Fall

08

RESEARCH ASSIGNMENT
MOTIVATING THE SALESFORCE: In a retail sales environment

Table of Contents
Table of Contents.......................................................................2 Executive Summary....................................................................3 Introduction...............................................................................3 Nature of Motivation...................................................................4 Maslows Hierarchy of Needs......................................................5 Types of Motivation....................................................................6 The Need For Motivators in the Retail Environment .....................8 Managerial Implications, and Suggestions.................................12 Summary.................................................................................14 Reference List..........................................................................15 Appendix One...........................................................................17

Executive Summary
Motivating salespersons is one of the most important aspects of sales force management (Darmon 2004). The basis of motivation is simple. It can be easily understood through the behavioral concept of motivation, why does a person act as they do? The answer is that he or she is seeking, consciously or unconsciously, to fulfill some physiological or psychological need (Stanton & Spiro 1999). Motivation can come in two forms, intrinsic or extrinsic. Non-financial rewards come in the form of; promotion, a sense of accomplishment, personal growth opportunities, recognition/appraisal, job security, status, job satisfaction, enrichment and additional training (West, 1987; Stanton & Spiro 1999). Financial motivations that the sales manager must be aware of are; remuneration, commission, direct incentives, bonus payments and fringe benefits (West, 1987; Wilson, 1983; Stanton & Spiro 1999) . The importance of the front line sales assistants cannot be overemphasized in retail organizations where the bulk of the presentational effort is carried by the sales force (Wilson, 1983). It is the quality of the sales assistant in the case of retail sales that determine the success or demise of an organization in this field. Retail sales organizations tend to employ more non-financial motivators than financial. Seldom retail organizations do however employ minor levels of financial incentives or rewards, however it is the basic, satisfaction of basic human needs that are most frequently engaged. Suggestions for the future would be offering monetary incentives for the acquisition of large accounts, where by the sales assistants are able to use at their own accord on top of their hourly rate or set salary. This motivational theory is reinforced by a study by Yap, Bove & Beverland (2009) who found that compared to formal recognition programs, informal reward programs individual financial incentives to be more effective in motivating sales associates to enhance their in-role and extra-role performance.

Introduction

Motivating salespersons is one of the most important aspects of sales force management (Darmon 2004). Front line sales assistants in the retail industry hold the success and growth of an organization in the palm of their hands. It is the front line sales assistants who retain the power to generate sales, help fuel organisational growth, and act as ambassadors for the brand in question. So it is without a doubt, organizations in the retail industry act in a way to retain, and motivate their sales force to attain above average returns, and exceed sales forecasted budgets. But what is it exactly that motivates these retail sales teams? Similar to corporate or industrial sales representatives, retail sales assistants work long hours, are familiar with the product, interact personally with their clients, as well as act as unofficial brand ambassadors. It is widely known and accepted that these sales associates do not receive a significant salary, nor do they receive commissions. In retail organizations, sales managers use mostly non-financial motivators and basic rewards to motivate their sales team. However in an economic climate where closing sales are becoming more difficult, and personal expenditure is decreasing, are these drivers enough to keep these sales assistants motivated? This report will attempt to uncover whether the current retail motivators are enough to retain talented sales associates, and what measures could be taken in the future.

Nature of Motivation
It is important in any retail environment for any store or sales manager to be able to retain trust in their sales force. The promise that the sales assistants remain

focused to the sale and the overall presentation of the store becomes questionable. It is with sales motivators that aid in the loyalty and focus of the employees. It is the duty of the store manager to create an environment where their staff can employ their full abilities in their jobs (Farfan, 2011). Human beings all react differently to different motivational techniques. Motivational patterns are excessively complex and humans react emotionally as well as physically (Wilson 1983). Motivational techniques have come along way from the traditional methods of mechanical concepts that they once were, and it has become of fundamental importance that managers must develop much more sophisticated views of motivation rather than the simple beliefs that all that sales associates want is a pat on the back. When employees are newly hired, it is general assurance for them to ensure that their employers system of motivation, if any, adequately accommodates their expectations of the job in question. This is mutually advantageous to both employer and employee to see that these expectations do not diverge too drastically (West, 1987).

