b2 final Report.docx

BUSINESS COMMUNICATION II

LONG REPORT 

“INCREASING THE MOTIVATION

OF SALES FORCE AT

PHARMEVO (PVT.) LTD.” 

Ahsan Adil (9168)

M. Usman Khan (9034)

Omar Muhammad Khan (9809)

(Section A)

Submitted To: Ms. Samra Javed

Submission Date: 6th

 Decemeber’2010 

INCREASING THE MOTIVATION

OF SALES FORCE AT

PHARMEVO (PVT.) LTD.

Presented to

Miss Samra Javed

Course Instructor

Business Communication II

IoBM

Prepared by

Ahsan Adil (9168)

M. Usman Khan (9034)

Omar Muhammad Khan (9809)

Students

December 6, 2010

TABLE OF CONTENTS

Letter of Authorization................................................................................II

Letter of Acknowledgement........................................................................III

Letter of Transmittal....................................................................................IV

Executive Summary......................................................................................1

Introduction..................................................................................................2

Background of the problem..........................................................................3

Research and findings...................................................................................3

Solutions and alternatives.............................................................................5

Establishing the criteria for selecting appropriate method..........................5

Value of each method...................................................................................6

Evaluating each method by criteria...............................................................6

Comparative analysis and costs of each method..........................................7

Conclusion.....................................................................................................7

Recommendation..........................................................................................8

Bibliography..................................................................................................9

LETTER OF AUTHORIZATION 

December 06, 2010

Dear Readers,

As students of BBA Honors; Ms. Samra Javed –  Course Instructor for Business Communication

II has authorized us to prepare a recommendation report on the “Declining Performance of

Pharmevo ’s Sales Force”. The requirement is to conduct a primary and secondary research andto identify the various alternative solutions and give recommendations to solve that problem.

This research is conducted by interviewing the sales force and the top management of the

organization about the problem, various alternative solutions and also exploring about this problem through other sources.

The report is required to be submitted on December 06, 2010.

Sincerely,

Omer Mohammad Khan (9809)Ahsan Adil (9168)

M. Usman Khan (9034)

LETTER OF ACKNOWLEDGEMENT

We would first like to thank the Almighty Allah for giving us the strength and endowing us with

the privilege of completing our report on the subject of “finding ways to improve the

 performance of the sales force”. 

We are also extremely thankful to our mentor and guide Ms. Samra Javed whose help,

suggestions and encouragement helped us during the time of research and in the making of thisreport. I have learnt a lot of new things during this report and found it to be very interesting.

We would like to express our gratitude to all those who helped us in completing this project.We want to thank the management ofPharmevo  for giving me the permission to commence the

 project, to do the essential research work and to use their organizational information. We would

like to thank Mr. Saif ul Hassan (Senior Sales & Distribution Manager, Pharmevo) who gave us permission to go ahead with our project.

Thank you

Omer Mohammad Khan (9809)

Ahsan Adil (9168)

M. Usman Khan (9034)

LETTER OF TRANSMITTAL 

December 06, 2010

Ms. Samra Javed

Professor, Business CommunicationInstitute of Business Management

Dear Madam,

Here is the report, authorized on one of the major problem faced byPharmevo  which is the

declining sales performance of the sales force and in this report we come up with measures toimprove the sales force performance by carrying out a research through face to face personal

interviews.

The report focuses on the problem that the Pharmevo has been facing fopr the last few years due

to the decline in the performance of the sales force and studying the deep insights of the reasons

as to why the sales force hasn‟t been performing up to the mark. It further studies the various

alternatives that can be used to overcome this problem by evaluating each of them in terms of

cost, effectiveness, time period and importance for the sales force.

We hope that this report is helpful in helping Pharmevo overcome their problem. This report

conveys our findings based on the research been conducted, and we have researched the topic tothe best of our abilities.

Sincerely,

Omer Mohammad Khan (9809)

Ahsan Adil (9168)M. Usman Khan (9034)

EXECUTIVE SUMMARY

PharmEvo is a successful pharmaceutical company that started the business as distributors but

then started to manufacture the medicines itself. The company was doing well when recently

they faced a gradual decline in the sales in the past two years. The company conducted an

internal research and came up with the result that the sales have been hampered by the inefficient

 performance of the sales force.

