Organizing and Staffing The Sales Force

CHAPTER 5
ORGANIZING AND STAFFING

THE SALES FORCE
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Chapter - 5
Learning Objectives
LO1. Know the purposes of a sales organization and classify the basic types
of sales organizations.
LO2. Explain specialization in sales organizations, categorize key accounts,

and create a sales organization for key accounts.
LO3. Determine the size of the sales force and describe the sales force
staffing process.
LO4. Carry out recruitment and selection of the salespeople.
LO5. Organize hiring and socialization of the salespeople.
Copyright © 2018 2
Chapter - 5
Purposes of a Sales Organization

• The purposes or reasons for existence of a sales
organization are to:
(i) Determine a degree of centralization.
(ii) Allow a degree of specialization.
(iii) Define line and staff positions.
(iv) Show a market orientation.
(v) Achieve an effective coordination.
(vi) Ensure a reasonable span of control.
Copyright © 2018 3
Chapter - 5
Basic Types of Sales Organizations
•Sales organizations are generally classified into

four basic types:
(i) Line sales organization.
(ii) Line and staff sales organization.
(iii) Functional sales organization.
(iv) Horizontal sales organization.
•We shall discuss main characteristics, advantages, and
disadvantages of each type of sales organizational structure.
Copyright © 2018 4
(i) Line Sales Organisation Chapter - 5
Head
Marketing
Sales
Manager
Area Sales Area Sales

Area Sales Area Sales
Manager-3 Manager-4
Manager-1 Manager-2
salespeople salespeople salespeople salespeople
Characteristics: All managers have line authority to direct and control subordinates. Used
in small firms and in companies having less number of salespeople.
Advantages: Simple organization structure, clear authority, quick decision making, and
low cost.
Disadvantages: No support to line managers from subordinates with specialized
knowledge / skills. The sales manager has Less time for planning / analysis. As the
company grows, line sales managers are overburdened, which makes them ineffective.
Copyright © 2018 5
(ii) Line and Staff Organization Chapter - 5
Characteristics: Specialist staff managers are made available to the

sales/marketing head. Staff managers’ role is to assist / advise line sales
managers. Used in medium and large size organizations.
Advantages: Better marketing decisions, superior sales performance.
Disadvantages: Higher cost and coordination work, slower decision
making, conflict may arise if staff managers’ role is not clear.
Copyright © 2018 6
(iii) Functional Organisation Chapter - 5
Characteristics: Each staff functional specialist manager has line authority over
salespeople. Used by a large firm with many products / market segments with
minimum number of staff functional managers.
Advantages: Qualified specialists guide salespeople. Simple to administer.
Disadvantage: Confusion and frustration of salespeople due to more managers
giving orders. Marketing head faces a difficult task of coordinating the
competing functional heads.
Copyright © 2018 7
(iv) Horizontal Organization Chapter - 5
Operations Team:
Research & Design Team: • Production /
• Customer Research Operations
• Product / Service • Quality Assurance
Design • Systems Engineering
Planning Team:
• Strategic Planning
• Accounts, Finance
• HR, Administration
• Chief Operating Officer
Customer Support Team: Customer Satisfaction

• Information Team:
• Service • Sales & Marketing
• Training • Pricing, Promotion
• Channels, Logistics
Characteristics: Removes management levels and departmental boundaries.

Except planning team, all others are members of cross-functional teams. Used by
firms having partnering relationships with key customers.
Advantages: Reduction in supervision, unnecessary tasks, and cost; Improved
efficiency and customer responses.
Copyright © 2018 8
Specialization in Sales Organization Chapter - 5
• Needed to increase effectiveness of the sales force.

