Internal and External Cultural Force that Affect a Firm’s Sales Perf：中国经济管理大学 MBA课堂笔记《销售管理：塑造未来的领导者》
Internal and External Cultural Force that Affect a Firm’s Sales Perf
中国经济管理大学 MBA课堂笔记《销售管理：塑造未来的领导者》
中国经济管理大学/中國經濟管理大學
Internal and External Cultural Force that Affect a Firm’s Sales Performance
Learning Objectives:
After completing this chapter, the student should be able to:
Explain what characterizes an organization’s corporate culture.
List and explain different cultural categories that guide organizations.
Discuss how a firm’s culture impacts its sales effort.
Offer a strategy for modifying a firm’s culture.
Discuss the impact global, national, and local cultures have on sales management.
Contrast the differences related to managing domestic versus overseas sales personnel.
Explain why having a diverse sales force is important to the success of today’s sales organizations.
Introducing the Chapter:
This chapter explains how culture—both internal and external to the firm―impacts the way sales forces operate and how people’s cultural beliefs and practices influence their alliances, customer relationships, and management practices.
There are many ways to introduce this chapter since it focuses on both internal and external cultural influences. In regard to internal cultures, ask the class to list as many functional areas as possible within the firm. They will say marketing, sales, production, accounting, MIS, customer service, etc. Then ask the class what each does and when there are responses ask them how do we know when they are doing an outstanding job. Asked differently, what should be the primary goal of each functional area of the firm. IF the firm is aligned, each functional area’s goals for success will revolve around what the area does rather than who they serve. What you should be trying to transfer is that aligned firms focus on keeping their customers satisfied by supporting the needs of the sales and customer service areas.
A second way to introduce this chapter is to go to the “Other In-Class Exercises” that is located at the end of this IM chapter and look at Exercise 3. In the question posed for the class, an American salesperson visits a Saudi business man and potentially offends the buyer five times. This will drive home the importance of understanding how to conduct business in another culture. Follow this up with the second exercise about “who broke the watch.” These two exercises are excellent examples of how national cultures influence the way business is conducted and people are managed in a culture different from the salesperson and/or manager.
Chapter Outline:
I. A firm’s corporate culture is characterized by beliefs, attitudes, values, assumptions, and ways of doing things the company’s members share and teach new members.
a. Corporate culture influences:
i. Ethical standards and policies
ii. Attitudes toward diversity and multiculturalism
iii. How managers and workers communicate and behave
iv. The work environment
v. Stories told about firm successes and failures
b. Corporate culture is “the water in the fishbowl” because salespersons are immersed in it, but are unaware of it until something changes!
II. Corporate cultures often form in their orientation to the marketplace:
a. There are at least five different orientations:
i. Production oriented – mass production, at reasonable costs to achieve economies of scale
ii. Product oriented – focusing on newest technology or latest feature
iii. Sales oriented – “pushing” the product/service by aggressive sales efforts
iv. Market oriented – satisfying buyers to maximize profits
v. Relationship marketing oriented – forming long-term relationships with more profitable customers to maximize the continuous flow of profits
b. Firms are more successful when internal culture is aligned with the external marketplace
i. Any orientation can be successful when properly aligned with the market
ii. About 30% of salespersons fail to meet expectations because of a mis-alignment of internal and external environments!
III. Low Versus High-Performance Cultures
a. Behavior that is culturally sanctioned thrives and is rewarded, while unapproved behavior is frowned upon or punished
b. Weak internal cultures lack a consensus about what is important, while in strong cultures there is agreement about what is important
i. Low performing cultures are more likely to exhibit:
1. Insular thinking
2. Resistance to change
3. Politicized internal environment
4. Unhealthy promotion practices
ii. In contrast, high performance cultures are more likely to be results oriented and associated with the following healthy attributes:
1. People oriented
2. Stress achievement and excellence
3. Reinforce cultural beliefs
IV. Achieving Internal Alignment
a. Alignment can be a source of competitive advantage
b. Can result in higher financial performance
c. Many firms lack alignment in sales & marketing due to two factors:
i. Economics – fighting over budgets by marketing and sales
ii. Different job cultures
1. Marketing is more analytical, data-oriented, and project focused
2. Sales is more action-oriented, relationship driven, and short-term
iii. Each group may believe their contributions are more important
d. When there is an alignment gap, entropy occurs:
i. Entropy is the amount of energy employees expend engaging in non-productive activities as a result of this mismatch
e. Four internal cultural gaps contribute to entropy:
i. Lack of personal alignment – a gap between a salesperson’s stated values and their behavior
ii. Lack of structural alignment – gaps between a firms stated values and the rules, regulations, and managerial systems in place
iii. Lack of values alignment – incongruence between salesperson’s personal values and the values of the group
iv. Lack of mission alignment – gaps between sales team members’ objectives and the firm’s goals
f. When a firm experiences cultural entropy a manager has two choices:
i. Changes sales strategy to fit the firm’s culture
ii. Alter the firm’s culture to match the sales strategy
g. Modifying a firm’s culture is a difficult undertaking for any manager
h. Sales managers can take several actions that lead to a stronger culture:
i. Determine which parts of the firm’s culture supports sales strategy
ii. Communicate honestly those areas that need to be modified
iii. Take visible actions that communicate a transformation of existing culture
i. Managers who want to transform firm culture can take two actions:
i. Substantive actions – actions that demonstrate that a leader is serious about changing the firm’s culture. For example, holding salespersons responsible for their performance or firing unproductive salespersons.