Our group went to the company and interviewed their Sales and HR manager as well as few sales

 personals to gather the first hand knowledge so as to come up with the recommendations that can

 be helpful in aiding the company to deal with the current situation. We conducted face-to-face

interviews using convenient sampling.

Our findings showed that indeed the research conducted by the company pointed out the correct

factor which was affecting the sales i.e. the decline in the performance of the sales force. Some

 basic elements that were responsible were lack of training sessions, provision of non-monetary

incentives to the frontline sales force and proper timely evaluation of the sales personals.

To cope up with the situate we came up with the three alternatives (a) Outsourcing (b) Training

and development (c) Motivation. Outsourcing included hiring another distributor for

compensating the reduced sales. Training and Development would require constant measures for

the skill development of the sales force that have to carry out on regular basis. Motivation

includes providing the sales personals with non-monetary incentives, also on long term basis.

A detailed analysis of the aforementioned alternatives is also provided with respect to the cost

and the comparative analysis of the ways discussed. After the analysis we came to the conclusion

that it would be in companies best interests to opt for Motivation to cope up with the current

situation as the other two ways proved to be unpractical for the time being.

INTRODUCTION:

PharmEvo started the business as the distributors of the pharmaceuticals and consumer

 products in 1971 and then expanded the business by manufacturing baby care/dental products, pharmaceuticals, textile, food and others products. Currently the company holds group

employees of 3000 people.

Today PharmEvo is a team of approx. 600 people, offering wide range of formulations with anunpredicted growth of 40% over the years. Their focus is to offer solutions in major therapeutic

categories through quality, ethical and biopharmaceutical products.

PharmEvo factory is a state of the art purpose built building stretching over an area ofapproximately 40,000 Sq. meters. It is located at Port Qasim, a newly developed industrial area

that is about 40 km north of downtown Karachi and at half an hour drive from the PharmEvo

headOffice.

BACKGROUND OF THE PROBLEM: Decline in sales force’s performance 

Sales force of PharmEvo is underperforming for last 2 years. They have failed to meet the

forecasted sales. The actual sales lagged behind the expected mark. The sales force is not either

actively working for the attainment of their goals or they are de motivated and unsatisfied with

their jobs.

For clarifying the exact reason for the problem PharmEvo carried out a research that helped them

to find out the core of the problem. The hired a research agency for this purpose who conducted

a thorough research among the sales force personals and some members of the top management.

The report findings that they came up with are given below.

1.  Lack of training2.  Lack of single minded pursuit of sales excellence.

3.   Not exposed to best practices, including having a formal, structured sales process.4.  Lack of accountability/no proper performance evaluation.5.  Ineffective sales coaching

6.   No learning or study courses were taken by the sales force in past 6 months.

Although the basic f actors that affects the sales persons‟ are many there are some factors that are

liable to change as per the change on the external factors such as motivation, skill-set, role

 perception etc. For increasing the motivation of the sales force we came up with the followingset of solutions and alternative ways and evaluated each of those to see which of them is more

 prudent to be implemented at PharmEvo.

RESEARCH & FINDINGS:

In order to figure out the reasons for the declining performance of sales force, secondary research

was carried out by reviewing the previous performance and records of the sales force and the

historical data of the company to get a deep insight of the issues.

However the most critical breakthrough was through the primary research, which included

 personal meetings and face to face interviews with the sales manager, HR manager and major

sales force personal.

Convenience sampling was used for the research process i.e. the persons who were available

were interviewed briefly. Some of the primary questions that we asked from the concerned

 people were as follows:

  In your opinion do you think that the sales force has decreased morale?

  Has there been a timely scheduled performance evaluation of the sales‟ personals? 

  What is the basic criterion of  providing incentives/bonuses/commissions to the sales‟

 personals?

  Is there any timely training sessions for the old sales‟ personals? 

  Have your sales‟ force attend any workshops and/or seminars regarding the skill

development of the respective field?

  Do you think that management has provided you with enough facilities to carry out your

routine tasks?

