Post on 01-Dec-2014
Sales Force Management/Nerolac/Group8 Page 1
2011
A Report on
“SALES FORCE MANAGEMENT AT
NEROLAC PAINTS INDIA”
MASTERS OF BUSINESS ADMINISTRATION
SHRI JAIRAMBHAI PATEL INSTITUTE OF BUSINESS MANAGEMENT AND COMPUTER
APPLICATIONS, SJPI(NICM)
GUJARAT TECHNOLOGICAL UNIVERSITY,
AHMEDABAD
Submitted By:
Arvind Upadhyay (B-4)
Gaurav Verma (B-13)
Aditi Goyal (B-18)
Dimple Thandani (B-49)
Basant Bagchandani (B-51)
Submitted To:
Prof Krunal Joshi
Sales Force Management/Nerolac/Group8 Page 2
2011
PREFACE
The India makes high progress on industrial levels. Due to liberalization and globalization
industrial and business opportunities are increasing. So to achieve this opportunities demand of
competitive management and skilled manager are also being increased. MBA Program is very
well for this necessity. Because it is well structure and integrated course of management
studies. In MBA practical knowledge is as necessary as theoretical knowledge.
Today in the age of globalization where cutthroat competition is prevailing in the
market, theoretical knowledge is not enough beside on this practical knowledge gives
experience and presents the true picture of theoretical knowledge.
As a part of the Sales and Distribution Course project we choose to study the Sales Force
Management at Nerolac, India.
Undergoing this study project at was very interesting and one of the finest experiences
during our study.
Sales Force Management/Nerolac/Group8 Page 3
2011
ACKNOWLEDGEMENT
Over the year, we have received tremendous support from my teachers, parents, friends
and my guides. We am indeed thankful to them. We would take this opportunity to express my
gratitude for the sustained support we have received from Nerolac Paints Pvt. Ltd. for
providing us an opportunity to carry out this project.
Sincere thanks to our faculty and guide Prof. Krunal Joshi helped us throughout the
internship and guided in all the aspects of the project.
We wish to express my deep sense of gratitude to Mr. Vishrant Gandhi,(Zonal Sales
Officer, Industrial Sales) for supporting and guiding me. He was the one without whose
cooperation the project would not have been a success. His guidance, encouragement and
help were much indeed appreciated.
Besides, this project made us realize the value of working together as a team and as a
new experience in working environment, which challenges us every minute.
Lastly, we offer my regards to all of those who supported us in any respect during the
completion of the project.
We take sole responsibility for any errors remaining. Any comments, observation,
constructive criticism and suggestion for further improvement of the report are welcome.
Sales Force Management/Nerolac/Group8 Page 4
2011
TABLE OF CONTENTS
PREFACE ................................................................................................................................................................ 2
ACKNOWLEDGEMENT ............................................................................................................................................ 3
1. INTRODUCTION ............................................................................................................................................. 5
1.1 HISTORY ................................................................................................................................................ 5
1.2 KANSAI NEROLAC PAINTS LIMITED ........................................................................................................ 5
1.3 CORPORATE VALUES ............................................................................................................................. 6
1.4 THE HR PHILOSOPHY ............................................................................................................................. 7
1.5 CULTURAL ETHOS .................................................................................................................................. 8
1.6 OPEN DOOR POLICY .............................................................................................................................. 8
2. MEANING & THEORIES OF SALES FORCE MANAGEMENT ............................................................................... 9
2.1. SALES FORCE OBJECTIVES ...................................................................................................................... 9
2.2. SALES FORCE MANAGEMENT AT NEROLAC ......................................................................................... 12
2.3. SALES STRUCTURE AT NEROLAC .......................................................................................................... 15
2.4. RECRUITMENT AND TRAINING ............................................................................................................ 16
2.4.1. RECRUITMENT AT NEROLAC: ...................................................................................................... 17
2.4.2. SELECTION AT NEROLAC ............................................................................................................. 19
2.4.3. TRAINING OF SALES PERSONNEL................................................................................................. 22
2.5. JOB ANALYSIS & JOB DESCRIPTIONs .................................................................................................... 24
2.5.1. JOB ANALYSIS ............................................................................................................................. 24
2.5.2. JOB DESCRIPTION .................................................................................................................... 24
2.5.3. QUALIFICATIONS, EXPERIENCE AND JOB DESCRIPTIONS AT NEROLAC ...................................... 25
3. DESIGNING THE SALES FORCE ...................................................................................................................... 27
3.1. OBJECTIVES OF SALES FORCE AT NEROLAC .......................................................................................... 29
3.2. DEFINING THE SALES TERRITORY ......................................................................................................... 30
3.3. DETERMINING SIZE OF THE SALES FORCE ............................................................................................ 31
4. NEROLAC’S PERFORMANCE APPRAISAL SYSTEM ......................................................................................... 32
4.1. METHODS ........................................................................................................................................... 33
4.1.1. KRA AT NEROLAC ........................................................................................................................ 36
4.2. COMPENSATION AT NEROLAC............................................................................................................. 37
4.2.1. PLAN FEATURE ............................................................................................................................ 37
Sales Force Management/Nerolac/Group8 Page 5
2011
1. INTRODUCTION
1.1 HISTORY
It was founded in 1920 as Goodlass Nerolac Paints Ltd. It was formerly known as
Goodlass Nerolac Paints Ltd. In 2006, Company changed its name to Kansai Nerolac
Paints Limited.