Maslows Hierarchy of Needs

The basis of motivation is simple. It can be easily understood through the behavioral concept of motivation, why does a person act as they do? The answer is that he or she is seeking, consciously or unconsciously, to fulfill some physiological or psychological need (Stanton & Spiro 1999).

The work of Abraham Maslow, a pioneering American psychologist who introduced, in the 1940s, a hierarchical understanding of basic or innate human needs (Bakosh, 2007). Generally depicted as a pyramid, the original version of Maslow's hierarchy arranged our needs in to five levels. Staring at the bottom, the four levels progress through basic physiological needs; a need for safety, for belonging and for esteem and end at the top of the hierarchy duly titled "selfactualization," Maslow referred to self-actualization as striving to live up to one's potential. Two principles are essential to the application of Maslow's hierarchy; firstly, that people are motivated to satisfy the lowest level of an unmet need, and secondly, that a satisfied need cannot serve as a source of motivation. Maslow's hierarchy is based on the principle that human beings share a set of universal needs regardless of their culture and experiences. However, to apply that hierarchy to a retail setting, Maslow's general principles must be expressed in terms more relevant to a particular workforce. Appendix One hosts a reinterpretation of Maslows Hierarchy for sales force, and shows four levels of motivational need. Motivators can include a vast array of different things. Retail sales motivation management is based on an understanding of basic human motivation, on the importance of trust, self-esteem, social recognition and improved chances to fulfil ones potential. (Bakosh 2007)

Types of Motivation
Firstly, motivation can come in two forms, intrinsic or extrinsic. With intrinsic motivation achieved with the attainment of an inheritably rewarding job. Extrinsic motivation on the other hand is the motivation achieved with the rewards

provided by others (Jobber, 2009). Non-compensation, or more commonly understood as non-financial rewards, come in the form of; promotion, a sense of accomplishment, personal growth opportunities, recognition/appraisal, job security, status, job satisfaction, enrichment and additional training (West, 1987; Stanton & Spiro 1999). Alan West (1987) considers a motivational mix to categorize the major financial motivations. We can categorize the major financial motivations into five categories that the sales manager must be aware of; remuneration, commission, direct incentives, bonus payments and fringe benefits (West, 1987; Wilson,1983; Stanton & Spiro 1999) . Non-financial rewards are benefits given to employees for good performance or loyalty. They are not to be confused with incentives, which encourage good performance and loyalty by way of retention, although there is clearly scope for overlap between the two (Whitaker, 2010). Most employers recognize that paying at or above market-levels is not sufficient to encourage and motivate staff. In regards to the retail sales environment, sales assistants are usually motivated with a limited and controlled amount of incentive based rewards, fringe benefits and nonfinancial rewards. It is very common in the retail industry that rewards for exceptional performance come in the form of motivators such as public recognition or a thankyou from management for their efforts (Whitaker 2010) as well as seldom-indirect financial incentives that range from staff discounts, store vouchers for large sales to staff allowances in some organizations. Additional non-compensatory motivators can include; store meetings, product launch seminars or parties, personal recognition, encouragement as well as (and most common in fashion retail) private fashion line viewings. Effective sales managers

are also a primary motivating force in the retail industry with positive morale and a high level of effort statistically linked to sales force motivation (Deeter-Schmeiz, Kennedy, & Goebel, 2002). In the retail industry, motivational forces are utilized to create a culture of trust; leveraging the power of peer recognition; and focusing on the enablers and tools that help salespeople reach their potential in an increasingly complex business environment without the help of commission based structures to drive sales (Darmon, 2004). This is said to fuel vital parts of the overall picture of motivating a sales force more effectively. By gaining a deeper knowledge of human motivation, top level management are able to implement approaches that to encourage and reward the behaviors that help produce high performance. (Bakosh 2007)