  Apart from sales‟ commission provided to the sales „personals, what other ways you

follow to motivate your sales force?

  What were the factors that lead you to conclude that declining sales are primarily the

result of inefficient sales force?

Findings of the research process helped us out in evaluating and analysing the respondent‟s

answers and thus making a judgement and recommend:

According to the manager whenever they are doing evaluation for the sales‟ personals, they

accepted that their main focus and concern is the „current‟ sales or units sold by a particular sales

representative. Despite the fact that they should consider the previous records, increase or

decreased in the performance, yearly contribution to the sales and other modern methods for the

evaluation of the sales representative. The sales manager also said that there has been a general

decrease in the targeted sales that a unit in charge of localities and they are ordering less

quantities. Performance evaluation is done yearly and not all the sales‟ personals are evaluated;

only the ones which hold and maintain the key accounts are evaluated regularly. As for the

training only the new inductees go through training sessions while the old ones have not been a

 part of any training sessions. It was also the same scenario for workshops and seminars. We were

also told that apart from the monetary benefits there aren‟t any significant factors that the

management uses for sales‟ personals while upper management and senior sales‟ personals do

get non-monetary incentives. The sales‟ personals expressed slight discontent feelings regarding

the facilities provided by the management and the awarding of incentives. The sales manager

also justified his concerns about the sales‟ personals by pointing out the fact there their whole

industry uses a very limited marketing and thus the flux of sales are chiefly dependent upon the

sales force that a particular company holds, it‟s not merely sales‟ force they are holding, it is

their „human capital‟ which in their opinion were not performing up to the optimum level. 

SOLUTONS AND ALTERNATIVES:

In an effort to improve the sales force performance and achieve the forecasted expected sales.

Pharmevo will have to both fire the existing sales force and outsource a new one completely

through independent distribution channel. This will reduce cost and be less costly, and at least

 better than relying on a sales force that has let the company down for the last 2 years. Selecting a

well reputed distribution channel would be a good idea.

The other option could be to train the existing sales force through various training and

development programs, seminars and workshops. This would train the existing sales force to

 perform better and ways to achieve the forecasted sales. Although this will be a costly procedure

 but if it is successful then it‟s going to be ver y helpful for Pharmevo in the long run.

The third option could be to motivate the sales force by various monetary and non-monetary

incentives; this will keep the sales force satisfied with their jobs and as a result their performance

will improve and they will work more effectively and efficiently in order to achieve the expected

forecasted sales. As motivation is the key for the employees to work hard and perform well.

ESTABLISHING CRITERIA FOR SELECTING THE APPROPRAITE

METHOD:

To choose from the three methods, here are the three groups of criteria we used in evaluating the

three methods:

1.  Costs- include the whole cost associated with the method and the costs that will have to

 be incurred for the continuation of the process. Will the cost incurred be worth the return

generated?

2.  Effectiveness-how effective will be each method in improving the sales force

 performance? What are the probability of success and the chances of the method being

 productive? How will it benefit the company both in the long run and in the short run as

well?

3.  Time span required- the amount of time taken for each method? The time span, will it

take a long time or very short time? Does the company have enough time to forgo the

method?

VALUE OF EACH METHOD:

To asses and evaluate the value of each method. We conducted secondary research from

Company‟s past records to see the course of action taken in the past in similar circumstances, to

measure the effectiveness. We also consulted the sales force personally to better understand the

reasons as to why they were not able to achieve the forecasted sales.

EVALUATING EACH METHOD BY CRITERIA:

Each method was evaluated using the following criteria:

Criteria Method

Outsourcing Training &

Development MotivationCostly Yes Yes No

Long run benefit Yes No YesShort run benefit No Yes Yes

Finance department concern Yes Yes No

Human Resource department

concern

Yes Yes Yes

Probability of effectiveness 50% 70% 90%

Sales force interest No Somewhat YesFindings of research study No Yes Yes

The above table evaluates each method with different criteria and areas of concern for the

company. The evaluation suggests that motivation is the least costly compared to outsourcing

and training and development which are both expensive. In terms of long run benefits both

outsourcing and motivation are aimed at providing long run benefits to the company whereas

training and development only provides short term benefits and outsourcing cannot be beneficial

in the short run for the company. Both outsourcing and training and development are an area of

great concern for the finance department in terms of the huge costs associated with them. Since

the HR department has to deal with all the 3 methods (whether it is outsourcing, training and

development or motivation) because all the three methods are related to the tasks of the Human

Resource department. Motivation has the highest probability of effectiveness (90%), so greater

chances of achieving the desired results compared to outsourcing and training and development

(50% and 70%) respectively.