It has 5 paint manufacturing plants and about 6-7 contract manufacturers.
The Nerolac owned plants are at:
Jainpur (Uttarpradesh)
Bawal (Haryana)
Lote, Chiplun (Maharastra)
Chennai (Tamilnadu)
Hosur (Tamilnadu)
1.2 KANSAI NEROLAC PAINTS LIMITED
Kansai Nerolac Paints Ltd (formerly known as Goodlass Nerolac Paints Ltd) is largest in
industrial paint and second largest decorative paint company based in Mumbai. It is a
subsidiary of Kansai nerolac paints, JAPAN.
It is engaged in the industrial, automotive and powder coating business.
It develops and supplies paint systems used on the finishing lines of electrical
components, cycle, and material handling equipments, bus bodies, containers and
furniture industries.
Sales Force Management/Nerolac/Group8 Page 6
2011
Kansai Nerolac has always believed that the key to its business is :
Technology
Research & Development
Innovations
Quality
KNPL has 5 Division :
Decorative
Industrial Coating. (General Industries & Automotive)
Powder Coating
High Performance Coating
Pre Treatment Chemicals
1.3 CORPORATE VALUES
Vision values and culture: In today’s dynamic business environment, no organization
can afford to survive without a well-articulated and carefully thought vision stating the
overall strategic direction and long-term future of its business.
“It is our vision to leverage global technology, for serving our customers with superior
coating systems built on innovative and superior products and world class solutions, to
strengthen our leadership in Industrial coatings and propel for leadership in
Architectural coatings, all to the delight of our stakeholders.”
The company firmly believe that it is not only the vision of where they wish to go which
will form a cornerstone of all their further growth, but also their conviction to the fact
that the values based proposition has to be ultimate foundation of their business.
Sales Force Management/Nerolac/Group8 Page 7
2011
To this end they consciously have internalized and been practicing these values in all
their business transactions though human beings:
i) Innovation
ii) Entrepreneurial
iii) Responsive
iv) Simplicity
v) Team Orientation
1.4 THE HR PHILOSOPHY
At Nerolac, they recognize their human resources as extremely important and
critical assets. They honor the dignity of each individual, irrespective of position and highly
value the feelings and emotions of people.
Their Human Resource Policy is, to facilitate creation of synergy, mutuality and
interdependence between individual and corporate development and growth through total
employee involvement and building an enabling work culture in the organization.
Informality in interactions, transparency and openness in communications at all levels,
and an enabling work environment supporting high autonomy of work, transparency and an
objective subjectivity of Performance Management System, fair dealing, tremendous care
and concern for people are a few of the softer aspects of permeable people management
environment which represent the organizational climate and culture.
Sales Force Management/Nerolac/Group8 Page 8
2011
1.5 CULTURAL ETHOS
Vision driven organization
Employees feel pride in being part of the organization
Recognition of human resources as extremely important and critical assets
High level of human dignity
Transparency and openness among employees at all hierarchical levels
Performance-linked reward system
Management and employee commitment to organization values is high
Autonomy in work is high
High commitment to quality products
1.6 OPEN DOOR POLICY
Working together requires that we have a friendly atmosphere based on trust and
respect amongst all of us.
At Nerolac we follow an Open Door policy. Any person is free and welcomed to
share good idea, suggestion, doubt, problem about job or work place, or
uncertainties about one’s future in the organization. An open and transparent
communication is appreciated.
Sales Force Management/Nerolac/Group8 Page 9
2011
2. MEANING & THEORIES OF SALES FORCE
MANAGEMENT
"Sales force management is a distinct process, consisting of planning, organizing, staffing,
directing and controlling the selling effort by use of sales force to determine and accomplish the
sales force objectives".