• Done by expanding the basic sales organization.
• Bases of Specialization:
(1) Geography
(2) Product
(3) Market
(4) Functional (see slide 7)
(5) Combination of the above factors.
• Criteria for Selection – (i) meeting customer needs, (ii)
nature and number of products, (iii) abilities of the sales
force, and (iv) selling costs.
Copyright © 2018 9
(1) Geographic Specialisation
Chapter - 5
Characteristics: Salespeople are assigned geographic areas and are responsible

for all selling activities to all customers within the assigned areas. Branch sales
managers adjust marketing plan to local needs.
Advantages: Better market coverage and customer service, better control over
salespeople, quick response to local conditions and competition.
Disadvantages: Limited specialization of marketing tasks. Hence, it is often
combined with product / market sales organization.
Copyright © 2018 10
(2) Product Specialization Chapter - 5
• Used when the company has many products and / or brands

• Two types of product specialization:
(x). Sales organization with product specialized sales force.
(y). Sales organization with product managers as staff specialists.
Fig. (x):Sales Organization with Product Specialized Sales Force.

Product Specialisation (Continued)
Chapter - 5
Fig. (y): Sales Organization with Product Managers as Staff Specialists

Fig. (x): Characteristics: Salespeople in each product group sell only the products in that
group.
Advantage: Each product gets specialized attention from the sales force.
Disadvantage: Sometimes, more salespeople from the same company contact the same
customer, resulting in customer dissatisfaction and higher selling cost.
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 the company
salespeople.
Disadvantage: Lack of product specialization by the salespeople.
(3) Market Specialization
Chapter - 5
• Characteristics: Desirable when customers are classified by specific types, user

industry, or marketing channel. Salespeople carry out all activities for all products
only for specific customer groups. Use of market specialization is increasing.
• Advantages: Meets needs of specific customer groups, implements customer-
centered philosophy of the company.
• Disadvantages: Geographic duplication of territory coverage and higher costs.
( For functional specialization, see slide no.7)
(5) Combination Sales Organisation Chapter - 5
• 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.
• The figure above shows combination of geographic and market
specializations.
Chapter - 5
Management of Key Accounts
• Also called house, major, global, strategic or national accounts (or
customers).
• They buy large volume of the company’s products/services and are
profitable.
• They may expect superior service, low prices, strategic relationship.
How to Manage Key Accounts?
Objective: To become a sole / preferred supplier.
Strategies to achieve the objective are:
• Appoint a key accounts manager to lead a cross- functional team.
• Team selling, special prices and superior quality products /services.
• Depending on the key customer’s needs, provide customized
products/services.
• Strategic collaborative relationship with key accounts.
• Create or develop a special sales organization for key customers.
Chapter - 5
Size of the Sales Force
• How many salespeople are needed (or the sales

force size) to achieve a firm’s sales and profit
objectives is a key decision.
• Methods to decide optimum sales force size are
as follows:
(i) Workload
(ii) Sales potential (or breakdown)
(iii) Incremental
• We shall discuss these methods briefly:
Chapter - 5
(i) Workload Method
Assumption: All salespeople will have equal workload.

Steps to calculate the sales force 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 the salespeople needed
total market workload (3)

total selling time available per salesperso n (5)
Chapter - 5
Workload Method (Continued)

Advantages: Simple method, conceptually sound, used for all
types of selling situations.
Disadvantages: Ignores profits and costs of serving
customers.
(ii) Sales Potential Method
• The formula used is: N  S (1  T ) , where
P
N=Number of salespeople needed, or sales force 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 sales force turnover
Advantages: Simple and straight forward.
Disadvantages: Conceptually weak; lead time needed for a
new salesperson to reach average productivity.
Chapter - 5
(iii) 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 sales force size, sales volume,
costs and profits.
• Demerits: (i) Can not be used if historical data on sales
and costs are not available, (ii) development of sales
response function may not be possible for all firms.
Sales Force Staffing Chapter - 5
• It is one of the most challenging and important

responsibilities / activities of sales management.
• Process of sales force staffing includes the
following stages:
(i) Planning
(ii) Recruiting
(iii) Selecting
(iv) Hiring
(v) Socialization
• We shall briefly discuss each of the above stages.
Chapter - 5
(i) The Planning Stage
It consists of three steps:

(i)Establish responsibilities for staffing process.
(ii)Decide the number of salespeople needed.
(iii)Outline the type of salespeople needed.
(i)Establish Responsibilities for Staffing Process
• The 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 is needed between sales,
marketing, and HR executives.
Planning Stage (Continued) Chapter - 5
(ii)Decide the Number of Salespeople Needed.