The most important criteria which deals with the sales force is that, of course the sales force will

retaliate through labor unions if outsourcing is done, because no employee would like to lose

his/her job. Training and development programs are of somewhat interest for the sales force as it

gives them the opportunity to learn in excel in their careers in the long run. However motivation

is the method that is of greatest interest for the sales force as it benefits them directly whether it

is in the form of paid leaves, extra pay, incentives, bonuses, commission or fringe benefits.

COMPARATIVE EVALUATION AND COSTS OF EACH METHOD:

The costs associated with each method are different;

The cost for outsourcing the distribution channel is comprised of both firing cost for every

salesperson along with the cost associated to be paid to the distribution channel. The firing cost

 per salesperson will be Rs. 50,000 for a low-level sales person who has served the company for

less than 5 years, comprising of the provident fund. Those who have served the company for

more than 10 years or the Sales force manager their firing costs will range from Rs.100,000-

Rs.200,000, which will include the gratuity, provident fund and compensation benefits. The cost

for hiring the best distribution channel (outsourcing) that is the “Global Distributors” is 10% of  

the sales achieved.

The cost for the training and development include both off-site and on-site single-day workshop

sessions programs and is Rs.70, 000 for each session in a single day along with an additional fee

of Rs.1,000 for each participant.

The cost for the motivation of staff varies widely according to the monetary or non-monetary

 plan for motivation selected by the company‟s human resource department. The motivation plan

would include these benefits to be provided continuously, not just for an initial or a specific

 period, but over a long period of time.

CONCLUSION:

The cost of outsourcing is very high and it also does not give a surety as to whether the new

distribution channel would be able to perform better than the sales force or not. Although

“Global distributors” are the best distributor company but the method is just too costly to take a

risk.

The cost for firing each sales force is very high and will be paid to all the salespeople at the same

time i.e. at the time of firing, so this would be a very heavy amount that will cause some serious

 problems for the finance department to manage.

The cost of keeping the sales force motivated is although low but it needs to be carried out for an

indefinite period as a result the company will have to keep on paying this either in the form of

money or other benefits. Comparatively keeping the sales force has the lowest cost. It also helps

the company to evaluate the performance of the sales force as to whether the motivation is

effective to improve the performance or not. This will also help the sales force to work more

effectively and efficiently, by being satisfied with their jobs and focusing more on work, thereby

helping Pharmevo achieve its sales targets.

RECOMMENDATION:

Therefore we recommend that Pharmevo adopt the method of keeping the sales force motivated

to improve the performance of sales force and achieved the expected sales forecast and targets.

To keep the sales force motivated PharmEvo have to conduct proper evaluation thus they can

appraise the sales persons accordingly.

As stated in “Evaluating sales force: Overview” the concerned person involved in appraising and

evaluating the sales force can find the qualitative and quantitative criteria of great help.

Qualitative criteria include sales skills, territory management skills, personality traits, etc. The

quantitative factors include the sales volume, average calls per day, sales orders, etc.

Quantitative criteria are those aspects that measure the sales performance in terms of the end

results whereas qualitative criteria involve all those activities that the sale person does to achieve

the end results.

BIBLIOGRAPHY

  „Sales and distribution management‟, Evaluating sales force performance:

Overviwe, viewed 4 December 2010,

http://www.icmrindia.org/courseware/Sales%20and%20Distribution%20Management1/S

SDM16.htm 

  „PharmEvo‟, viewed 4 December 2010, http://pharmevo.biz/ 

  Mr. Saif-ul-Hasan, Senior Manager, Sales Support & Distribution