1. Chapter
5
Organising and Staffing the
Salesforce
SDM-Ch.5 1

2. Learning Objectives
• To understand the concepts of the sales organisation, and
the basic types of sales organisations
• To know specialization within the sales organisation, 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
SDM-Ch.5 2

3. Concepts of Sales
Organisation
• A sales organisation assists the sales manager
to carry out needed tasks efficiently and
effectively to achieve results
• The basic concepts of the sales organisation
are:
• Degree of centralisation
• Degree of specialisation
• Line or staff positions
• Market orientation
• Effective co-ordination
SDM-Ch.5 3

4. Basic Types of Sales
Organisations
Sales organisations are generally classified into
four basic types:
• Line Organisation
• Line and staff organisation
• Functional organisation
• Horizontal organisation
We shall discuss main characteristics, advantages,
and disadvantages of each type of sales
organisation
SDM-Ch.5 4

5. Line
Organisation
Head
Marketing
Sales
Manager
Area Sales Area Sales
Area Sales Area Sales
Manager3 Manager4
Manager1 Manager2
salespeople salespeople salespeople salespeople
Characteristics: All managers have line authority to direct and control
subordinates. Used in small firms / departments
Advantages: Simple organisation, clear authority, quick decisions, low
cost
Disadvantages: No support to line managers from subordinates who
have specialised knowledge / skills. Less time for planning / analysis
SDM-Ch.5 5

6. Line and Staff
Organisation
Head-Marketing
Marketing Research Promotional Customer Service
Sales Manager
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 organisations
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
SDM-Ch.5 6

7. Functional
Organisation
Head-Marketing
Marketing Research Promotional Customer Service
Sales Manager
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
SDM-Ch.5 7

8. Horizontal
Organisation Operations Team:
Research & Design Team: •Production / Operations
•Customer Research •Quality Assurance
•Product / Service Design •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.
SDM-Ch.5 8

9. Specialisation within Sales
Organisation
• Needed to increase effectiveness of salesforce
• Done by expanding basic sales organisation
• 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
SDM-Ch.5 9

10. 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 specialisation of marketing tasks. Hence, it is
combined with product / market sales organisation
SDM-Ch.5 10

11. Product Specialisation
• Used when the company has many products and / or brands
• Two types of product specialisation
(x). Sales organisation with product specialised salesforce
(y). Sales organisation with product managers as staff specialists
Head-Marketing
Marketing Research General Promotion Sales Training
Manager Sales Manager Manager Manager
Area Sales Managers – Area Sales Managers –
Product Group ‘A’ Product Group ‘B’
Salespeople – Salespeople –
Product Gr. ‘A’ Product Gr. ‘B’
Fig. ‘x’ Sales Organisation with product specialised salesforce
SDM-Ch.5 11

12. Product Specialisation (Continued)
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 Organisation 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 specialisation by salespeople
SDM-Ch.5 12

13. Market Specialisation
General Sales
Manager
Sales Manager- Sales Manager- Sales Manager-
Sales Manager-
International- Government Consumer Markets
Commercial
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
SDM-Ch.5 13

14. Combination Sales
Organisation
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 specialisation
organisations, called hybrid or combination sales organisation, with
a view to minimise disadvantages and maximise advantages of
specialisation organisations
• Figure above shows combination of geographic and market
specialisations
SDM-Ch.5 14

15. 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
SDM-Ch.5 15

16. 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:
SDM-Ch.5 16

17. 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)
SDM-Ch.5 17

18. 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
S
N=Number of salespeople needed, )or salesforce size
N = (1 +
P
T
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
SDM-Ch.5 18

19. 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
SDM-Ch.5 19

20. 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
SDM-Ch.5 20

21. 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
SDM-Ch.5 21

22. Planning Stage (Continued)
Decide the number of salespeople needed
• Steps followed by each territory sales manager to plan
requirement of sales people:
– Decide optimum salesforce size (using methods
discussed earlier)
– Add number of promotions, retirements, transfers out,
terminations, resignations expected from existing
salespeople
– Subtract expected transfers into the territory and existing
salesforce
– 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
SDM-Ch.5 22

23. 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) Analyse 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.
SDM-Ch.5 23

24. 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
SDM-Ch.5 24

25. 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
SDM-Ch.5 25

26. 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
SDM-Ch.5 26

27. 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
SDM-Ch.5 27

28. 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
SDM-Ch.5 28

29. 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
SDM-Ch.5 29

30. 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
SDM-Ch.5 30

31. 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
SDM-Ch.5 31

32. 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
SDM-Ch.5 32

33. 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
SDM-Ch.5 33

34. 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
SDM-Ch.5 34

35. Key Learnings
• A sales organisation assists a sales manager to carry
out needed tasks efficiently and effectively
• Basic types of sales organisations are : (1) line, (2) line
and staff, (3) functional, (4) horizontal
• Specialisation within sales organisation, 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
SDM-Ch.5 35

36. 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
• Socialisation stage is required to retain new salespeople
SDM-Ch.5 36