Gaining insights into what really makes a sales force tick has benefits that go well beyond the sales organization, since many of the lessons also apply to workforces in general. Not all workers, of course, have motivations and incentives as tied to the very definition of their jobs as salespeople do, but today, those managing all types of workforces are beginning to understand what chief sales officers have known for years: When it comes to motivating people toward great performance, it's not just about the paycheck. (Bakosh, 2007)

The Need For Motivators in the Retail Environment

Not only are motivators implemented to drive sales and organizational growth, but are also utilised to improve effectiveness in the work place. The importance of the front line sales assistants cannot be overemphasized in

retail organizations where the bulk of the presentational effort is carried by the sales force (Wilson, 1983). It is the quality of the sales assistant in the case of retail sales that determine the success or demise of an organization in this field. The retailer is the middleman whose primary concern is selling directly to the ultimate consumer (Wingate & Nolan 1976). Sales managers in each of these fields require their sales teams to perform at a high level with their personal performance dependant upon the composite performance of the individuals making up the sales team. In a retail sales context, sales associates are the boundary spanners of the organization. Sales associates job performance is often assessed along the lines of outcome performance (i.e. making dollar sales; generating new accounts) and behaviour performance (i.e. customer service; store activities; knowledge and skills) (Fang et al., 2005). Rewarding and motivating retail sales assistants to achieve above average returns when their earnings are considerably less than those at the corporate level has become and is increasing as an important part of retail management. Although sales jobs vary from one company to the next, sales jobs are alike in many respects. With a succession of ups and downs, varying daily experiences resulting in feelings of depression or exhilaration (Still, Cundiff & Govoni, 1988). In the course of a single days work, sales people interact with many pleasant and courteous people, but then again, some are unpleasant and rude, and difficult to deal with, made worse when multiple sales people vie for their business, frustrating the customer further. The inherent nature of the sales job is the first reason that additional motivation is required. To ensure the chances that those engaged, motivated and effective sales

associates remain in the sales force, it is important for organizations to utilize motivational techniques to engage with their staff and aid in retention. Currently, the sales industry is experiencing a higher level of worker scarcity (Bakosh 2007), meaning a greater need for an understanding of basic human needs and of the methods that can sustain greater levels of motivation among a companys sales staff is becoming of fundamental importance. Keeping sales staff enthused and motivated is one of the most difficult challenges facing any retail organization. No matter how integrated or in tune with staff needs a concept may be, the success or failure if the concept is decided at the point of sale. It is the retail industry, unlike many others that so many individual employees have such direct responsibility for the customer relationship. It is in addition to this that their own personal behaviour is such a powerful and immediate factor in a companys success (Kliger, Tweraser 2009). Retail organizations tend to take a relaxed approach to motivation, with common techniques to increase productivity including; encouraging creativity, openness between colleagues, benchmarking the competition and creating a positive atmosphere (Millard, 2010; Farfan, 2011). Detailing facets of motivation that should be applied to all work places and not specifically retail, where the pressure is high, a derivative of having to produce large sales. Trainers and supervisors working with newly hired retail sales associates; the first and most important task is motivating them to achieve superior sales and service (Unknown, 2011). But when it comes to motivational tools to help drive the sales force to perform at a high level, it seems that the retailing industry, fronted by a team of sales assistants, miss out on a lot of these extra motivational incentives; primarily in the directly financial rewards that are offered to sales forces in the corporate, business to business or industrial industry in the form of commission.

Underappreciated, overworked or under motivated sales assistants can prove detrimental to a store in regards to sales, approachability and whether customers feel comfortable to even enter the store, far before purchase decisions can even be considered. When the sales force is considered, designing and controlling an appropriate motivational system for what is basically an individualistic group, regarded as low status within the broader organization, poses an acute problem (West, 1987). The effects of disgruntled employees appear in a number of forms; Poor job performance Expansion of minor complaints into major disasters Development of other interests Demoralizing effects on other individuals within the group. (West, 1987)