In our present context:
1. Planning implies determining sales force objectives, formulating a strategy and scientific
and systematic estimation of sales force requirements over a period of time.
2. Organizing means determining the necessary component tasks to achieve sales force
objectives and grouping and assigning responsibilities to them.
3. Staffing involves recruiting, selecting, training and compensating salespeople and
making plans for meeting future staff needs of the organization.
4. Directing means guiding, motivating and supervising the sales people.
5. Controlling involves those evaluative activities that are essential to ensure that
objectives are accomplished as planned.
2.1. SALES FORCE OBJECTIVES
Companies must carefully define the specific objectives they expect their sales force to
achieve. The old idea was that the sales force should “sell, sell, and sell”.
Salespeople have sales quotas, and the better salespeople met or exceeded their
quotas. Later, the idea arose that sales representatives should be skilled in customer problem
and propose a solution. More recently, some industries have begun to insist that the sales force
engage in “commitment selling.” Under this concept, salespeople do not initially try to sell a
specific product or solve a specific problem. Rather, they show a customer-prospect how their
Sales Force Management/Nerolac/Group8 Page 10
2011
company can help the customer improve its profitability. They seek to join their company with
the customer’s company as “partners for profit.”
Regarding of the selling context, salespeople will have one or more of the following specific
tasks to perform:
PROSPECTING: Sales representatives search for prospects, or leads.
TARGETING: Sales representatives decide how to allocate their time among prospects
and customers.
COMMUNICATING: Sales representatives skillfully communicate information about the
company’s products and services.
SELLING: Sales representatives know the art of sales - approaching, presenting,
answering objections, and closing sales.
SERVICING: Sales representatives provide various services to the customers-consulting
on their problems, rendering technical assistance, arranging financing and expediting
delivery.
INFORMATION GATHERING: Sales representatives conduct market research and
intelligence work and fill in call reports.
ALLOCATING: Sales representatives decided which customers will get scare product
during product shortages.
Companies typically define the specific objectives they want their sales force to achieve.
To maintain a market focus, salespeople should know how to analyse sales data,
measure market potential, gather market intelligence, and develop marketing strategies and
plans. Sales representatives need analytical marketing skill and these skills become especially
important at the higher levels of sales management. Marketers believe that sales forces will be
more effective in the long run if they understand marketing as well as selling.
Sales Force Management/Nerolac/Group8 Page 11
2011
On a whole it includes Designing the sales force, setting out the objectives of the sales
force, chalk out a strategy for the sales force, to define the structure and compensation, and
also the recruitment and training of the sales force.
Integral part for success of marketing strategy is management of the sales force.
The management of sales consists of following:-
1) Recruitment is at the centre of an effective sales force. Companies develop selection
procedure where behavioral and management skills are tested.
2) Training is essential to remain ahead of the competition. Sales force needs training before
entering the market as well as training at different stage of the product life cycle.
3) Supervision on sales force is decided on the profile of product portfolio. A general
supervision is maintained with respect to sales people dealing with potential clients.
Supervision is related to efficient time management from preparation of client call to
closing of the deal.
4) Motivation is a key aspect for management of the sales force. Here compensation plays an
important part in driving up the motivational level. Compensation can be assigned based on
sales quota. Other motivational tools are social gathering and family outing.
5) Evaluation is essential to management of a sales force. Sales reports sent by the sales force
serve a good starting point of evaluation.
6) Art of negotiation and relationship marketing these two are the important aspects of
successful sales representative and long term benefit for the company.
Sales Force Management/Nerolac/Group8 Page 12
2011
2.2. SALES FORCE MANAGEMENT AT NEROLAC
The face of any organization is the sales force. Sales personnel are the company’s link to
the customers. Any company’s survival and existence depends on the market and hence the
sales force which maintains that link deserves the deepest thought in terms of setting
objectives for it, strategy for it and structuring it.
Companies spend a considerable amount of time and money on sales force rather than
on any other promotional activity. However, sales force is expensive and companies are looking
forward to managing them in an efficient and effective manner.
Sales Management which is concerned with the direction & control of sales force refers
to the management of sales personnel. Sales force management is “the planning, direction &
control of personnel selling, including recruiting, self selection, training (equipping, assigning,
routing), supervising, paying & motivating as these tasks apply to the personal sales force
management.” In addition to other responsibilities, controlling & guiding the sale force is one of
the important activities of management.
