Donaldson Manufacturing Company: Electrical Products Manufacturer – Selecting a Top Sales Executive

The president of the Donaldson Manufacturing Company of Chicago faced the problem of selecting a new general sales manager. The company had annual sales in excess of $75 million and more than forty years of experi­ence in manufacturing electrical safety switches, circuit breakers, regula­tors, manual and magnetic starters, and related products. These products, which were used in industrial and institutional markets, were distributed through nearly 250 electrical supply wholesalers. Four divisional sales managers directed field operations from offices in Chicago, New York, Houston, and San Francisco. Divisional managers each supervised from three to eight salespeople and were responsible for recruiting, selecting, and training the personnel under their control. Sales potential and quotas were determined by the general sales manager and an assistant but were adjusted after consultations with the divisional sales managers.

The need for selecting a general sales manager was occasioned by the impending retirement of Preston, who had been with the company since its inception. For many years, Preston had been an advocate of increasing decentralization in sales force operation and control. He felt that the cen­tral sales department should concern itself almost exclusively with plan­ning and that the sales divisions should have maximum freedom in decid­ing how goals should be reached. Sales personnel in the field received little direction or control from the Chicago head office. Divisional sales manag­ers administered their divisions like independent business people; they had grown accustomed to making decisions and to formulating policies for their own marketing areas. Little standardization existed in the sales operating policies followed in the four divisions.

Price competition in the industry was of secondary importance, the main basis being that of product development and design. Donaldson sales personnel spent a high proportion of their time calling on industrial and institutional users with the representatives of electrical supply wholesalers. Their principal function was to analyze the problems of the wholesalers customers and to prescribe Donaldson equipment as a solution. If stan­dardized products were not adaptable to customers’ problems, sales force members often recommended that equipment be specially manufactured to meet users’ requirements.

The twenty-five Donaldson salespersons all possessed degrees in electrical engineering or equivalent experience, and they had been trained under the personal direction of the divisional sales managers. Sales per­sonnel were compensated on a straight salary basis, partly because of the great amount of time spent working with wholesalers salespeople and partly because they were required to assist in installation of equipment and to make repairs in emergency situations.

Divisional sales managers were compensated on the basis of a min­imum fixed salary plus a commission on the gross margin realized from sales originating within their respective divisions. The central office made decisions on changes in the salaries of divisional sales managers, but divi­sional sales managers made adjustments in the compensation of sales­people. Indeed, only recently had all divisions adopted the straight-salary plan for salespeople, a change insisted upon and pushed through by the company president. It had been impossible to assign the sales personnel to nonoverlapping territories—each person worked with several wholesalers, and, in many instances, the same areas were cultivated by two or more wholesalers. However, it was unusual for more than one salesperson to make calls on the same industrial or institutional user.

Preston was responsible for setting sales quotas and determining sales potentials, planning promotional programs with the advertising agency, assisting in the setting of price ranges, developing the sales department budgets, and in formulating other basic marketing policies. He was also responsible for conducting the public relations program. The president of the company, who had the support of the board of directors, felt that the time had come to centralize more of the operations of the sales depart­ment. He realized that any changes would have to be made gradually, but he was certain that greater control over the salespeople was essential. For example, the head office had little information on the performance of individual salespersons. It was often several months before the head office learned of personnel changes made in the sales divisions.

The president had been authorized by the board of directors to screen all applicants for the position of general sales manager, and to submit his selection for final approval. Because he believed in the basic soundness of a “promotion from within” policy, he first considered the four divisional sales managers and the assistant general manager. He decided that two of the divisional managers were incapable of assuming the iricreased respon­sibilities; the third, although competent, had expressed a desire to continue in his present capacity; the fourth was not only willing but anxious to assume the added responsibility. The assistant general sales manager was also in the running, and four other applications had been accepted. From the president’s investigations, the following information was extracted:

1. Thomas G. Gunning

Personal information: Age 48; height: 6 feet 2 inches; weight: 225 pounds; fair health; divorced; three dependents by two ex-wives. Education: Attended public schools in Denver, Colorado. Received B.S. degree in electrical engineering from the University of Colorado. Experience: Past eight years divisional sales manager, Southern Division (Houston). One year as salesperson, Southern Division. Outstanding sales record. Three years in military service as infantry officer. Served overseas, principally in staff positions. Also assigned as an instructor at the Infantry Officers’ Candidate School.

