Team performance and control process in sales organizations

The Authors

Rajagopal , Department of Marketing, Business Division, Monterrey Institute of Technology and Higher Education, ITESM, Tlalpan, Mexico

Ananya Rajagopal, Corporate Office, Banco Azteca, Grupo Salinas, Mexico City, Mexico

Abstract

Purpose – The purpose of this paper is to present the managerial perspectives of building, nurturing and evaluating sales teams in Mexico. This study discusses the impact of sales team design in reference to the underlying rationale of management control and team coordination as indicators of performance and sales unit effectiveness.

Design/methodology/approach – The major focus of the study is to discuss the impact of sales team design and task coordination as predictors of effectiveness of sales unit performance. A sample of 258 respondents has been covered under the study, categorizing them in equal proportion into three broad areas,: type of sales team, type of product market, and type of sales operations. Four industrial streams in sales were covered while selecting the sample respondents: consumer goods, consumer durables, industrial products, and consumer services.

Findings – The study reveals the balance between team designing and team coordination in performing sales. Work environment is largely governed by team coordination effects for the salespeople. Sales team-building process has a substantial effect on sales organization effectiveness both directly and indirectly through its relationship with salespeople's behavioral performance.

Practical implications – The results of this study reveal that team performance largely depends on the effectiveness of team coordination, leadership and performance control through behavioral attributes. Sales managers may implement such controls effectively by establishing coordination, training, and feedback process rather than imposing command and control policy.

Originality/value – The thesis of the paper is developed around issues of the cross-cultural variables and team management affecting workplace environment. The paper explores and maps the symbiosis between cognitive drivers of team members and team culture in performing the tasks.

Article Type:

Research paper

Keyword(s):

Teambuilding; Sales performance; Task analysis; Leadership; Mexico.

Journal:

Team Performance Management

Volume:

Number:

1/2

Year:

2008

pp:

70-85

Copyright ©

Emerald Group Publishing Limited

ISSN:

1352-7592

Introduction

“Team” conceptualizes group of people engaged in delivering a common task. In ideal situations the individual and group behavior in a team is integrated towards common objectives and the task delivery process is shared which leads to set the group dynamics. The basic attributes of a good team include clear identification of goals, clarity of roles, common feeling, motivation, commitment and collaborative attitude (Rajagopal and Rajagopal, 2006). The team selling approach is followed by many multinational companies for various products and services, which the customer faces as a first-time buy and salespeople need to support such negotiations with comprehensive information needs. Team selling would also be advantageous when an account requires special treatment or a large number of people are involved in the process of buying decision. In addition, team selling is more likely to be employed when the potential sale is large for the representative firm and when the product is new to the product line of salespeople (Rajagopal, 2007). In a sales team each member of the group shows interest in the achievement and follows a systems approach which provides the framework or organizational principal for evaluating task in parts (Cummings, 1980). The members develop confidence, trust and commitment to work in a team and rely on group communication on the given tasks and schedule.

Team may not function effectively if any of the above factors or associated variables are incoherent. The reward and punishment issues in a team emerge as a post-process synergy of all associated variables and are largely governed by the factors such as common feeling, motivation, commitment and collaborative attitude (Rajagopal, 2006a). Hence teams are collections of people who must rely upon group collaboration, if each member is to experience the optimum success and goal achievement. Changing technology and markets have stimulated the team approach in multinational companies for performing the organizational tasks. Moreover, complexity of the society and human needs has prompted team-work as a significant tool in managing the corporate tasks (Dyer, 1987). Team management is employed largely in the organizations where activities are less repetitive and predictable. Such an approach demands effective liaison, appropriate delegation of powers, judicious allocations of roles of team members, sharing of information and accuracy in evaluation of team performance (Harris and Moran, 1999).

Team control has emerged as a behavioral control mechanism. The sales engineers become a part of a quasi-firm arrangement, along with the client's engineers and managers, who supervise their work. Management efforts to ensure detailed documentation emerge as a second control mechanism (Darr, 2003). Industrial organizations largely implement direct management control and influence the activities of employees leading towards improving their efficiency (Anderson and Oliver, 1987; Eisenhardt, 1985; Ouchi, 1979). The extent monitoring of sales managers, and directing, evaluating, and rewarding activities in an organization intend to guide sales team behavior through team control processes to achieve favorable results to the organization and the employees (Anderson and Oliver, 1987). Team control in a sales organization, is thus recognized as an important performance indicator of the task performed by the salespeople (Cravens et al., 1993; Oliver and Anderson, 1994).