Managing the sales force involves the implementation of personal selling strategy. The
sales force management has two key personal selling strategic decisions
Sales force size
Selling style
These decisions results from planning how to achieve the sales volume & related
company goals. The decision on selling styles determines the range and nature of activities
required for personal management or management of sales force. The decision on sales force
size determine the magnitude of these activities. Implementing these strategic decisions is sales
management responsibility.
Sales Force Management/Nerolac/Group8 Page 13
2011
Sales force management is specialized type of personal management. The personal
management focuses upon sales, production or office workers but sales force management
focuses only upon sales personnel.
Sales personnel work away from their co-workers and superiors, so it is difficult to
develop a spirit of identity with and loyalty to the company and to manage them into a unified
team. Sales personnel’s necessity is to give freer rein then production or office workers. Up to a
large extent they are relied upon as individuals to plan and control their own activities. Most
sales personnel visit their home office only infrequently and centralize direction of their
activities mainly by phone and mail.
Sales Force Management/Nerolac/Group8 Page 14
2011
The steps in sales force management are the same as those in general personnel
management.
Sales force management work, starts with job analysis-determining the job objectives,
the component duties and responsibility, performance criteria, and reporting relationships. The
output of job analysis is the written job description that is used in deriving the necessary
qualifications (job specifications) of the employee.
Qualified job applicants must be found, and this requires decisions on recruiting sources
and methods. From the supply of applicants, those meeting the job specifications are selected.
After hiring applicants undergo initial training and throughout their entire careers with
the company-receive continuing training through diverse delivery systems. Compensation plans
are designed to provide appropriate levels and methods of compensation.
When the salesperson is assigned to the field, other personnel activities come into play.
The salesperson is motivated to plan and make productive use of working time. To improve the
effectiveness of sales calls, salespersons are counseled on working habits and methods
controlling sales personnel require analysis of selling records and evaluations of sales
performance.
Sales Force Management/Nerolac/Group8 Page 15
2011
2.3. SALES STRUCTURE AT NEROLAC
If the company sells one product line to one end using industry with customers in many
locations, the company would use a territorial sales force structure. If the company is selling
many products to many types of customers, a product specialized or market specialized sales
force structure may be more appropriate. The structure needs to be changed by established
companies as they expand and economic conditions change.
Chairman And BOD
Managing Director
Vice President
General Sales Manager
Divisional Sales Manager
Area Sales Manager
Assistant Sales Manager
Sales Officer
Sales Executive
Sales Force Management/Nerolac/Group8 Page 16
2011
2.4. RECRUITMENT AND TRAINING
Recruitment is the process of identifying that the organization needs to employ
someone up to the point at which application forms for the post have arrived at the
organization. Selection then consists of the processes involved in choosing from applicants a
suitable candidate to fill a post.
Training consists of a range of processes involved in making sure that job holders have
the right skills, knowledge and attitudes required to help the organization to achieve its
objectives.
Recruiting individuals to fill particular posts within a business can be done either
internally by recruitment within the firm, or externally by recruiting people from outside.
At the stage of selection companies have to make sure they get the right persons that
subscribe to the company’s objectives and value.
Sales Force Management/Nerolac/Group8 Page 17
2011
2.4.1. RECRUITMENT AT NEROLAC:
There are two types of Recruitment sources followed by NEROLAC:
Internal Sources.
External Sources.
INTERNAL SOURCE
Internal sources include personnel already on payroll of the organization filling a
vacancy. It can be done by means of promotions which increase the general level of moral of
existing employees and make them to provide more reliable information about the capable
candidates.
Following are included in this source:-
i. Present Permanent Employees.
ii. Employee Referrals.
iii. Former Employees.
EXTERNAL SOURCE
These source lie outside the organization, in Nerolac they consider following sources
Recruitment
1) Advertisement.
2) Campus Interview
3) Employment Exchange
4) Unsolicited Application
Sales Force Management/Nerolac/Group8 Page 18
2011
Advertisement
For the recruitment, Nerolac consider this particular source. They give Advertisement in local
newspaper and other newspaper for the post in the sales department with complete job
description.
Campus Interview
This is second option that Nerolac consider. Recruiters are sent to educational institution where
they find suitable candidate. Nerolac go through this option. But this type of recruitment is
done for the upper level positions i.e. Assistant managers, managers etc.
Employee Exchange
An employment exchange is an office set up for bringing together as quickly as possible
Candidates searching for employment and employees looking for prospective employees.
Employee Referrals
Nerolac also considers this option for recruitment. Friends and relatives of present employees
are also a good source from which employee may be drawn.
Unsolicited Application
Some candidates send in their application without any invitation from the organization. A
Recruiter can use these unsolicited applications for appointment and when vacancies arise.
