Module Seven Sales Management Leadership and Supervision The Importance of Leadership An Expert’s Viewpoint: Regan Lancaster, vice president of global sales at i2 Technologies uses conventional and unconventional tactics to lead his salespeople. He offers substantial incentive-based pay and promotion opportunities. In addition, he has dressed as a superhero and staged a mock battle against competitors, motorcycled through a brick wall, and repelled down a four story building to inspire his salespeople. Action The Importance of Leadership An Expert’s Viewpoint: Result Lancaster’s leadership is paying dividends. During his first seven years at i2, revenues have increased more than 750 percent. In 2000, i2 had a record-breaking year for e-business with revenues of $1.1 billion. What is the Difference Between Leadership and Supervision? Leadership: The use of influence with other people through communications processes to attain specific goals and objectives Supervision: The day-to-day control of the salesforce under routine operating conditions Sales Force Socialization (Revisited) Task-Specific Self-Esteem: The extent to which an individual believes s/he can perform a task competently Organizational Commitment: The extent to which an individual feels a bond to the organization Formalization: The extent to which work activity is directed by rules, regulations, and commitment Sales Force Socialization (Revisited) Work Alienation: An individual's psychological separation from the activities of the job Job Involvement: – An individual's psychological attachment to the job itself Contemporary Views of Sales Leadership • Leader-Member Exchange (LMX) Model – trust (salesperson and customer) • Transformational Leadership – change agents, charismatic • Behavioral Self-Management (BSM) – self-control, self-discipline by the salesperson Key thoughts on sales leadership • Build a strong, trust-based relationship with individual salespeople • Be an active stimulus for change, and work with sales people and others to accomplish the mission • Expect salespeople to take an active role in managing themselves Leadership Model for Sales Management Goals & Situation Objectives Time Constraints Individual Nature of Tasks Organizational History and Norms Power Sales Needs Manager’s Salespeople Sales Manager Leadership Effectiveness Other People Leadership Skills Power Anticipation Salespeople Diagnostic Other People Selection Communication - Influence Strategy - Communications Mechanisms Power and Leadership Five types of power which may be present in interpersonal relationships: Expert Power George Referent Power Bush has which Legitimate Power types of power ? Reward Power Coercive Power What makes an effective leader? • Trait Approach (not very useful) • Behavior Approach (not very useful) • Contingency Approach (situational) Needs and Wants of Salespeople • Important when coercive power is not being utilized • Realize all needs and wants cannot be met • Not all leadership directives need to be based on needs and wants • Consider each salesperson as a unique individual (requires a lot of the manager) Goals and Objectives • Leadership is easier when personal goals and objectives of the salespeople are consistent with those of the organization • Sales managers strive to seek balance and consistency between organizational goals and their salespeople’s goals. Either hire people with consistent goals or educate and train them to have consistent goals Leadership Skills • The ability to anticipate problems • The ability to seek and obtain substantive feedback • The ability to diagnose problems and opportunities Leadership Skills • The ability to select an appropriate leadership behavior and match it to the situation • The ability to communicate effectively Communication Skills: Influence Strategies • Threats (coercive power) • Promises (reward power) • Persuasion (expert or referent power) • Relationships (referent or legitimate power) • Manipulation Coaching The continuous development of salespeople through supervisory feedback and role modeling. Suggestions for affective coaching include: • Take a we approach • Address only one or two problems at a time • Don’t focus on criticizing poor performance, reinforce good performance • Foster involvement • Recognize differences in salespeople and coach accordingly • Coordinate coaching with more formal sales training • Encourage continual growth and improvement • Insist salespeople evaluate themselves • Obtain agreement with respect to punishments and rewards • Keep good records Planning and Conducting Integrative Meetings • Keep technical presentations succinct • Use visual aids and breakout discussion groups • Keep salespeople informed of corporate strategy and their role in it • Minimize operations review Planning and Conducting Integrative Meetings • Set a humane schedule . . . allow time for sharing and adequate breaks • Set and communicate the agenda (when?) • Ask for input from the salespeople • Generate excitement