Result oriented control and market volatility are positively related to new product selling performance. The effect of sales team adoption on selling performance is stronger where outcome based control is used and where the firm provides information on the background of the new product to salespeople through internal marketing (Hultink and Atuahene-Gima, 2000). It has been observed that salespeople, who simultaneously exhibit commitment and effort, achieve higher performance in sales activity. Measuring sales performance has been emerged as significance managerial control to sustain competitive advantage (Anderson, 1996; Magrath, 1997; Samiee and Roth, 1992). However, not much research attention has been given to sales team control approaches beyond developed countries (Money and Graham, 1999), notwithstanding recognition of the critical role of the sales manager in international selling (DeCarlo et al., 1999; Honeycutt and Ford, 1995).

This study discusses the impact of sales team design in reference to the underlying rationale of management control and team coordination as indicators of performance and sales unit effectiveness. The relationships among the key performance variables including team coordination, team leadership, task distribution, and time-target synchronization have also been examined in this paper. In addition, discussion in the paper analyzes impact of key performance indicators on performance of the behavior of salespeople. The independent role of monitoring, directing, and evaluating activities in combination with professional development has also been analyzed in the paper as they significantly affect the sales performance in an organization.

Review of literature and hypotheses framework

High technology sales organizations evolve in a highly turbulent environment, hence external conditions can be expected to modify the relationships between the antecedents and the control system in these industries. The uncertainty of environment and technological turbulence modify the relationships between most of the antecedents and the control system (Lapierre and Skelling, 2005). A study of sales team working in the pharmaceutical companies in UK and Ireland explores how changes in the nature of the customer and the competitive environment are impacting on the way managements are structuring the work process and the nature of skills required (Lloyd and Newell, 2001). The SMART variables may be considered to administer sales teams which include-strategy orientation, measurability, approach, reality and time frame. The strategy orientation would drive the brainstorming discussion to result orientation and the measurability would count on the success of the deliberations (Rajagopal and Rajagopal, 2006). Teams which need to work within an organization and across functional activities such as sales, marketing, purchasing, personnel and finance find that team working fosters as collaborative tool rather than a competitive approach. It is important that terms of reference of teams must be capable of doing the job for which they have been selected and this clearly implies that the membership should include people that are able to contribute towards the completion of task (McGreevy, 2006).

Team coordination and control effectiveness

Sales team design in reference to a particular territory is also considered as an important factor, which has received little analytical attention in the traditional literature, but which appears to be an important influence on the effectiveness of the sales operation. It has been argued that organizational effectiveness is determined by outcome performance and behavioral performance of sales team, as well as through systems control approach. Although conventional theory has suggested that behavior performance and outcome performance result from different stimuli, behavior-based control is positively associated with both behavior performance and outcome performance (Piercy et al., 1998). Mexican sales teams have the promising behavior intending to offer a pleasant, positive and rewarding scenario of the situation under discussion and the unpleasant consequences are kept undisclosed. The members of the sales team avoid any negativity in their conversation as far as possible. Sales team culture in general is embedded with 3-T power-grid comprised of a synergy of task (commitment), thrust (driving team) and time (punctuality), which are weak in Mexican sales teams and affect their overall performance (Rajagopal and Rajagopal, 2006). Issues pertaining to culture, conflicts and individual values in reference to performing tasks in teams are exhibited in Figure 1 which explains how personality of the team members is influenced by external and internal factors while performing the task (Rajagopal, 2006a).

The attributes illustrated in Figure 1 envisage learning and adaptive processes, which enable the members of the team to develop strategic fit with the external factors to augment task performance abilities and develop synchronization with the internal factors for building effective team-task relationships.