Sales Force Management/Nerolac/Group8 Page 19
2011
2.4.2. SELECTION AT NEROLAC
Selection either internal or external is a deliberate effort of the organization to select a
fixed number of personnel from a large number of applicants. The primary aim of employee
selection is to choose those persons who are most likely to perform their jobs with maximum
effectiveness and to remain with the company. Thus, in selection, an attempt is made to find a
suitable candidate for the job. In doing so naturally many applicants are rejected. This makes
selection a negative function.
Following are the steps followed are as under:
Application
Initial interview of the candidate.
Employment tests.
Interviews.
Checking references.
Physical or medical examination.
Final interview and induction.
During this, various steps like Education, Experience, Personal Detail, Aptitude Test, Interest
Test, Intelligence Test, Performance Test, and Personality Test are considered. Different types
of interviews are conducted like:
Preliminary interview.
Extensive interview.
Stress interview.
Discussion interview.
Structured interview.
Non -structured interview.
Group interview.
Final interview.
Sales Force Management/Nerolac/Group8 Page 20
2011
The Selection Process in NEROLAC is as under
Vacancy In Any Department:
When there is any vacancy in any department of the organization, they give advertisement
in the newspapers.
Approval From M.D:
When there is any vacancy in any department, first step is to take approval from M.D to
give advertisement in newspaper. After getting approval the process goes further.
Advertisement:
After getting approval from M.D, advertisement is given in local newspaper for the related
post in the sales department.
Collection of Application:
All the direct applications are collected.
Securitization of applications:
After collection, applications are scrutinized in detail and incompatible applications are
rejected. Others are kept for further process. During this process, suitable applications are
considered on basis of criteria decided by Nerolac.
Interview:
Interview is being carried out by a panel of 3 to 4 members consisting of head of Sales
Department, M.D. and Manager of Administration. This panel will be rating on different aspects
Sales Force Management/Nerolac/Group8 Page 21
2011
such as personality, knowledge of that particular field, general knowledge, written test etc.
They will be having a rating sheet consists of all such headings mentions and each panel
member giving marks and then after ranking will be done.
Selection:
At the end they give the appointment letter to the person and he/she is informed about
his/her Joining in the organization.
Induction:
Induction is introducing an employee to the job and to the organization. The primary
purpose of induction is to give information about organization about organization so that
he/she works comfortably.
Generally induction conveys three types of information:-
1) General information about the daily work routine.
2) A review of the organization history, objectives, operation, products, visiting different
department.
3) Detail information of the organization policies, work rules and benefits given to employee.
After a detailed induction program of a month’s duration, the trainees go through on-
the- job training for a year. They get placed at assistant manager level to start with.
Sales Force Management/Nerolac/Group8 Page 22
2011
2.4.3. TRAINING OF SALES PERSONNEL
Now that the selection has been made, the organization provides adequate training so
that the applicant really becomes suitable for the job. Gone are the days when people thought
that "salesmen were born and not made". Research has clearly indicated that the person can be
trained to become a good salesman.
Researchers have clearly indicated that the following are some of the factors which exist in
case of a good salesman, i.e. a salesman properly trained as against one who was not so
trained:
He makes a more enthusiastic presentation.
He has the ability to clinch the order.
He has greater product knowledge.
He pays closer attention to ensure that services are rendered to the customers.
He has superior territory organization.
He answers objections better.
He can obtain more customer interviews.
The objectives of training are to give the following types of information to the salesmen,
namely:
Knowledge of the company, its background and history. This will give him a perspective
as to how he fits into the organization structure of the company.
Knowledge of the Company's products and more particularly the `selling points' or
advantages that he can emphasize with a view to close the sale.
Knowledge of customers, i.e. details about the types of customers and how they should
be handled.
Knowledge of sales and other procedure which is prescribed, such as how to get
orders, what forms to fill up, the sales reports required, etc.
Sales Force Management/Nerolac/Group8 Page 23
2011
Training in the art of selling or salesmanship.
Specific skill development programs are conducted for employees in sales. They also
nominate their employees for external training programs and seminars.
Sales Force Management/Nerolac/Group8 Page 24
2011
2.5. JOB ANALYSIS & JOB DESCRIPTIONs
2.5.1. JOB ANALYSIS
Job analysis is the process of examining jobs in order to identify the key requirements of
each job. A number of important questions need to be explored:
the title of the job
to whom the employee is responsible
for whom the employee is responsible
A simple description of the role and duties of the employee within the organization.