with contests and other rewards Approaches to Management Ethics Immoral Management – Intentional and consistent management activity conflicting with what is moral (ethical). – Exploits opportunities for corporate gain. Cut corners when it appears useful. ENRON – Seeks profitability and organizational success at any price. ENRON – Selfish. Management cares only about its or the company’s gain. ENRON Dell's Higher Standard Dell's success is built on a foundation of personal and professional integrity. We hold ourselves to standards of ethical behavior that go well beyond legal minimums. We never compromise these standards and we will never ask any member of the Dell team to do so either. We owe this to our customers, suppliers, shareholders and other stakeholders. And we owe it to ourselves because success without integrity is essentially meaningless. Our higher standard is at the heart of what we know as the "Soul of Dell" - the statement of the values and beliefs which define our shared global culture. ………..we want all members of our team, along with our shareholders, customers, suppliers and other stakeholders, to understand that they can believe what we say and trust what we do. Our higher standard includes several key characteristics that both underpin the Soul of Dell and provide the foundation for our Code of Conduct: • Trust - Our word is good. We keep our commitments to each other and to our stakeholders. • Integrity - We do the right thing without compromise. We avoid even the appearance of impropriety. • Honesty - What we say is true and forthcoming - not just technically correct. We are open and transparent in our communications with each other and about business performance. • Judgment - We think before we act and consider the consequences of our actions. • Respect -We treat people with dignity and value their contributions. We maintain fairness in all relationships. • Courage - We speak up for what is right. We report wrongdoing when we see it. • Responsibility - We accept the consequences of our actions. We admit our mistakes and quickly correct them. We do not retaliate against those who report violations of law or policy. Approaches to Management Ethics Amoral Management – Management activity that is neither consistently moral or immoral . . . Decisions lie outside the sphere to which moral judgments apply. – Give managers free rein. Personal ethics may apply but only if managers choose. Respond to legal mandates if caught and required to do so. – Seeks profitability. Other goals are not considered. – Well-Intentioned but selfish in the sense that impact on others is not considered. Approaches to Management Ethics Moral Management – Management activity conforms to a standard of ethical or moral behavior. – Live by sound ethical standards. Assume leadership position when ethical dilemmas arise. Enlightened self-interest. – Seeks profitability within the confines of legal obedience and ethical standards – Management wants to succeed but only within the confines of sound ethical precepts. Meeting Ethical and Moral Responsibilities Sales managers should be aware of three particularly relevant types of unethical acts: 1. Nonrole 2. Role Failure 3. Role Distortion. Meeting Ethical and Moral Responsibilities Type Direct Effect Examples Nonrole Against the firm • Expense account cheating • Embezzlement • Stealing supplies Role Against the firm • Superficial performance Failure appraisal • Not confronting expense account cheating • Palming off a poor performer with inflated praise Meeting Ethical and Moral Responsibilities Type Direct Effect Examples Role For the firm • Bribery Distortion • Price fixing • Manipulation of suppliers Problems in Leadership • Conflicts of Interest (NYSE specialists) • Chemical Abuse and Dependency • Problem Salespeople: A Disruptive Influence – Lone Wolf (high sales) – Corporate Citizens (low sales) – Institutional Stars (the best) – Apathetics (fire them) • Termination of Employment • Sexual Harassment Sexual harassment • Zero tolerance means…?…..a good policy? • California law sets a zero tolerance policy, holding employers automatically responsible for any supervisor who sexually harasses an employee – regardless of whether the company knew about the offensive conduct.  • California Supreme Court ruled in Nov. 2003 that the employee must complain promptly…. the employer is strictly liable for all acts of sexual harassment by a supervisor. However, the Court announced that an employer can raise the defense of "avoidable consequences," which will not eliminate liability, but can be used to reduce a plaintiff's damages. The defense will apply if the employer can prove three elements: (1) the employer took reasonable steps to prevent and correct workplace sexual harassment; (2) the employee unreasonably failed to use the preventive and corrective measures that the employer provided; and (3) reasonable use of the employer's procedures would have prevented at least some of the harm that the employee suffered.