It has been observed that organizations may not define salespeople' territories based on mutually exclusive geographical areas. Moreover, the effective sales organizations place more emphasis on team coordination process, and, additionally, their sales teams show significant differences in both personal characteristics and performance dimensions. Salespeople in the more effective sales units display higher levels of intrinsic and extrinsic motivation, sales support orientation, and customer orientation. Both behavior of salespersons and outcome performance were rated higher by managers in the organizations with more effective sales units. Experienced sales managers understand that territory based poor team designs will have a negative impact on salesperson morale, result in inadequate market coverage, and complicate management evaluation and control (Churchill et al., 2000). Several factors including the size of the sales team, buying power of the accounts, geographical dispersion of accounts, time required for servicing each account, and competitive intensity should be considered for designing the sales territories. Sales teams would have better environment to perform if sales territories are designed in association with the members of sales teams.

The selling skills are determined by the degree of experience of salesperson and effectiveness of training while the adaptive selling techniques are related with increased performance (Johlke, 2006). Firms should be able to apply the time-based philosophy of revenue management to their sales teams by revising the traditional time allocation practices with the salespeople. Hence, a different type of proposed measure, revenue per available salesperson hour, is proposed to better integrate the value of the salesperson's time as a factor in sales potential and revenue calculation (Siguaw et al., 2003). The sales unit effectiveness is an overall evaluation of outcomes (e.g. sales, profit contribution) of the sales unit for which the field sales manager is responsible (Churchill et al., 2000). Evaluating effectiveness is important since it provides an indication of the performance of the manager's sales unit.

Personality factors

The process of meeting the responsibilities of sales managers in the direct supervision of assigned salespeople describes the team control parameters. Generally, a field sales manager may have the responsibility for some salespeople, which constitute the sales unit. The efforts of sales managers in monitoring, directing, and evaluating sales persons are focused towards achieving results, in the process of behavioral control of sales people (Anderson and Oliver, 1987). It has been observed through empirical investigations that the method of team coordination and control system are important determinants of ethical behavior while age of the salesperson also proves to be a significant antecedent of ethical behavior. However, education may not be significantly related to the behavior and control process in the sales management. Additionally, a salesperson's ethical behavior leads to lower levels of role conflict and higher levels of job satisfaction, but not to higher performance (Ramon and Munuera, 2005; Stewart and Nandkeolyar, 2006). Effective communication between members of the sales team and leaders is confirmed as one of the predominant critical success factors (CSFs) in achieving sales performance in the region. Besides, top management support and commitment, clear integration objectives and quantifiable performance indexes, qualified project team, and user training and education were also identified as the CSFs of such integration (Cheng et al., 2007).

Behavior of a salesperson is an important predictor of salesperson and sales organizational consequences in developed country studies (Babakus et al., 1996; Piercy et al., 1999). These studies examine control from the perspective of the field sales manager which is the focus of our research. The external and internal environment of a company and personality traits affect decision making of salespeople. Internal communication and the choice of a control system especially affect ethical decision making (Deshpandé and Farley, 1998). It has been observed that informal internal communication affects the personality traits while the control system influences the ethical climate of the salespeople. Ethical climate and salespeople's personality traits also affect the ethical decision making (Verbeke et al., 1996). The study shows that ethical decision making can be influenced by management. A few studies have found significant relationships between personal and organizational variables such as job experience, closeness of supervision, performance feedback, influence in determining standards, and span of control and the amount of role conflict and ambiguity perceived by salespeople. Other studies relate personal characteristics to variations in motivation by showing that salespeople's desires for different job-related rewards (e.g. pay, promotion) differ with such demographic characteristics as age, education, family size, career stage, or organizational climate (Chonko et al., 1992; Román et al., 2005). The salesperson's expectancy, instrumentality, and valence perceptions are not directly under the sales manager's control. But they can be influenced by things the sales manager does, such as how he or she supervises the salesperson or rewards the individual. Since the salesperson's motivation strongly influences performance, the sales manager must be sensitive to how various factors exert their impact (Dubinsky et al., 1994; Rajagopal, 2007). Managers must not only craft a compensation plan that balances stability of income with strong incentives, but select and train salespeople for increasing their level of performance (Bursk, 2006).