2.5.2. JOB DESCRIPTION
A job description will set out how a particular employee will fit into the organisation. It will
therefore need to set out:
the title of the job
to whom the employee is responsible
for whom the employee is responsible
A simple description of the role and duties of the employee within the organization.
A job description could be used as a job indicator for applicants for a job. Alternatively,
it could be used as a guideline for an employee and/or his or her line manager as to his or her
role and responsibility within the organization.
Sales Force Management/Nerolac/Group8 Page 25
2011
2.5.3. QUALIFICATIONS, EXPERIENCE AND JOB DESCRIPTIONS
AT NEROLAC
2.5.3.1. SALES OFFICER- INDUSTRIAL
Ideal candidates will be B.Sc/ M.Sc in Chemistry,BE/B.Tec Chemical (MBA Preferred)
with 2-4 years of experience.
The incumbent should have an experience in paints/ lubricants / auto industry /
Powder Coating / Protective Coating/High Performance Coating.
Job Description:
The candidate shall be responsible for:
Achieving sales & collection targets,
Developing new business,
Maintaining the stock norms,
Generating information reports on market share, new products, upcoming
business opportunities etc.
Sales Force Management/Nerolac/Group8 Page 26
2011
2.5.3.2. AREA SALES MANAGER
The ideal candidate should be a Graduate, Preferable MBA with 3-6 years of experience.
The incumbent should have an experience in Profitable Sales with market share gain.
Job Description:
The incumbent shall be responsible for:
Achievement of sales (volume / value) as per budget.
Manage accounts receivables as per norms.
Manage and control inventories and SMNM stocks as per budgets through
proper forecasting.
Managing the business in his division through a team of 30-40 people.
Training and development of sales and admin team and develop successors for
self and ASM.
Monitor, evaluate & provide feedback on performance of ASMs / PSMs
Implement channel incentive scheme and ensure control measures and cost
controls.
Channel management and expansion as per need of the business.
Implement marketing plan and promotion, pricing, product mix & distribution
policies of the company in the division
Gather information on competitors’ activities in the region and act upon it for
KNPL’s benefit.
Control entire accounting and all audit related queries
Sales Force Management/Nerolac/Group8 Page 27
2011
3. DESIGNING THE SALES FORCE
Sales force is linking between companies and customer. Therefore, companies have to be
careful in designing and structuring sales force.
1. The first step is setting out an objective for sales force. Earlier companies had a
single objective increasing sale making it objective also for sales people. Sales people
are asked to perform a search for prospective clients or lead. Sales people are asked
to balance time between a prospective customer and current customer. Effective
communication of product and services is essential to close the deal. Sales people
also play an important role in after sales service and can make a difference for the
company. Sales people are eyes and ears of the company in the market gathering
information about competition and customer changing demands.
2. The second step is use sales people strategically. Sales people have to combine
efforts with other team members to achieve the objective. Sales people should be
aware how to analyze market data been provided and convert them into marketing
strategies.
3. The third step is deciding the structure of the sales force. The structure of the sales
is dependent on the strategy followed by the company. Common sales force
structures are as follows:-
Territorial structure is used where every sales representative is assigned
specific geographical area. This structure is preferred for building
relationships with locals.
Sales Force Management/Nerolac/Group8 Page 28
2011
Product structure is used for complex and un- related product portfolio.
Here the sales people are directly associated with research and development
of the products.
Market structure is used if the companies are operating different industry or
market segments. Every sales force specializes in a definite market and helps
push a product efficiently across the given market. However, the
disadvantage would arise if customers are located over a wide geographical
area.
Complex structure is used when companies are in business of selling
complex product to different customer across a large geographical area. Here
sales force structure is a combination of other structures discussed.
Once the structure is designed companies need to make a decision with respect to
the size of the sales force. The size of the sales force is dependent on the market size
and number of customers.
4. The next step is to design compensation for the sales force. Compensation plays a
big motivational factor for sales people. Companies follow a structure of a fixed
amount plus a variable amount depending of success achieved in the market.
Allowances play an important factor in the salary owing to continuous travel and
market visits.
Sales Force Management/Nerolac/Group8 Page 29
2011
3.1. OBJECTIVES OF SALES FORCE AT NEROLAC
Market mapping. ( Overall growth & to define market size)
Competitors movement ( To keep red eye on every movement of competitor)
Technical Approval( To get technical approval of Nerolac Products from customer )
To develop & maintain relationship with Applicators/ Contractors/ Pre Engineering
Building Constructors / Dealers / Consultants
To keep sales expense under control
To keep track on upcoming project in the allocated zone.
