training programmes. Companies like Infosys, Patni Computers, Bharat
Heavy Electricals, and Marico Industries in India give the perk of additional education to their
salespeople to upgrade their skills.
Sales Contests
Sales organizations organize sales contests for the salespeople to stimulate sales. They are part of the
sales force promotion programme. These programmes are organized to counter the competitive moves
in the market, to offload the inventory in the off-season, to gain sales force commitment for an additional
product launched, and of course to gain support of the salespeople during the maturity stage of a
product life cycle. It is a temporary incentive programme that offers monetary and non-monetary
rewards, and is not a part of the regular compensation plan. Contests have multiple purposes, besides
one single goal for the salespeople, i.e., to enhance their morale and motivate them for higher sales in
the short term.
Non-financial compensation in isolation is also an important motivator for the salespeople. It is observed
that non-financial compensation methods are always accompanied by financial compensation methods.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 9 of 15
NEW TRENDS IN COMPENSATION MANAGEMENT
Various trends are emerging in compensation management. As new organizations are emerging, so also are new methods of
compensation. Today the sales force is not compensated only on the basis of sales volume. The level of customer satisfaction
is an important tool of evaluating and rewarding the salespeople. A company like Xerox is the pioneer in designing a
compensation plan based on customer satisfaction. It follows a compensation plan based on customer satisfaction defined by
the customer itself. This serves as a challenge for the salespeople to achieve the customer defined satisfaction level.
Another emerging trend is team-based compensation. Though the idea has a Japanese origin, it has found acceptance all
over the world. Majority of the business-to-business selling is done through the team selling strategy and cross-functional
teams are designed for handling customer objections in a better way. More and more key account and national account
managers are coordinating with the local salespeople to close a sale at multiple points. Many customers are now operating
across the territories and geographical boundaries. The organizations need to address their demands and problems at multiple
points and in multi-location situations. Hence, it is important to have sales teams. The performance of the individual
salesperson is now linked to the performance of the salespeople in other territories catering to the same set of customers. S o
companies are adopting team-based compensation, which links the pay of the salespeople with the performance of the
customer service personnel, delivery people, and managers heading and supervising the teams.
Customers are now spread across the globe and the salespeople serve them by inno vative technology and operating across
different boundaries and time limits. This has brought the issue of global compensation management systems. Today majority
of customer care and sales service jobs are outsourced to third world countries due to availab ility of cheap labour and quality of
service output. It is a challenge for management to compensate the global sales force working in different countries in diffe rent
cost zones through an equitable and flexible compensation plan.

MOTIVATION

Motivation is a goal-directed behavior, underlying which are certain needs and desires. Specifically, as applied
to sales personnel, motivation is the amount of effort the salesperson desires to expend on the activities
associated with the sales job, such as calling on potential accounts, planning sales presentations, and filling
out reports. Expending effort on each activity making up the sales job leads to some level of achievement on
one or more dimensions of job performance – total sales volume, profitability, sales to new accounts, quota
attainment, and the like.
Most sales personnel require motivational help from management to reach and maintain acceptable
performance levels. Four aspects of the salesperson’s job affect the quality of its performance. Each is an
important reason why sales personnel require additional motivation.
Inherent nature of the sales job: Every sales job is a succession of ups and downs – a series of experiences
resulting in alternating feelings of exhilaration and depression. Salespersons are particularly frustrated when
aggressive competing sales personnel vie for the same business, and they meet numerous turndowns.
Furthermore, sales personnel spend considerable time away from home causing them to miss many attractive
parts of family life.
Salesperson’s boundary position and role conflicts: The salesperson occupies a ‘boundary’ position in the
company and must try to satisfy the expectations of people both within the company and in customer’s
organizations. There is a linkage with four groups – sales management, the company organization that
handles order fulfillment, the customers, and other company sales personnel. Each group imposes certain
behavioral expectations on the salesperson, and in playing these different roles, the sales person faces role
conflicts.
Tendency towards apathy: Some sales personnel naturally become apathetic. Covering the same territory
and virtually the same customers year after year, salespersons tend to lose interest and enthusiasm. Gradually
their sales calls degenerate into routine order taking.
Maintaining a feeling of group identity: The sales person, working alone, finds it difficult to develop and
maintain a feeling of group identity with other salespeople. Team spirit, if present at all, is weak. Thus, the
contagious enthusiasm – conductive of improving the entire group’s performance – does not develop.