Three years as salesperson, Southern Division. Average record. Three years as salesperson, Fort Worth Electrical Wholesale Supply Company. Two years employed as engineer on various government projects, chiefly in the Mountain States. Six years as partner in electrical con­tracting business, Denver. Business was liquidated as a result of finan­cial reverses.

2. Glen G. Parker

Personal information: Age 35; height: 5 feet 3 inches; weight: 150 pounds; good health; married; five dependents.

Education: Attended parochial schools in Syracuse, New York. Received B.S. degree in business administration from Syracuse University. Successfully completed three correspondence courses in electrical and mechanical engineering.

Experience: Past nine years assistant general sales manager. Works directly under Preston, who was responsible for hiring him. His prin­cipal duties have been to gather economic and marketing statistics and to assist in sales forecasting. Three years as assistant store man­ager, Rochester, New York. Stock boy in department store, Utica, New York, for one year after college. While in college, worked as a waiter in a restaurant for three years.

3. Joseph Q. Brunzell

Personal information: Age 38; height: 6 feet; weight: 175 pounds; excellent health; married; two dependents.

Education: Attended public schools, Oak Park, Illinois. Attended Indiana University, majoring in European history. Left college after three years because of lack of funds and death of father.

Experience: Past seven years assistant sales manager of Logston Cor­poration, Chicago manufacturer of sound recording equipment. Is responsible for sales research work. Plans and conducts sales training programs and “training clinics” for company and distributors’ sales­people. Five years as salesperson, Chicago office supply firm. Work included the demonstration of various items of office equipment and the making of suggestions to customers on methods of simplifying office procedures. Two years generial work in chain grocery store, Oak Park, II.

4. Sven A. Pelly

Personal information: Age 59; height: 5 feet 9 inches; weight: 165 pounds; good health; married; one dependent. Has son attending Princeton.

Education: Attended private elementary and secondary schools in Ohio. Received B.A. degree in political science from Princeton. Experience: Past fifteen years account executive with New York adver­tising agency. Has participated in planning and executing promotional programs for several products, mostly in the consumers-goods field. Has had considerable experience in planning promotional budgets for large clients. Ten years free-lance writer of promotional literature. Did work for a large mail-order house. Prepared some material, including sales portfolios, for companies manufacturing industrial goods.

Ten years employed by Cleveland stockbrokerage firm. At first was mainly a statistician, later became a customer contact man.

Comment: When interviewed, Pelly was extremely nervous.

5. Richard E. Black

Personal information: Age 34; height: 6 feet; weight; 180 pounds; good health; married; two dependents.

Education: Attended public schools in western Oregon. Received B.A. degree from University of Oregon. Received M.B.A. degree from StanfordUn iversity.

Experience: Past two years assistant sales manager of Morrow Electric Corporation. Has helped plan and execute marketing programs for several electrical products similar to those in Donaldson line.

Four years as market analyst, Morrow Electric Corporation.

Two years as instructor in marketing, Foothill College.

Two years as student, Stanford University.

Two years as office manager, Chrysler automobile dealership, Portland,O regon.

Comment: Applicant has been active in community service organizations.

6. John H. Curtin

Personal information: Age 40; height: 5 feet 9 inches; weight: 175 pounds; married; no dependents.

Education: Attended parochial schools in Boston. Completed two years at Boston College.

Experience: Past eight years—owns and manages wholesale electri­cal supply house in western Massachusetts. Donaldson distributor for past five years.

Has completed preliminary negotiations for sale of his business. Four years as production supervisor, Baltimore electronic plant. Eight years as supervisor for a Boston electrical contractor.

Comment: Applicant appears to have substantial means. It is also rumored that his wife, the daughter of a wealthy New York banker, furnished the money that enabled him to go into business for himself eight years ago.

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.