To forecast the requirement of every SKU's in terms of volume on every 22nd of month.
To see through that the material is dispatched well in time for every order as per
customer's instruction.
To track that the forecasted material has been taken by plant for manufacturing.
To keep the inventory as minimum as possible.
To keep account receivable number of days as minimum as possible.
To develop new customer.
Sales Force Management/Nerolac/Group8 Page 30
2011
3.2. DEFINING THE SALES TERRITORY
For this the following process is followed:
From the above approximately the centre area is selected which can cater to entire
region,
For example in Gujarat Nerolac has Sales Office at
Surat/Baroda(H.O)/Ahmedabad/Rajkot/Gandhidham.
Baroda region covers Nadiad, Anand, Vidhyanagar, Baroda, Manjusar, Savli, Jambusar, Halol,
Por, Karjan, Ankleshwar, Bharuch, Dahej etc.
MARKET SIZE MAPPING
Number of
Applicators/Consultants/Contractors/OEM/Projects in the
market.
Available capacity to meet the requirements
Sales Force Management/Nerolac/Group8 Page 31
2011
3.3. DETERMINING SIZE OF THE SALES FORCE
For every 3 Cr of business – 1 Sales Person is allocated.
MARKET SIZE MAPPING
Number of
Applicators/Consultants/Contractors/OEM/Projects in the
market.
Available capacity to meet the requirements
Sales Force Management/Nerolac/Group8 Page 32
2011
4. NEROLAC’S PERFORMANCE APPRAISAL SYSTEM
A performance appraisal, employee appraisal, performance review, or (career)
development discussion is a method by which the job performance of an employee is
evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding
manager or supervisor.
A performance appraisal is a part of guiding and managing career development. It is the
process of obtaining, analyzing, and recording information about the relative worth of an
employee to the organization. Performance appraisal is an analysis of an employee's recent
successes and failures, personal strengths and weaknesses, and suitability for promotion or
further training. It is also the judgment of an employee's performance in a job based on
considerations other than productivity alone.
Generally, the aims of a performance appraisal are to:
Give employees feedback on performance
Identify employee training needs
Document criteria used to allocate organizational rewards
Form a basis for personnel decisions: salary increases, promotions, disciplinary actions,
bonuses, etc.
Provide the opportunity for organizational diagnosis and development
Facilitate communication between employee and employer
Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.
To improve performance through counseling, coaching and development.
Sales Force Management/Nerolac/Group8 Page 33
2011
4.1. METHODS
A common approach to assessing performance is to use a numerical or scalar rating
system whereby managers are asked to score an individual against a number of
objectives/attributes. In some companies, employees receive assessments from their manager,
peers, subordinates, and customers, while also performing a self assessment This is known as a
360-degree appraisal and forms good communication patterns.
The most popular methods used in the performance appraisal process include the following:
Management by objectives
360-degree appraisal
Behavioral observation scale
Behaviorally anchored rating scales
Trait-based systems, which rely on factors such as integrity and conscientiousness, are also
used by businesses but have been replaced primarily by more objective and results-oriented
methods. The scientific literature on the subject provides evidence that assessing employees on
factors such as these should be avoided. The reasons for this are twofold:
1) Trait-based systems are by definition based on personality traits and as such may not be
related directly to successful job performance. In addition, personality dimensions tend to
be static, and while an employee can change a behavior they cannot change their
personality. For example, a person who lacks integrity may stop lying to a manager because
they have been caught, but they still have low integrity and are likely to lie again when the
threat of being caught is gone.
2) Trait-based systems, because they are vague, are more easily influenced by office politics,
causing them to be less reliable as a source of information on an employee's true
performance. The vagueness of these instruments allows managers to assess the employee
based upon subjective feelings instead of objective observations about how the employee
has performed his or her specific duties. These systems are also more likely to leave a
Sales Force Management/Nerolac/Group8 Page 34
2011
company open to discrimination claims because a manager can make biased decisions
without having to back them up with specific behavioral information
Nerolac had a workforce of 1900 professionals and distribution network of 11,000
dealers serviced by 66 company depots spread across the country in 2004.
Apart from its focus on brand building and distribution, Nerolac also focused on
instituting suitable HR policies and systems to attract and retain employees of all
divisions, including the sales and marketing divisions.
As part of its HR strategy, Nerolac devised an effective performance appraisal system
based on Key Result Areas (KRA's) for its sales professionals. The compensation was
linked with the assessment of employee performance based on the KRA's.