Some Common Motivational Theories and their Implications for Sales Management

Self-Actualisation Achievement Recognition

Motivators Advancement Work itself
Esteem needs (Job Content) Growth Potential Responsibility
Social needs
Safety needs Hygiene Factors Interpersonal Relations Peers, Supervisors, Subordinates
Company Policy Job Security
(Job Context)
Physiological needs Work Conditions Salary
Personal Life
Maslow’s Herzberg’s
Hierarchy of needs Two factors theory

David McClelland’s If individuals with high nAch can be best performers in

Achievement-Motivation theory sales jobs, then management might target its recruiting
towards such people.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 10 of 15

CONTROLLING
Analysis of Sales
Appropriately designed and skillfully implemented control mechanisms increase the chances that the sales
organization will focus upon achieving selling and profit objectives. The sales budget is the key control
mechanism, and quotas, properly set and administered, stimulate sales personnel to achieve sales and profit
objectives. Sales territories make the control of sales operations more effective.
Still other control mechanisms contribute to the effectiveness of the personal-selling effort. Sales Audit is one
of them. Sales audit is a systematic and comprehensive appraisal of the total selling operation. It appraises
integration of the individual inputs to the personal selling effort and identifies and evaluates assumptions
underlying the sales operation. Sales audit is a systematic, critical, and unbiased review and appraisal of the
basic objectives and policies of the selling function and of the organization, methods, procedures, and personnel
employed to implement those policies and achieve those objectives.
Three other major variables are measured for evaluating and controlling a sales force. Companies conduct sales
analysis, cost analysis and behavioral analysis to monitor sales programs. These control mechanisms help sales
executives to monitor profitability of the operation.
Each salesperson’s sales volume can be monitored and measured against the quota allocated to him. These sales
figures can be broken by territory, by product line, by customer types and results can be compared with quota
and forecasted sales in these areas. This method is called Sales Analysis. The costs can be evaluated in Cost
Analysis on the basis of an individual salesman, territory, product line and customer type. When these data are
combined with the sales analysis, a sales manager can find out not only the profitability on segment to segment
basis but also the overall customer profitability. The third kind of analysis is called Behavioral Analysis. A sales
person’s actual behavior should be evaluated with the sales volume and profit generated by each one of them.
There are several techniques such as self-ratings, supervisor’s evaluation, self appraisals, field observations, and
survey of customer satisfaction used in behavioral analysis. Although sales analysis is a traditional method of
performance evaluation, more and more modern organizations are using a combination method of performance
evaluation.
Through sales analyses, management seeks insights on strong and weak territories, high-volume and low-
volume products, and types of customers providing satisfactory and unsatisfactory sales volume. If sales
management depends solely on summary sales data, evaluation is often incomplete. Sales analysis uncovers
details that otherwise lie hidden in the sales records. The fact that sales increased by 2 percent over last year but
profit decreased by 1 percent would be a cause of concern but of no help in determining how to reverse the
profit decline. Sales analysis provides additional information, for example, that the increased sales volume came
from products carrying lower-than-average gross margin.
The original sources of data for sales analysis are the sales invoices. Detailed data from sales invoices are
transferred to computers. The information on each transaction identifies the customer details such as name,
geographical location, type of account and others as well as sales person details such as name, territory etc. The
information also includes such sales data as order date, products sold, quantities, price per unit, total amount of
sales per order etc. With information stored in this detail, sales analyses are performed quickly and at low cost.
Costs and Profitability
Marketing Cost Analysis analyzes sales volume and selling expenses to determine the relative profitability of
particular aspects of sales operations. The first step in marketing cost analysis is sales analysis by territories,
sales personnel, products, classes of accounts, sizes of order, marketing channels, and other categories.
Marketing cost analyses determines the relative profitability of particular aspects of sales operations. Having
broken down sales volume, for instance, by sales territories, the next step is to break down and assign selling
expenses by sales territories. The outcome indicates relative profitability of the sales territory. The specific
objective is to suggest answers to questions like: Which sales territories are profitable or unprofitable? What are
the profit contributions of individual sales personnel? What is the profitability of different products? What is the
minimum size of a profitable account? Which marketing channels provide the most profit for a given sales
volume? How small can an order be and still be profitable? Answers to more complex questions, requiring
cross-analysis of expense allocations, are also suggested.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 11 of 15

EVALUATION OF THE SALES FORCE

Performance evaluation and control of the sales force is the key prerequisite for effective sales force management. By
evaluating the performance of the sales force, a sales manager can test the effectiveness of the sales program and the
quality of implementation of the program by the sales people.