Motivational factors are heavily dependant on the intrinsic qualities of individual sales associates (Jobber 2009). Although sales effectiveness can be improved by training, it is limited by innate ability. Overall achievements in sales are highly proportional to the personal characteristics of the salesperson especially in the retail environment, where the sales assistant must match the values, style and hold a likeness to the brand. Similarly motivational techniques may stimulate salespeople to achieve higher sales but they can only do so much. A lot will be dependant on the innate motivation of the salesperson to complete a difficult sale. (Jobber 2009) In their inexperience, new associates often focus solely on the demands and complexity of the retail environment and need to be trained to sell effectively. Further, they need to be motivated to create the right atmosphere for a customers shopping experience (Allen, 2011). Such a challenging task can often

seem overwhelming for trainers and supervisors. When it comes to successful motivational approaches and incentive strategies, top-level management should be looking at the primordial models of motivational theory. That is, they must rediscover some of the basic and deeper truths about what factors, besides financial compensation, motivate their sales professionals, and then use those insights to design a more comprehensive approach to incentive management (Bakosh, 2007). Referring this back to Maslows Hierarchy is an approach which aids in re-discovering the underlying motives for human behaviour.

Managerial Implications, and Suggestions

Where the goal remains the same amongst all sales teams, the retail sales assistant is never as greatly rewarded for their efforts as an employee in the corporate sales world. Thus being of a major implication. After working in the retail environment for 5 years, I have personally experienced the rewards accustomed to fashion retailing organizations. I was lucky to have the opportunity to work for Sass and Bide, an Australian mid-range designer, who attempted to foster a strong relationship between top-level management and their front-line sale associates. It was at Sass and Bide where we received a $500 quarterly clothing allowance due to the expensive pricings on the garments that we were required to wear in the store at all times, and purchase ourselves. Once an item had gone out of season, or run out of stock, we were directed not to wear it whilst on the sales floor. This was a huge implication for many of the casual assistants who were also

engaged in part time study, and could not afford to continue purchasing new outfits. The company also implemented a staff discount to try and overcome this implication with the offer being 60% off the RRP. This was indeed a motivator to work at the store, however we were guaranteed this discount regardless of our sales figures, and operated as a fringe benefit and motivated staff retention. An incentive program was also introduced, allowing the sales team to earn monetary vouchers to spend in store, given that a customer spends over a set amount in one purchase generally above $700 per sale. The vouchers started at $20 for a $700 sale and increasing up to $80 for a sale above $2,000. The voucher system was definitely received as an incentive to acquire large sales. This, however was also seen as the company profiting off the sales team, as no one was able to make an exorbitant amount in vouchers, yet would use it as an enticer to purchase unnecessary garments that they wouldnt normally pay money for. I believe that these motivating factors were useful and acted as incentives to close large sales, however these motivators were dependant on the individual sales assistants likeability to the brand. If a sales assistant was just there to earn a salary and was not fond of the garments, the fringe benefits would be worthless. With the money circulating back into the organization, there were no directly financial benefits to the assistants for closing large sales. This strategically implemented incentive was also a cost covering tactic where the extra profit earned from the sale as well as the additional purchase from the sales assistant covered the cost of the incentive, maintaining the cash flow to remain internally to the organization (Shelley & Rines,1988).

Suggestions for the future would be offering monetary incentives instead of store credit for the acquisition of large accounts, where by the sales assistants are able to use at their own accord on top of their hourly rate or set salary. Some retail organizations have already adopted this incentive such as international retailer Arthur Galan, which has been received positively by their sales team as a motivating force. Reinforcing my suggestion is a study by Yap, Bove & Beverland (2009) which found that compared to formal recognition programs, informal reward programs (individual financial incentives, individual social recognition and group social recognition) appeared to be more effective in motivating sales associates to enhance their in-role and extra-role performance.