The sales results typically emerge from the performance of the salesperson and this issue is receiving increasing attention among the multinational companies. This may be evidenced from research in several countries that indicates that sales managers are concerned with the team and customer relationship building activities of salespeople as well as their sales results (Corcoran et al., 1995). Outcomes are certainly important, but managers also need to consider the behavior (inputs) of the salesperson that is instrumental in guiding the sales results. Another study investigating from 104 senior sales managers, who were asked to assign importance ratings to a large number of performance factors, evidences that managers ranked almost all the behavior-based performance factors, higher than outcome factors (Morris et al., 1991). Both the salesperson's job behavior and psychological well being can be affected if there are perceptions of role ambiguity or conflict or if these perceptions are inaccurate. There is a good deal of evidence, for example, that high levels of both perceived ambiguity and conflict are directly related to high mental anxiety and tension and low job satisfaction. In addition, the salesperson's feelings of uncertainty and conflict and the actions taken to resolve them can have a strong impact on ultimate job performance (Singh, 1993). Salespeople in a firm are influenced by sales drivers to reach high outcome performance in a given region and time. Sales drivers include territory design, compensation, scope of assigned task and cultural interaction in the market.

Framework of hypotheses

Organizational commitment and sales territory design are significantly related to sales team performance and the study highlights the growing emphasis on building long-term, collaborative buyer-seller relationships that favor the use of behavior-based control systems in many sales management situations, and suggests a new agenda for management attention in improving sales team effectiveness. The importance of designing effective sales territory is widely supported in the process of organizational restructuring (Bailey, 1989). Despite this importance, the impact of sales territory designs on salesperson and organizational consequences has not gained significant research attention. There is a significant relationship between the different behavioral attributes of work-related activity in team-work and team performance (Ntayi, 2005). However, the role of designing effective sales territories in the multinational sales organization is growing substantially which includes the challenges towards integrating the local market differences in sales infrastructure and other competitive market attributes. Hence, following hypotheses has been framed:

H1. Territory design satisfaction is the strongest predictor of team performance in Mexico.

Decision of a company determines the factors of time, target and territory of the assigned sales tasks to the sales teams in a control process. It operates independently from managers' monitoring, directing, and evaluating activities, and needs to be assessed separately in management practice (Lawler, 1990).

H2. The tasks assigned to team members, coordination in team to perform tasks and balanced supervisory control provides higher confidence among the sales teams.

Sales performance in an organization is largely associated with the derived customer value, delivery of goods and services, and customer relations. Market dynamics and growing competition have led to the evolution of a new sales operation which manages a complex strategic customer portfolio and works across functions to deliver value to customers. Evidence suggests that many important decisions and responsibilities associated with marketing strategy are now located in the sales organization (Piercy, 2006). As the multinational companies are getting closer to the customer oriented selling strategies, the sales teams have increasing responsibility on building customer value and customer retention. The outcome performance of the salespeople is thus reflected through the customer value generated either in business to consumers or business to business sales operations.

Study design

This study is based on primary investigation in reference to the practices followed in sales team administration in Mexico. Data has been collected by administering questionnaires to field sales managers from participating companies in each country in order to assess the responsibility of direct supervision of salespeople in industrial selling situations. The questionnaires for the respondents were translated from English to Spanish and in translating some questions, the technique of equivalence or reformulation have been used to give a correct sense to sentence. Data collection was carried out through e-mails, telephone contacts and company visits. The survey was pre-tested in each country to ensure that scale of measurement and variables of the study were well understood by respondents

Sample size

A sample of 258 respondents has been covered under the study categorizing them in equal proportion into three broad areas which include type of sales team, type of product market and type of sales operations. Data was collected by the graduate students as they had advantage of also being working managers. The modalities of data collections involved telephone contacts, mailing of questionnaires and company visits to arrange questionnaire completion. Major attributes of the sample respondents are exhibited in Table I.

Data collection was concentrated on companies in two cities of Mexico – Mexico City and Toluca. The measures used in the study design as exhibited in Table II, comply with the questions asked from the respondents during the data collection.

Initially focus group discussion of a representative sample from selected industries was carried out to assess the practice of team sales and performance in general. Based on the analysis of focus group discussions major variable segments for data collection have been identified. The study conducted with culturally differentiated sample respondents brings added value to understanding sales management practices. The descriptive statistics of the data used in the study is exhibited in Table III.

Data collected from respondents were tested for its reliability applying the Cronbach Alfa (α) test. Variables derived from test instruments are declared to be reliable only when they provide stable and reliable responses over a repeated administration of the test. The (α) values were found in the range from 0.77 to 0.94 (p>0.01 two-tailed) within acceptable levels for the individual country samples.