Performance Appraisal
Performance appraisal, a crucial part of evaluation, is the process of identification, measurement, and
management of Force
Sales
management of a sales force in an organization. Performance appraisal is the process
Performance Appraisal Process
of evaluating the performance and qualifications of the sales force in terms of the
Deciding on the criteria for requirements of the job to ensure effective administration, including the selection for
measuring performance promotion, rewards and other recognitions in the organization. A sales manager takes
decisions related to performance appraisal in a sales organization on the basis of the
Deciding on the conduct of the criteria used for measuring performance, conducting of performance appraisal, and
performance appraisal
evaluating individuals and teams. The sales manager also uses suitable criteria for
comparing actual performance with established standards, frequency of performance
Deciding on evaluation of individuals appraisal, and the decisions taken on other external influences in the evaluation
and teams process.
Comparison of actual performance Appraisal Criteria
with standards
The first step in appraisal of performance is identification of what is to be measured.
Here, those aspects or dimensions of the performance need to be identified which
Deciding on the frequency of the determine effective job performance. This may be in terms of the quantity or the
performance appraisal quality of work done and interpersonal effectiveness. Measuring the performance of
salespeople involves assigning a relative score to reflect a salesperson’s performance
The external variables and their on the identified dimensions or characteristics. Sales managers can choose the
influences performance measure technique from a wide array of formats available. These
techniques are classified on the basis of the type of judgement required for evaluation
(relative or absolute) and the focus of the measure (trait, outcome or behavior).
Relative and Absolute Judgements
In the relative judgement method, the sales manager is asked to compare the salesperson’s performance with that of other
salespeople on the job. A rank order for salespeople from the best to the worst performer is developed. Salespeople may
also be classified into groups such as top three, middle bracket, and a lower set. This kind of a system enables the sales
manager to differentiate performers among salespeople. The problem with this method is that there is no clarity as to how
big/small the differences are between groups of employees.
In the absolute judgement method, the sales manager is asked to make judgements about the salesperson’s performance.
This is based on the sales performance measured in sales volume, market share, or revenue realization. The dimensions
relevant to the sales job are listed and all the salespeople are rated according to their performance. The problem with this
method is that there is a likelihood of differences in the evaluation standards of different sales managers.

Trait-based
The sales force can be evaluated based on some criteria related to traits, outcome, and the behavior of the sales force. Trait
appraisal instruments are used to make judgements about a salesperson’s traits and selling characteristics that tend to be
consistent and enduring. The most commonly used traits for this purpose are decisiveness, reliability, energy, and loyalty.

Outcome-based
Performance criteria based on outcomes measure the results of the selling process. The most common approaches used in
this method are called management by objectives (MBO) and natural outcome measures. MBO is a goal-directed
approach to performance appraisal in which salespeople and managers together set goals for the upcoming evaluation
period. A rating is then done by deciding whether these goals are met. In the natural outcome method, the performance
measure is assumed to be acceptable to the salespeople. Both the measures provide clear and unambiguous criteria by
which the performance of the sales force can be judged.

Behavior-based
This method focuses on the behavior of the salespeople instead of focusing on the traits or performance outcome. The
behavioral measure is related to selling activities and for this the sales manager records how frequently behaviors listed in
a checklist of ratings have occurred. These ratings assess the value of the behavior measures rather than their frequency of
occurrence and include product knowledge, presentation quality, closing ability, service performed, the number of active
accounts, and relationships with customers. Other behavioral measures that are rated include the number of calls made per
day, and number of working days in a specific period of time.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 12 of 15

Performance Rating
Various instruments are used for the purpose of performance appraisal. These instruments include rating forms,
forced choice scales, behavioral observation scales (BOS), self-assessment questionnaires, and customer
surveys.
Rating forms are statements in the form of an inventory or a list of adjectives about the sales job that a sales
manager uses to evaluate each salesperson. These forms are easy to fill up and cover a broad range of selling
activities and have the ability of providing uniform and consistent information about salespeople.
Forced choice scales allow the sales managers Inventory of Objectives for Evaluation
to rate salespeople on a series of objectives that
explain a salesperson’s performance. The scores
and rates are predefined and the sales manager
is ‘forced’ to give a score or weight out of the
assigned weights. A series of activities are then
undertaken to design a forced choice scale.
These include essay writing by sales managers
in which the characteristics of both effective
Behavioral Rating Scale
and
and ineffective salespeople are explained. Outside experts
read the essays and build a set of inventories of adjectives
used in the essay as a measure of evaluation and then assign
weights to the adjectives used to explain both effective and
ineffective salespeople. Neutral weights are given to
adjectives that are common to both effective and ineffective
salespeople.
BOS are purely based on significant job incidents, which
describe behaviour that can either enhance or reduce the
level of performance. This method has got several
advantages over the rating scale. The evaluator focuses on
special behaviors that influence the level of performance of
a salesperson. The sales manager is asked to identify only
that behaviour which significantly influences performance.
This helps in identifying certain behaviors which are both
desirable and undesirable in the context of the job. While
the rating scales could not tell what it means to be
friendly to the customers, the BOS method clearly
indicates to the salesperson what actions lead to more customer friendly behaviour.