• Steps followed by each territory sales manager to plan
requirement of sales people:
(1) Decide optimum sales force size (using methods
discussed earlier in slides 16 to 19).
(2) Add number of promotions, retirements, transfers out,
terminations, resignations expected from the existing
salespeople.
(3) Subtract expected transfers into the territory and the
existing sales force.
(4) Make a total of new salespersons needed.
• Territory sales managers submit their requirements to the
national / general sales manager, who calculates the total
number of new salespersons to be hired by the company.
Planning Stage (Continued) Chapter - 5
(iii) Outline the Type of Salespeople Needed.

The steps involved in the process are:
(1) Conducting a job analysis.
(2) Preparing a job description.
(3)Developing job qualifications / specifications.
(1) Conducting a Job Analysis
• It is done by a person from sales / H. R. department,
or a consultant. It consists of two tasks:
(a) Analyze the environment in which the
salespersons would work – e.g. type of customers,
competitors, products.
(b) Determine duties to be performed by the
salespersons. Obtain this information from
salespersons, sales managers and customers.
Planning stage (continued) Chapter - 5
(2) Preparing a Job Description
• It is a written document developed from the job

analysis, describing a detailed account of the job.
• The detailed job description is a useful tool for
recruiting, selecting, training, compensating, and
evaluating salespeople.
• Some of the points it normally covers are:
Job title, reporting relationship, types of products
/ services sold, types of customers, duties and
responsibilities, location, geographic area to be
covered, key result areas, and job demands.
Chapter - 5
Planning Stage (Continued)
(3) Developing Job Qualifications / Specifications
• These are generally based on the job description.
• Job specifications / qualifications include education,
sales experience, skills, traits, and abilities.
• Many studies have been done, but no generally
accepted job qualifications for selecting salespeople,
because there are many types of sales jobs.
• Some methods are used for developing job
specifications, which are as under:
• Study the job description. Useful for a new company.
• Analyze personal histories of salespersons.
• Ask customers.
(II) Recruiting the Salespeople Chapter - 5
• Recruiting includes activities to get individuals who will

apply for the job.
• The general purpose of recruitment is to get enough
qualified job candidates, to enable the company to select
the right persons.
• H.R. and sales managers must update information on
government employment regulations.
• Recruiting process includes following activities:
(i) Finding the sources of sales recruits.
(ii) Evaluating and selecting the recruiting sources.
(iii)Contacting candidates through the selected
source(s).
(i) Finding the Sources of Sales Recruits Chapter - 5
• For finding prospective candidates, firms use internal and

external sources. They include:
Internal Sources External Sources
• Employee referral • Advertisements in
programs, newspapers and journals /
• Current employees, magazines,
• Promotions and transfers. • The Internet (job sites),
• Educational institutions,
• Employment agencies,
• Job fairs,
• Other companies.
(ii) Evaluating and Selecting the Chapter - 5
Recruiting Sources
• Recruiting sources are evaluated based on the database built over a

number of years. For a new company, it depends on the cost of
recruitment.
• Evaluating factors are:
(1) Performance rating of salespeople, after 2 years of working.
(2) Percentage of salespeople retained, after 2 years of working.
(3)Total cost of recruiting.
Above data is built over a period of one year or more. It can be
then used for subsequent years for selecting the most effective
source of recruiting at the least cost. The above data should be
updated every year.
• Contacting the candidates through the selected sources is done by

the H. R. department.
(iii) Selecting the Salespeople Chapter - 5
• Selection process consists of seven major selection