Industry coverage

Four industrial streams in sales were covered while selecting the sample respondents which include consumer goods, consumer durables, industrial products and consumer services. Customer goods included dairy products, beverages, processed food and products of hygiene and sanitation while consumer durables covered refrigerators, televisions, high value audio equipments and domestic appliances. The sample of respondent engaged in selling industrial products covered rubber products for industrial applications, electronic transponders used by cellular phone industries, suppliers of medical equipment and material for canning processed food. Consumer services belonged to banking and insurance industry in both the countries. The above industries were selected as it has been observed that a large number of salespeople are deployed in this segment as compared to others and team sales approach is followed in carrying the tasks. The sales teams functioning in these industries systematically target their offerings, matching the right products with the right customers in Mexican market.

Results and discussion

It has been observed that the efforts of managers to improve team coordination may be more important than their monitoring, directing, and evaluating activities in driving salesperson's outcome performance. Among other variables used in the study, the task distribution has apparent impact on outcome performance in both the countries. However, one of the more persuasive reasons for inconsistent task distribution within teams is the attribute of team members to deal independently outside the team frame to score individual performance. It has been observed during the study that quantity measures require a detailed analysis of salespeople's call reports, an extensive time utilization analysis, or even solicitation and evaluation of customer feedback on non-selling activities. However, once the measurement procedure is set up, it is typically conducted with less biasness and inconsistency in the teams. Correlations for all major variables of study are exhibited in Table IV.

Though the results in Table IV exhibit high inter-correlations among the variables, the analysis appears flawless as the data sets were subject to reliability tests which appeared to be significant(α=0.77 to 0.94). Hence the high inter-correlation results do not post any statistical bias. Satisfaction with the leadership in the team has been observed as the strongest predictor of behavior performance of team members in Mexico. It is important to recognize that the coefficients mask their individual impact to some extent due to correlations among the predictors. Such result indicates that higher perceived values in task distribution, team coordination in reference to power play and task responsiveness, team leadership, synchronized task performance to optimize time-target matrix and professional development opportunities to manage the tasks and work effectively in team provide more confidence to the salespeople. A positive and significant relationship among these variables leads to the effectiveness of the sales units in the study region. Hence the results of the study lead to conformity of hypothesis H2.

Redundancy in the results which exhibited some degree of biasness in inter-correlations among variables has been minimized using Monte Carlo (MC) method. Bias is largely affected by sample size and biasness was found to decrease by increasing the volume of data. It has been observed that intercorrelation bias tends to decrease as the intercorrelations between the two sets of variables increase. The numbers of predictors and criterion variables, as well as the size of the correlations between variables in each set, has relatively minimal effect on bias (Beth, 1982). MC method is a useful technique to compute numerical integration and sort out the redundancy in the statistical results. A procedure for averaging correlation coefficients using the Eigen value of an intercorrelation matrix was adopted in the study using Monte Carlo methods (e.g. Dunlap et al., 1987), which is known as Kaiser average. This process has substantially reduced the bias for correlations near zero and showed slightly smaller standard errors (greater efficiency) than the other averages for small correlations.

As the data have been organized following normative distribution, in many observations the biasness of intercorrelations in results was minimized. However, due to computational limitations of the data, the statistical prejudice could not be fully eliminated. The results are more likely to project a relationship from the perspectives of judgments and efficacy. The biasness of illusory correlation effect on the judgment similarity of variables relationship, or of whether the relationship of one variable induces another, has also been statistically minimized using the MC method.

It has been observed in the study that the formal controls on the performance of such activities are carried out in 35.2 percent of companies in the study area. More strictly relational activities, both in an external (i.e. towards the customers) and internal (i.e. towards other members of the sales team) perspective appear to be very frequently performed by the sales team. Nevertheless, customer relationship management and development seem to be far more intensively performed which may be seen as {M=4.96, t(82)=16.41, p<(0.001)} than co-ordination of the sales team within the selling company {M=5.21, t(82)=15.33, p<(0.05)} in the study area.

