Purposes of Sales Organization

In the ideally organized sales department, wasted motion and duplication of effort would be eliminated, friction would be minimized, and coop­eration maximized. Dynamic characteristics inherent in marketing pre­clude the achievement of such perfection. But when sufficient attention is given to sales organization, the ideal is approached, if not attained, and personal-selling efforts increase in productivity.

Executive effort expended on sales organization need not, indeed should not, go exclusively to questions of design, that is, of the “formal” organization plan. How an organization works is more important than how it is supposed to function. Sales management should direct its main orga­nizational efforts toward the “informal” organization. Through intelligent leadership and related “human relations” talents, the skilled manager moves both individuals and informal groups along lines that facilitate achievement of the purposes of formal organization.

1. To Permit the Development of Specialists

As a business expands, marketing and selling activities multiply and become increasingly complex. It is difficult to fix responsibility for perfor­mance of all necessary activities, particularly when executives are reluctant to delegate authority.

One purpose of reorganizing the sales department is to facilitate assignment of responsibility and delegation of authority. This often requires reshaping the structure so that it is easier for specialists to develop. In fact, specialization, or division of labor as economists call it, is the chief means through which the processes of organization and reorganization are effected. As tasks grow in number and complexity, they are broken down into man­ageable units and are assigned to specialized personnel. This involves fixing responsibility for specific tasks with specific individuals (or, occasionally, with certain groups). The assignments made are called “delegations of authority.” This is conducive to the development of specialists.

2. To Assure that All Necessary Activities Are Performed

As a sales organization grows and specialization increases, it is increasingly important to perform all necessary activities. What is “necessary” changes over time. When jobs are highly specialized, danger exists that the organizational plan will not provide for supervision of all activities. Essential tasks may not be performed, simply because they are not assigned to specific individuals.

When a company is small, for instance, its executives are in close con­tact with users of the product. As a company grows, as marketing channels lengthen, and as the marketing area expands geographically, top execu­tives become farther and farther removed from the customers. As soon as executives begin to lose their informal contacts with customers, an individ­ual should be assigned responsibility for maintaining such relationships. If these contacts are highly important, responsibility for maintaining them should be assigned to an executive specializing in customer relations.

3. To Achieve Coordination or Balance

Good organization achieves coordination or balance. Individuals vary in competence, potential, and effectiveness. Particularly forceful executives may prevent a basically sound organization from functioning smoothly.

Their personalities may be such that through assumption of authority, failure to delegate it, or both, their positions are magnified out of all proportion to their importance. Worse yet, total accomplishments of the organization are less than they could have been if, so to speak, greater advantage had been taken of the synergistic effect—when the sum of a combination effort exceeds the efforts of the same individuals working alone. By getting people to pull together as a team rather than as an assortment of individuals, the organization accomplishes more collectively than its members could independently.

Motivating individuals to work together towards common objectives is, then, important in achieving coordination. Individual goals are subordi­nated to, or reconciled with, organizational goals. Some of the means for accomplishing this are indoctrination and training programs, group meet­ings, supervision and guidance, and two-way communications. Throughout the sales organization different activities are kept in proper relation to one another in order that the greatest organizational effectiveness is realized.

As specialists emerge in a growing sales organization, management must guard against a tendency of each to search for ways to justify his or her own existence. One form of justification is to devise technical nomen­clatures that nonspecialists in other areas have difficulty understanding. This, in turn, leads to increasing communications difficulties with other specialists and a reduction in overall organizational effectiveness. These instances of uncoordinated proliferation suggest that top sales execu­tives should concern themselves continually with orchestration of effort. Modern organizational theory suggests that sales departments should be divided into small, freely communicating, face-to-face groups to decrease the possibility of uncoordinated proliferation.

4. To Define Authority

Sales executives should know whether their authority is line, staff, or functional. Line authority carries the power to require execution of orders by those lower in the organizational hierarchy. Staff authority is the power to suggest to those holding line authority the method for implementation of an order. Functional authority enables specialists in particular areas, such as in technical product service, to enforce their directives within a specific and limited field. Line executives make decisions on the need, place, and time of action over a wide range of matters. Staff executives advise line executives about methods but have no formal power to require or enforce the execution of their recommendations. Functional executives are spe- cialists—experts in some aspect of the business—who assist executives holding general line authority. For example, such specialists advise on new product introduction. They do this by issuing orders, mainly on routine technical problems, directly to lower organizational levels. All executives should understand the nature of their authority with respect to each aspect of the operation; otherwise, friction develops. When, for instance, staff executives attempt to exercise line authority, they are headed for trouble with the line executives whose authority is usurped.

A sales organization receives directions from several sources. A sales­person, for instance, may get instructions on merchandising the advertising from an advertising specialist, directions for administering a questionnaire to customers from a marketing research technician, and general supervision and direction from the district sales manager. This conflicts with traditional organizational theory, which, in general, has said: No person should have more than one boss. The supporting argument is that, if individuals receive instructions from multiple sources, they may get conflicting and confusing directions. The argument is a good one, but the “one-boss” rule does not necessarily follow. Modern organizational theory points out, and rightly so, that the real problem is one not of avoiding the multiple-boss situation but harmonizing orders and directives from different sources. A smoothly operating sales organization has built-in ways of achieving harmony. Two important ways are continuing coordination of the work of different exec­utives and free-flowing communications systems.

5. To Economize on Executive Time

As a sales department’s operations and activities increase in complexity and number, additional subordinates are added. This permits higher-ranking sales executives to delegate more authority. It also allows for the more effective use of specialization, while higher executives devote less time to operations and more to planning. One purpose, then, of organization— and one often overlooked—is achieving economies in the use of executive time. Top sales executives need not concern themselves personally with all the sales department’s problems and activities, particularly routine or tech­nical ones, when they have capable and well-trained subordinates.

However, as sales executives gain subordinates, they must devote more attention, and probably more time, to coordinating their efforts. Unless the executive is an effective coordinator, subordinates may not work in har­mony or discharge assignments in line with expectations.

In building the sales organization, then, the need for effective coor­dination limits the number of subordinates who report directly to certain executives. This limit is the “span of control.” It is not possible to specify the proper number of subordinates. But the greater the abilities of the coordina­tor and of those reporting to him or her, the larger the number that can be effectively coordinated. However, Lower-level sales executives, those with salespeople reporting directly to them, have a wider span of control than higher executives devoting much time to planning and policy formulation and little to administrative and operating details. One must consider not only relative abilities of the coordinator and the subordinates, but the nature and importance of the coordinator’s other duties. Furthermore, in deciding optimum span of control for a particular position, other factors are taken into account. The span of control is widened: (1) with improvements in the efficiency, speed, and reliability of the communications system; (2) when subordinates perform routine, similar, or repetitive tasks; and (3) when sub­ordinates are concentrated at the same location as the executive.

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.

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