ii. Symbolic actions – communicates shifts in an organization’s culture and is secondary. For example, a firm’s president meeting regularly with the sales force that symbolically communicates status.
j. Sales managers must also change policies and practices that impede successful execution of a new strategy—e.g. sales training and/or compensation
k. The firm’s incentives, rewards, ad resources must be based on the new culture
V. How External Cultures Affects a Firm’s Sales Force
a. Sales organizations work in global markets and with customers in national markets that were raised in cultures different from their own
i. Cultural awareness allows sales managers to take advantage of broader perspectives to find managerial solutions to problems
ii. Cultural understanding leads to correct behavior in cross-cultural meetings
b. Different cultural levels:
i. Global culture – possessed by a group of consumers in nearly every country who are aware of global products, entertainment, news, etc.
ii. National culture – has the greatest impact on buyer behavior and consists of five dimensions:
1. Power distance – the acceptance of unequal power and authority relations in society.
2. Uncertainty avoidance – how individuals in a society react to uncertainty and ambiguity.
3. Individualism/Collectivism – relates to how group oriented a culture is when making decisions.
4. Masculinity/femininity – describes the traits valued by a society.
5. Long-term orientation – focuses on virtues oriented toward future rewards, like thrift and perseverance.
iii. Local culture – cultures found in different geographical regions, cities, and neighborhoods
c. Components of Culture – it is helpful for a sales manager and their salespersons to understand the eight components of culture
i. Communication styles
ii. Religions
iii. Educational levels
iv. Aesthetics
v. Social organizations
vi. Technology
vii. Time
viii. Values and norms
d. Low and high-context cultures – refers to the directness of words to communicate. In high-context cultures, what is left unsaid is often more important than what is openly stated!
e. Buyers and sellers who are ethnocentric are more rigid while those who are polycentric are more flexible in their business dealings. Ethnocentrism means that people believe their way is the only way vs. many ways for polycentric.
i. Individuals that look at a business situation from their own culture are employing a self-reference criterion that is based upon their customs, institutions, and ways of thinking.
ii. Ethnocentrism can be reduced by learning about other cultures and to be aware of beliefs that can distort your perceptions
VI. Managing the Global Sales force
a. As globalization expands, sales managers will find themselves supervising salespersons from different cultures around the globe:
b. Designing the global sales force – requires understanding the needs of current and potential customers
i. Can employ expatriates, local hires, or third-country sales reps
ii. In new markets, it is more efficient to partner with local companies
iii. Local markets must be organized to meet customer expectations
c. Selecting sales personnel – must define skills needed by salesperson
i. Maturity, flexibility, knowledge, cultural empathy, and positive outlook
ii. Selection criteria should be localized for specific sales job
iii. Applicants from other cultures may not interview in the same ways
iv. Hiring mistakes can be very costly
d. Training global salespeople – can be standardized or localized
i. Even after receiving training, new hire may cling to national culture
ii. Different instructional methods must be used to match culture
iii. Technology now allows more efficient training—CDs and internet
iv. Product and technical info can be standardized, but sales approach and market explanation must be localized
e. Motivating global sales personnel – complicated by distinct cultures
i. Whenever possible, motivation system should be geared to national culture. E.g. Individual pay in US vs. group pay in Japan
ii. Growth within the firm is also important for many global salespersons
iii. Important to communicate with people about changes that affect them
f. Compensating global sales personnel – difficult to offer a single compensation system that is fair, balanced, and flexible.
i. Higher salaries expected for working overseas
ii. Higher salary needed to cover expenses in home country and work country
iii. European managers often receive higher benefits and deferred compensation
g. Evaluating global sales personnel – global sales managers may view individual performance to be less important