In this kind of performance appraisal system, every employee was asked to specify the
Key Result Areas based on the job profile. These KRA's were reviewed by the respective
superiors to arrive at the final KRA's. Employee performance was assessed in terms of
KRA's on a quarterly basis. At the end of each year, the compensation and rewards were
decided in accordance with these appraisals.
Apart from the KRA's-based performance appraisal, Nerolac also implemented various
other performance measurement systems designed for different levels of employees.
Nerolac launched the 360-degree feedback initiative. However, this technique was
different from the conventional techniques followed by the corporates.
Nerolac followed the self-evaluation method instead of the usual process of
management evaluating the employees. The objective behind this initiative was to
empower the employees and bring in transparency to the assessment of employee
performance.
In this technique, employees were allowed to evaluate themselves on their
performance. The company then conducted open meets called 'feedback-sharing
initiative' at which employees could share their problems and solutions.
Sales Force Management/Nerolac/Group8 Page 35
2011
For example, if one employee admitted an inability to communicate, the other
employees tried to develop an action plan to help him/her overcome that inability. The
company also consolidated and uploaded this feedback onto a knowledge portal
developed for employees.
Nerolac introduced a flexible compensation structure called 'Corporate commission for
corporate performance. Generally, the managers' commission was decided based on the
achievement of individual targets. Apart from such performance-linked variable pay,
they were also entitled to commission based on the company's overall performance.
The company planned to accomplish two objectives by this initiative. First, it wanted to
make the employees aware of the larger interests of the company while performing
their duties. Second, this structure provided another measure of performance that
linked the individual performance to the overall performance of the department.
Sales Force Management/Nerolac/Group8 Page 36
2011
4.1.1. KRA AT NEROLAC
As part of its HR strategy, Nerolac devised an effective performance appraisal system
based on Key Result Areas (KRA's) for its sales professionals.
In this kind of performance appraisal system, every employee was asked to specify the Key
Result Areas based on the job profile. These KRA's were reviewed by the respective superiors to
arrive at the final KRA's. Employee performance was assessed in terms of KRA's on a quarterly
basis. At the end of each year, the compensation and rewards were decided in accordance with
these appraisals.
Quantitative KRA:
KRA Key indicators Weightage
Value and Volume Achievement of Budgeted Sales Value for segment 50%
Collections Achievement of min 50% C EI or any
Specific target given from HO. whichever
Is higher.
50%
Qualitative KRA:
KRA Key indicators Weightage
Systems Regular updation and usage of CRM 25%
Customers (a) Early identification of issue which could
lead to dissatisfaction along with resolution
(b) Identify & develop new accounts in and around.
50%
Customer
Administration
Generation of Customer opening form Closure of
unlinked items in the system Statement of Accounts -
sent by 10th every month Balance Confirmation - once
every 3 months and c Forms collections"
25%
Sales Force Management/Nerolac/Group8 Page 37
2011
4.2. COMPENSATION AT NEROLAC
A well-balanced system of compensation with rewards linked to performance has created
an effective performance orientation all through the organization. It is sustained perpetually
with conscious, proactive systems such as ‘Balanced Scorecard’, ‘Performance commission
dependent upon key Result Areas’, ‘Corporate Commission for corporate performance’
‘Annual awards to technical personnel’ for excellence etc.
Well, there is hierarchy and organization structure based on functional responsibilities. But
there is an excellent amount of informality, cordiality and flexibility all through the organization.
4.2.1. PLAN FEATURE
Design, Communication, And Administration Methodology
Sales compensation design begins with tying sales compensation goals to the business
objectives of the company in a direct way. The selling job is subsequently carefully defined in
terms of responsibilities, accountabilities, and goals. Communication and administration is the
responsibility of Sales supervisor with frequent executive sales performance audits conducted.
Application Of Performance Yardsticks
Both qualitative and quantitative performance measures are used to communicate
performance priorities for upcoming performance period. Often profit is used as a
supplementary yardstick to revenues.
Sales Force Management/Nerolac/Group8 Page 38
2011
Measures directly extend corporate sales goals to sales job and tie sales representative
into the overall business plan of the company. Team measures are often used to reward
cooperation and team selling.
Mix of Fixed and Incentive Compensation
Prime emphasis is on the economics of the selling task rather than competitive
compensation. Incentives offer very high cash compensation for excellent selling performance.
Little emphasis on competitive compensation and base salary or draw is measurably below
competitive compensation for industry, emphasizing on paying for sales success.
Actual Total Cash Compensation Paid
Total cash compensation varies dramatically based on sales performance. Over 25% of
sales representatives earn more than competitive cash compensation and 20% earn less than
competitive.