Summary
Motivations in todays financial climate are arguably more important than ever, as

organizations in many industries and different parts of the world face critical talent shortages that could impede their plans for growth. In fashion retailing, a career or casual job opportunity is easily attained without the need for a tertiary education, and in turn is not the highest paying industry. With the motivational theory derived from Maslows Hierarchy of Needs identifying a basic foundation for motivation, in the retail environment, it is common that non-financial, motivators and only limited indirect financial incentives are implemented, whereas their corporate counterparts utilizing the same skills are being compensated financially and significantly for their hard work. Implementing a personal financial reward system would be a step forward for this industry, and moreover reduce the level of talented and highly trained sales staff removing themselves from the industry in search for greater financial returns. An increase in financial motivators would also be of a high importance of the sales force in retail, highlighting their positions as fundamentally intrinsic to the success or demise of a retailer.

Reference List
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Bakosh, R. (2007). Talent & Organization Performance: How to Motivate your Sales Force to Great Performance. The Online Journal of High-Performance. Accenture. < http://www.accenture.com/us-en/outlook/pages/outlook-journal-2007-motivatesales-force.aspx> Darmon, R. (2004). The Measurement of Sales Force Motivation Revisited. Marketing Department, ESSEC Business School. Quebec. Deeter-Schmeiz, D. Kennedy, K. & Goebel, D., (2002). Understanding sales manager effectiveness: Linking attributes to sales force values. Journal of Industrial Marketing Management. Vol 31, Iss: 7, October, pp 617-626. Fang, E., Evans, K.R. and Zou, S. (2005), The moderating effect of goalsetting characteristics on the sales control systems-job performance relationship, Journal of Business Research, Vol. 58 No. 9, pp. 1214-22. Farfan, B., (2011). How to Motivate Retail Employees and Team Members Quotable Quotes and Advice from Successful People. New York Times Co. <http://retailindustry.about.com/od/frontlinemanagement/a/how_to_motivate_reta il_emplyees_and_team_members.htm> Jobber, D. & Lancaster, G., (2009). Selling and Sales Management, 8th Edn, Pearson Education Kliger, M. & Tweraser, S., (2009). Motivating Front Line Staff: For Bottom Line Results. McKinsey & Company European Retail Practice. Vienna. <http://www.mckinsey.com/practices/retail/knowledge/articles/Motivatingfrontline staff.pdf> Miao, C. Evans, K. & Shaoming, Z., (2007). The role of salesperson motivation in sales control systems Intrinsic and extrinsic motivation revisited. Journal of Business Research. Vol 60, Iss 5, May, pp 417-425. Millard, M. (2009). Retail Sales Training: How to Motivate Your Retail Sales Team. http://retail-sales-training.blogspot.com/2009/11/how-to-motivate-yoursales-team.html Shelley, P & Rines, M., (1988). Sales Management Handbook: Chapter 12 Motivation Programmes. Hants, England. Gower Publishing Company Ltd.

Stanton, W. & Spiro, R., (1999). Management of a Sales Force, 10th Edn, United States of America. Times Mirror Higher Education Group Inc. Still, R., Cundiff, E & Govoni, N., (1988). Sales Management; Decisions, Strategies, & Cases. Englewood Cliffs, New Jersey. Prentice Hall. West, A., (1987). Modern Sales Management. Basingstoke, Hampshire. Macmillan Education Ltd. Wingate, J. & Nolan, C., (1976). Fundamentals of Selling, 10th Edn. Cincinnati, Ohio. South-Western Publishing Co. Wilson, M (1983) Managing a Sales Force, 2nd edn. Aldershot, Hants, England. Gower Publishing Company Limited. Unknown - Retail Merchandiser., (2011). Management: Motivating Your Sales Force. Redcoat Publishing. < http://www.retail-merchandiser.com/supply-chain.html> Whitaker, P., (2010). What Non-Financial Rewards are Successful Motivators?. Strategic HR Review. Vol. 9 , Iss. 1, p43. Yap, J. Bove, L. Beverland, M., (2009). Exploring the effects of different reward programs on in-role and extra-role performance of retail sales associates. Qualitative Market Research: An International Journal, Vol. 12 Iss: 3, pp.279 294

Appendix One

(Bakosh, 2007)