Call reports are periodic accounts and customer

statements prepared by salespersons of how they
are dividing their working time between various
aspects of the job like prospecting,
demonstration, and follow-up. Call reports are
categorized on the basis of accounts and client
size. These reports help the sales management in
recording the status of the customer dealing and
sales realization and in finding out the processes
involved in serving a customer.
When a salesperson is terminated or transferred
from one territory to another, the sales manager
can evaluate the call reports and assign the client
to new recruits. They also provide a detailed
description of the activity of the salesperson
during his working with a company to augment
the process of evaluation. They also help the
management in forecasting the sales for future
years by using the sales force composite method.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 13 of 15

Silent call monitoring scores consist of a sales manager's rating of the salesperson's performance during
actual calls to the customers. The rating can cover a wide range of issues like greeting, ascertaining
customer needs and demands, courtesy, and the level of communication and listening skills.
Activity reports explain the unusual events
and incidents that occur in the field as
reported by a sales manager and
salespeople, including peers. This includes
events like the launch of a major price war
by the competitor, increase in the dealer
push money of the competitor, and the
entry of a new competitor. Activity reports
also explain changes in the purchase
practice of the customers, a change in the
decision-makers at the customers place
resulting from a transfer, promotion, or
movement of the purchase manager. The
sales managers develop guidelines for
activity reports in order to differentiate
them from call reports.
Customer satisfaction surveys are either random or periodic, where customers are both randomly and
continuously tracked. Companies also conduct satisfaction surveys by mass mailing questionnaires to
customers. Mailing to respondents is extensively used by airlines. For example, Jet Airways, a private
Indian airline, collects customer satisfaction data in a regular manner inside the flight and analyses it to
evaluate the performance of their sales, ground, and in-flight staff.

Combinational methods used in many modern-day organizations are combinations of outcome and
behaviour-based rating models. In a combination plan,
a sales manager evaluates the overall
performance of the sales force on the
basis of a combination of parameters.
These include the work experience, sales
aptitude, and level of knowledge related
to the company.

Conduct of Performance Appraisal

A sales manager can either conduct a performance appraisal or the salespeople can do a self-appraisal. The
primary evaluator should be the immediate supervisor of the salesperson in the organization since the
immediate supervisor has the knowledge of the salespeople, his territory, and work experience as a
salesperson himself.
Problems with a salesperson's evaluation are known as biases in evaluation. A bias occurs when sales managers
inflate or deflate the subordinate's performance rating. A bias is either conscious or unconscious. Anchoring
occurs when sales managers rate salespeople using a scale. The anchor is the starting point of the scale
on which the salesperson is evaluated. If there is a five-point Likert scale where the value of 3 stands as
average, the sales manager tends to evaluate every salesperson from a score of 3 and then rates the
salesperson to reflect his activity observed during the time period of study. The bias happens when the
sales managers adjust ratings in an unjustified way. A salesperson who has received a high rating in one
period is likely to be rated higher in subsequent periods due to the halo effect, even when his
performance is not of that order.
Individual versus Team Appraisal
Most of the performance appraisals are done on an individual basis. The appraisal systems are developed
to evaluate the contribution of each member of the sales force towards organizational objectives. However,
a modern-day selling organization has brought the idea of team selling to the forefront.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 14 of 15