Multiple regression analysis exhibited in Table V presents the relationship between the predictors including behavior control, incentive pay, territory design and consequence of behavior, sales performance, and sales unit effectiveness. The interpretation of regression results exhibited in Table V indicates that time-target synchronization has greater significance along with the behavior of team to achieve the sales unit effectiveness. Satisfaction with team leader clearly emerges as more important predictor for the sample respondents. Hence, it may be stated that well-coordinated teams provide salespeople with the opportunity to perform well. The study revealed that one of the prominent drivers of behavior performance of salespeople in Mexico is leadership satisfaction and professional development. The performance of sales teams significantly affects the individual performance of team members. It has been observed during the study that a good territory design reduces inequality perceptions. Accordingly, the hypothesis H1 framed in the study get satisfied and established.

Limitation of the study

The study has been conducted in Mexico, which represents highly diverse work culture emerging from the regional socio-cultural influence. The number of samples drawn from the cities in Mexico may not be enough to generalize the study results. The questionnaires were translated in Spanish for the respondents in Mexico which might have conveyed varied conceptual sense to some extent. The open ended questions were answered in Spanish and some issues might have been overlooked during transcription of the audio. However to ensure that the data cover a wider spatial and temporal dimensions in the study region, the data should be cleansed and filtered with many variability factors affecting the behavioral and control process of the salespeople. Though this research included the most important team sales activities and the most frequently suggested antecedents of customer trust, other potentially relevant variables, such as conflict management skills (Weitz and Bradford, 1999), confidential information sharing and salesperson power within the selling firm (Morgan and Hunt, 1994) have not been considered.

Managerial implications

Effective management of sales teams is important to managers for maintaining strong behavioral threshold of salespeople for continuously improving effectiveness of the sales units. In the study the variables of economic and relational dimensions of external and internal fit have shown greater association with team performance. It has also been found that teams opt for greater autonomy and economic dependency for enhancing performance and this finding makes an intuitive sense. Results of this study reveal that the team performance largely depends on the effectiveness of the team coordination, leadership and performance control through behavioral attributes. Effective coordination of tasks in a team is a consistent predictor of salespeople's performance and effectiveness of the sales units. This indicates the importance of proactive monitoring, directing, and managing the teams in the sales activities. However, some firms involve the manager above the field sales manager in the performance appraisal of salespeople. The sales managers may implement such controls effectively by establishing coordination, training, and feedback process rather than imposing command and control policy. Managers aiming to improve team task performance should recruit individuals with a strong work ethic. Additionally, retail managers need to reduce work withdrawal and organizational retaliation behaviors so as to increase performance of sales teams.

Professional development of salesmen should be directed at making them aware of the advantages of adopting relational behaviors and at boosting their capabilities and skills to work in teams. The high-performance salespeople have greater commitment to their organizations and their sales managers are more satisfied with their units' sales team designs. The increasing adoption of a relational approach to customers is therefore fostering a deep-going change in the individual skills set and capabilities of the sales team and, farther upstream, a substantial rethinking of company strategies and policies of selection, training, motivation and control of the sales team. Sales teams should systematically target their firms' offerings, matching the right products with the right customers to enhance their performance and analyze performance of team members, measuring both internal processes and results to determine their teams' strengths and weaknesses.

Conclusions

The study reveals the balance between team designing and team coordination in performing sales and managerial control strategies are normally based on salespeople' outcomes. It may be appropriate for the managers to consider review of team designs for improving the sales unit effectiveness. However, there is no apparent negative impact of relatively high levels of control behavior in combination with team coordination and leadership attributes. Work environment is largely governed by team coordination effects for the salespeople. Sales team building process has a large effect on sales organization effectiveness both directly and indirectly through its relationship with salespeople's behavioral performance. Collecting and processing territory and account information are major aspects of a salesperson's task and to a large extent salespeople's effectiveness depends on the amount and quality of the market information available to them. The study reviews existing theoretical and management issues pertaining to team sales practices and determines major variables that affect the team performance in selected industries. The results of the study are consistent with the findings of previous studies referred in the paper. However, this paper attempts to contribute significantly to the existing studies as there is paucity of literature on this subject particularly in reference to Latin America.

Figure 1Culture, conflicts and value spread in teams

Table IAttributes of sample design employed in the study

Table IIMeasures used in data collection from the sales teams

Table IIIDescriptive statistics of the data employed in the study

Table IVCorrelation matrix of the major variables under study

Table VStandardized regression coefficients for the variables of the study area

References

Anderson, E., Oliver, R.L. (1987), "Perspectives on behavior-based versus outcome-based sales team control systems", Journal of Marketing, Vol. 51 pp.76-88.