steps / tools, which are like filters.
• Companies differ in using selection tools, depending on
the expenditure budget and the time available.
• Major selection steps are:
(1) Screening resumes.
(2) Application blank.
(3) Initial interview.
(4) Intensive interview.
(5) Testing.
(6) Reference check.
(7) Physical examination.
Chapter - 5
Screening Resumes / CV
• It is done when the company receives many resumes / curricula
vitae ( CV ).
• This step / tool is not required, if somebody else like employment
agency or an HR consultant does the initial screening.
• Initial screening of resumes are done by comparing applicants’
resumes 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:
(i) Easy comparison of many applicants.
(ii) Useful for asking questions during interview sessions.
(iii) It gives relevant information.
(iv) Can be designed to comply with legal requirements.
Personal Interviews Chapter - 5
• 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 in-depth view
of candidates.
Interview Structure / Type of Interviews:
(i) Structured / patterned / guided interview.
(ii) Unstructured / non-directed / informal interview.
(iii) Semi-structured interview.
(iv) Behavior and performance based interview.
(v) Stress interview.
Purpose is to decide a candidate’s fitness for a job.
Testing Chapter - 5
• Many firms use tests as a selection tool – examples: P&G, IBM.

• Purpose of testing: To find whether applicants have certain traits /
characteristics that lead to success in sales job.
• Type of Selection Tests
(i) Aptitude tests measure learning ability and aptitude for selling.
(ii) Intelligence tests find out mental intelligence or intelligence
quotient (IQ).
(iii) Interest tests find out applicants’ level of interest in a sales
career.
(iv) Knowledge tests measure applicants’ knowledge of products,
marketing terms, and information technology.
(v) 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.
Chapter - 5
Reference Checks/Background Investigations

• 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 candidates’ 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 applicants to complete the
health information form without seeing a medical doctor.
Chapter - 5
(IV) Hiring Stage
• After completing the selection process, a list of candidates to be
hired is made.
• In hiring stage, two activities are performed:
(i) The company making the job offer.
(ii) Acceptance of the job offer by the applicant.
(V) Socialization Stage

• It is the process through which new salespeople learn values,
norms, attitudes, and behavior of people working in the firm.
• Socialization process starts before the new salesperson accepts the
job offer and continues until the person is assimilated into the
company culture.
• Assimilation or orientation is the second stage of socialization
process.
• Companies have this process, in order to retain, increase job
satisfaction and performance of new salespeople.
35
Chapter - 5
End of Notes – Chapter 5

Organizing and Staffing The Sales Force

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Organizing and Staffing The Sales Force

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CHAPTER 5

ORGANIZING AND STAFFING

LO2. Explain specialization in sales organizations, categorize key accounts,

LO4. Carry out recruitment and selection of the salespeople.

LO5. Organize hiring and socialization of the salespeople.

Purposes of a Sales Organization

(ii) Allow a degree of specialization.

(iii) Define line and staff positions.

(iv) Show a market orientation.

(v) Achieve an effective coordination.

(vi) Ensure a reasonable span of control.

Basic Types of Sales Organizations

•Sales organizations are generally classified into

Area Sales Area Sales

salespeople salespeople salespeople salespeople

Characteristics: Specialist staff managers are made available to the

Customer Support Team: Customer Satisfaction

Characteristics: Removes management levels and departmental boundaries.

• Needed to increase effectiveness of the sales force.

Characteristics: Salespeople are assigned geographic areas and are responsible

• Used when the company has many products and / or brands

Fig. (x):Sales Organization with Product Specialized Sales Force.

Fig. (y): Sales Organization with Product Managers as Staff Specialists

• Characteristics: Desirable when customers are classified by specific types, user

• Characteristics: Many firms use some combination of specialization

Size of the Sales Force

• How many salespeople are needed (or the sales

Assumption: All salespeople will have equal workload.

Workload Method (Continued)

(iii) Incremental Method

• It is based on marginal- analysis theory of economics.

• It is one of the most challenging and important

It consists of three steps:

(ii)Decide the Number of Salespeople Needed.

(iii) Outline the Type of Salespeople Needed.

(2) Preparing a Job Description

• It is a written document developed from the job

• Recruiting includes activities to get individuals who will

• For finding prospective candidates, firms use internal and

• Recruiting sources are evaluated based on the database built over a

• Contacting the candidates through the selected sources is done by

• Selection process consists of seven major selection

• Widely used selection tool.

• Many firms use tests as a selection tool – examples: P&G, IBM.

Reference Checks/Background Investigations

(V) Socialization Stage

End of Notes – Chapter 5

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