Many organizations have thus built up a culture of team-based selling. In this method, a set of salespeople
from diverse functional backgrounds constitute a sales team. For example, the sales team may include a
salesperson, service engineer, technical support staff, and a customer service member. Such kind of teams are
able to answer all the pertinent questions related to the sale that covers areas like technological specifications,
financing pattern, and after-sales service issues. Therefore, a sales team services a customer better than an
individual salesperson.
Sales managers build a role result matrix for team evaluation. The role result matrix is a specification of the
roles played by each member of the
cross- functional team and indicates
the expected results from each of the
team members. It outlines the
individual responsibilities for the
success of the team and the
organization. The matrix plots the
people, tasks, and results expected
from each team member. The sales The Role Result Matrix
manager can use the relative weights based on the importance of each role and activity in achieving the desired
outcome. The sales manager can list the roles of each of the positions in a sales team for the purpose of
developing a new business and servicing the existing customers. For example, the role of a key account
manager in building new business will be high, but his role will be limited in the case of existing customers,
who interact with the customer's service staff on a regular basis.
Actual Performance vs Standards
The next important task for the sales manager is to evaluate the salesperson's actual performance against
either the industry standard or standards set by the organization. Many salespeople try to collect actual data
over a set of territories and calculate the average performance of all the territories and then compare each
salesperson with the average of the performance of all the salespeople.
The ranking method ranks salespeople according to their success in the territory in comparison to the
other salespersons. A comparison with the norm approach evaluates each salesperson on the basis of
either industry norms or the norms set by the firm. The sales manager fixes an evaluative norm boundary
and if the salesperson falls within the boundary, he is termed as operating within an acceptable level. The
sales manager fixes an upper and lower boundary level and evaluates the salesperson's performance. On a
rating scale, the upper boundary level is three standard deviations above the mean and the lower
boundary is three standard deviations below the mean. The sales manager should try to increase the
average mean score and narrow the control limits so that salespeople find their job challenging.
Frequency of Appraisal
Performance appraisal of salespeople is undertaken on an annual basis. However, more and more
organization's now measure the performance of salespeople on a quarterly basis. The annual review
system is conducive to many organizations because it matches an annual sales cycle planning. An annual
review gives an observable period for reviewing the behaviour of the salesperson, which is too short to
observe in a quarterly method. When the top management thinks that the sales force needs tighter control,
they ask for evaluations that are more frequent. When a company has a large number of new employees,
it needs to do a more frequent evaluation so that sales manager can guide them for improving their
performance and change undesired behaviour so that marketing problems can be avoided. The more the
frequency of the appraisal, the more is the administrative and paperwork involved for the sales manager.

Even if the sales in a quarter goes down due to some or the other reason, the salespeople can still adjust
the sales level in subsequent quarters to reach the annual targets specified. It also helps in the
identification of a base rate of performance. An annual review reduces the level of paper work for the
sales manager, which he would have to do in shorter cycles. One period of evaluation is called a
performance cycle and is related to specific product goals or job activities. A company can decide to have
three or four performance cycles per year depending on the product and sales goals set for the cycles.
Such cyclical evaluations provide an adequate input for a semi-annual and an annual review of sales
performance.
 MM403 SDM Chapter 05 Directing and Controlling the Sales Force Page 15 of 15

Influence of External Variables

There are various external influences on the performance appraisal system of an organization. The most
common influencing factors are the legal and ethical issues involved in evaluation. The appraisal system
leads to employee reorientation, training, and in many cases, the termination of employees who are found
to be underperforming for a continuous period. The biases that sales managers possess result in a
disputed evaluation of employees and in some cases can lead to legal battles. If the company loses the
court battle, the employee will be reinstated and it may lead to loss of esteem for the sales manager.
There are various wage rules that guide the termination of employment guided by a performance
appraisal, failing which the sales manager may take the company to the court.

Barriers
Rater errors occur very frequently and adversely affect the effectiveness of the evaluation system. A halo
error, a common error, is a tendency to evaluate salespeople similarly, across all the ratings dimensions.
This causes a greater concern for sales managers in deciding promotions and wage hikes. There are at
least two causes of a halo error. The sales manager may make an overall judgement about the salesperson
and then conform all dimensional ratings to that judgement. The restriction of range error is another type
of rater error, where the manager restricts all his ratings to a small portion of the rating scale on which all
salespeople are rated similarly.
There is an adverse influence of the likings and dislikes of the sales managers, which influence the
evaluation process. These kinds of errors are caused when raters allow their likes or dislikes of an
individual salesperson to influence their assessment of that individual's performance. Liking has the
potential to playa great role in rating because both are person-focused. Sometimes, the performance
ratings are fully based on how much a sales manager likes an employee. Sometimes, the objective
indicators are seriously deficient as indicators of performance. A number of important characteristics
may be dropped while taking objective indicators. Sales managers also like good performers and dislike
poor performers.
It is appropriate if sales managers like better performers, but their judgement is biased when sales
managers like or dislike employees for reasons other than their performance. The maintenance of a
performance record on a regular basis, though time-consuming will always be helpful. Such a recording
of behaviour will help in eliminating errors and biases and justifying the ratings given.
In many organizations, clear standards for performance evaluation may not be desirable.
Political influences and motives may introduce some ambiguity in rating standards. Appraisal in most
organizations can be motivated, as political perspective assumes that the performance of a salesperson
depends on the agenda or goals of the sales manager. In such a situation, the goal of performance
appraisal is not accuracy, but the maximization of benefits over costs. The sales managers and the
salespeople must be motivated to attain this goal.