Page 133 - DMGT205_SALES_MANAGEMENT

Unit 9: Motivating and Compensating Sales Personal

role. A sales force cannot be considered soundly managed unless there is a well developed and Notes
well administered company plan.
It is difficult to devise a sound compensation plan. It comes with experience and varies from
company to company. It is designed keeping in view the company's goals, capabilities and
requirements. The company wants to increase sales and profits at a minimum cost whereas the
sales person is interested in maximising his earnings. An effective compensation plan takes care
of both the parties. Therefore, a compensation plan must attract, retain and motivate capable
sales personnel and also work within the company's budget.
According to the motivation theories, money has limited potential as a motivator. Nevertheless,
sales force needs to be compensated to keep its morale high and to contribute its maximum. A
sales compensation plan, properly designed, has three motivational roles:
1. Provide a living wage.

2. Adjust pay levels to performance.
3. Provide a mechanism for demonstrating the congruency between attaining company's
goal and individual goals.

A properly designed sales compensation plan fits a company's special needs and problems.
Direct salary is similar for all companies but indirect incentives and prerequisites differ.
A sales force is representative of a company's philosophy and business principles. It builds
company's perception among its clients. Building of the sales force and its maintenance is
therefore important and this is done by compensation schemes and motivation.

Sales compensation plans are aids to, rather than substitutes for, effective motivation. The basic
appropriateness of a compensation plan is important and so is the way it is implemented and
administered.
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. Most changes are
minor, instituted to bring the plan and marketing objectives into closer alignment.
Major changes in the compensation plan are rare. Like most people sales personnel resist sweeping
changes, particularly when this requires them to alter accustomed ways of doing things.
How should Changes be Made?

Some executives think that introducing changes gradually minimises interference with
established habits and elicits less resistance from sales personnel. Others claim that major changes
should be made quickly because continual changes erode sales people's morale. Whether a
change should be made in one step or in many, depends upon the particular situation and no
easy generalisation is possible.
There are two situations where total overhauling of compensation plans are in order.
1. The company whose sales force already has low morale, perhaps because of the current
compensation plan.
2. When a company is anticipating the cultivation of new and different markets.
In both the cases, management must consider many factors, viz., the type of customers, marketing
channels, characteristics, intensity of competition, extent of market and complexity of selling
task.

LOVELY PROFESSIONAL UNIVERSITY 127