MODULE 7

SALES ORGANISATION STRUCTURE

Grouping of activities

• Activities allocated and divided to different positions in sales organisation

• These activities are aimed for achieving certain objectives
• These objectives provides basis for
o job description
o reporting relationships
o job duties / responsibilities
o performance measures
• grouping in done in a manner that closely related tasks are assigned to the same
position
• each position should carries
o sufficient tasks
o sufficient variations
so that job challenge, interest and involvement is maintained
• certain activities are crucial to success of sales department are assigned to
positions higher up in the hierarchy
eg. in a competitive market product merchandising and pricing policy takes an
important role and hence is usually given to senior managers.
• When large number of positions are present in a sales department then group of
related jobs may fall under 1 departmental subdivision.
However too many levels to be avoided so that perform activities do not get
disrupted and sales operations run smoothly.

Common Debate : Should we recruit special individuals accordingly to fill

positions or should we modify positions to fit capabilities of available personnel.

It is true that actually some positions require general requirements which many
personnel or can acquire through training. At the same time some personnel have
unique talents and abilities which may lead to modification of job specifications
to fit.
However it is better that individuals grow to fit particular job positions rather than
adjusting positions to fit personnel capabilities.

Co-ordination and control in Sales Organisation

• Sales executive control subordinates and junior sales staff
• If responsibilities are detailed and un delegated, then sales executive gets over
burdened and less time is available for co-ordination
• If too many subordinates are reporting to sales executive it can
o Weaken quality of control
 o Discharge of other duties may become extremely difficult
• Co-ordination and control in an organisation can be done
o Informally
• Strong leaders control through sheer force of personality
• Ability to attract and hold loyalty
• Minimises use of formal instruments
o Formal
• Through instruments such as
• Written job descriptions
• Reporting relationships
• Job objectives
• Duties
• Performance measures

Types of Sales Organisation Structures

Sales Organisation structures evolve from
• Needs of business
• No two companies have identical structure
• Factors effecting sales organisation includes
o Types of customers
o Market channels
o Size of sales department
o product line
o competitor practices
o management philosophies and personalities
• analysis of 3 basic types of structure is as follows:

Line Sales Organisation

• oldest and simplest
• more suitable and commonly used in
o smaller firms
o small no. of selling personnel
o serving limited geographic area
o selling narrow product line
• chain of command
o runs top from sales executive down through subordinates in such a way
that
 all executives have line authority
 each responsible to one person on next higher level
 responsibility is fixed
 all persons on one level independent of remaining on that level

Strengths
• simple structure
 • problems of discipline and control is reduced as each department reports to a
single person on next level.
• Responsibility is clear and logical and it is not easy to evade or avoid
responsibilities
• Authority is defined and saves time in making policy changes and converting
plans into actions
• Executives can develop close working relationships with their sales persons
• Due to few organisation level, admin expenses go down.

Limitations
o Most time is spent on supervision and less time to work and plan
o Less and indirect cross communication across sales department levels
o Contacts effected through next high level
o So much dependent on organisation head who needs to have outstanding abilities
o As sales organisation grows, close relationship advantages are taken away
o Hence not suitable for rapidly growing organisation
o Top sales executive gets less chance to grow his replacement
o Hence less opportunity for subordinates to acquire skills

Line & Sales Staff Organisation

o Usually found in large and medium sized companies
o Large number of selling personnel
o Selling diversified product line
o Wider geographic area
o Chain of command is such that
o This structure provides top executive with group of specialists separately
for areas such as
 Sales analysis
 Sales training
 Sales promotion
 Sales personnel admin
 Dealer /distributor relations
 Personal assistant to Sales Manager (or G.M Sales)
o Staff sales executives usually cannot issue orders
o They send recommendations to top executives to transmit instructions to line
organisation
o Staff can execute plans and implementation of policies and can bypass normal
line of command if there is a time restriction

Strengths
o Helps top executive to free time from detailed work
o Can concentrate more on planning and high priority matters and human aspects of
administration
 o Staff specialists assists in increasing the overall effectiveness of sales department
by providing a pool of expertise
o Connection between unrelated problems are brought into focus
o Policies rests on sounder base than line organisation
o More cross communication across different departments.

Limitations
o Work of staff specialists needs to be co-ordinated which can be time consuming
and costly
o Admin expenses goes up especially if number of sales executive go up
o Staff line relation needs close control otherwise some sales personnel world evade
or avoid responsibilities which made be made clear in job description
o Time gap between problem recognition and corrective action widens and staff
executive need time to study before making recommendations
o Sales people taking instructions through various sources due to which confusions
may result
o Contact with individual sales person is less and problems might arise due to this.

Functional Sales Organisation

o Relatively found rare in sales organisations
o Basic premise is that each employee should have few distinct duties and more
broad duties as much as possible
o Duty assignment and delegation should be made according to function
o Sales people receive instructions from several executives on different work
aspects
o All specialists staff also have line authority or in other words functional authority

Strengths
o Instructions policies came be put into effect without direct top level co-ordination
executive
o Improve performance through specialised activities of experts that guide and
increase sales force effectiveness

Limitations
o Size of sales force may make this structure impractical
o Administrative levels increases as product line becomes wider hence admin
expense increases very rapidly
o Need to use more modified versions of functional model to provide for more
levels and develop decentralization.