i. Important to evaluate actual against expected performance
1. US firms fire poorly performing salespersons while Japanese companies did not! How to motivate poor performers?
ii. Due to transfer pricing and other differences, it is often difficult to compute precise contributions of salesperson
VII. Changing demographics and diversity in the sales force
a. Multiculturalism is the presence of multiple groups of people that represent different cultures, races, languages, and religions living together in a single country or area of a nation:
i. By 2050 less than half the US population will be Caucasian
ii. Hispanics have become the largest US minority group
b. As a result of these changes, firms are undertaking diversity initiatives that aim to hire individuals from multiple cultures
i. Today’s immigrants are less likely to assimilate into US culture
c. There are many benefits of embracing diversity that include:
i. Right thing to do since it is inclusive and fair
ii. Legal requirement in US—not to discriminate
iii. Reflects the changing composition of US and other marketplaces
1. Easier to serve diverse customers in market
2. Results in lower hiring and turnover costs
3. Leads to more diverse problem-solving
iv. Diversity can also have potential downsides:
1. Firm’s strategy must be properly managed
2. Diverse group of workers must trust and work together
v. Sales managers must take actions to:
1. Insure equal opportunity and value
2. Insure neutrality of hiring, promotion, and HR policies
3. Include all personnel in firm activities
vi. Important that managers embrace, support, and advance diversity
VIII. Summary
a. Culture is both a micro and macro force that influences how a firm operates in today’s global economy.
i. Micro – firms are more profitable when internal culture is aligned with external strategy for market success
ii. Macro – national culture impacts everything we do!
b. Sales managers play important roles in aligning cultures with external strategies
i. Take symbolic actions and make substantive decisions
c. Sales managers must understand their own ethnocentrism
i. Plus, important to understand how culture impacts buyer behavior, relationships, and communications
ii. Culture complicates how a sales manager designs, hires, trains, motivates, and evaluates global sales efforts
d. The sales force, buyers, and business partners are becoming more diverse as demographics shift in the US and other developing nations
e. If a firm is to succeed in today’s marketplace it must be a reflection of the buyers that are being served.
Questions and Problems:
Explain what constitutes a corporate culture. Why might some employees view culture as the “water in the fishbowl” of their daily activities?
A firm’s corporate culture is characterized by the beliefs, attitudes, values, assumptions, and ways of doing things the company’s members share and teach new members. A company’s corporate culture influences:
The firm’s ethical standards and policies.
The firm’s attitudes toward diversity and multiculturalism.
How a firm’s managers and employees communicate and behave.
The tone of the work environment.
The stories employees tell about the firm’s successes and failures.
Corporate culture has also been described as “the water in the fishbowl of any business,” because salespersons are immersed and operate in it, but are unaware of the firm’s culture until something changes.
Explain the five orientations a firm can adopt and the impact they have on its sales force. What impact will they have on the sales force’s relationships with other functional areas within the firm and the firm’s customers?
Firms that are production-oriented are most concerned with mass producing products at low prices to achieve economies of scale. This approach allows a firm to offer a limited number of reasonably priced products at multiple locations. As a functional area of the production-oriented firm, the sales area is seldom consulted before product or pricing decisions are made. These changes are determined by production and financial executives. In a production-oriented firm, the sales force is more of an afterthought. The company’s managers believe that the sales force’s job is to communicate with potential buyers about the specifications of the firm’s products and their availability and to take customers’ orders. Production-oriented firms are more likely to prosper when market demand for their products exceeds their ability to supply them.
A product-oriented company focuses on the newest technology or latest product feature. Sometimes called the “better mousetrap syndrome,” the firm’s goal is to differentiate its products from those of its competitors by constantly upgrading the products. In product-oriented firms, engineering and research and development (R&D) are accorded superior status, and the firm’s focus centers on the product rather than the buyer. The role of the sales force is to notify buyers that the latest product models have been released and convince buyers that they are better than competing products.
When the supply of products exceeds the demand for them, firms often become sales- oriented. For example, when multiple competitors enter the marketplace and there are few noticeable differences between their products, customers tend to focus on the prices of the products. As a result, some sales managers will coach their salespeople to practice “hard sell” tactics regardless of customer needs. Management is likely to use a “carrot and stick” approach to motivate the sales force. In this company culture, salespeople receive bonuses for reaching their assigned sales goals, but face punishment or dismissal when desired sales levels are not reached!
By contrast, a market-oriented firm pursues the dual goals of satisfying their buyers while maximizing the profits of their firms. In market-oriented companies, senior executives are more active in sales and customer activities. As a result, salespeople are expected to satisfy the needs of their buyers in addition to meeting their sales goals. These goals can come into conflict, however, whenever short-term sales goals are achieved at the expense of customer satisfaction.
As we have explained in Chapter 5, more firms have become relationship marketing oriented, whereby they seek to establish long-term relationships with their customers. Salespeople are expected to act as consultants to fully understand their buyers’ long-term needs.5 Relationship-oriented firms expect their sales force to provide high levels of service to profitable accounts and grow business with buyers who are willing to pay higher margins for greater service and the meeting of their needs.
When a firm’s organizational culture is aligned with its marketplace strategy, the company’s sales managers and the sales force are more likely to be successful. Thus, each type of orientation we’ve just discussed is appropriate when it is aligned with the market in which the firm operates. For example, in many developing markets in Asia and Africa today, consumers are interested in purchasing high-quality items at affordable prices. However, in more developed nations, like the United States, Europe, and Japan, buyers expect customized solutions to their problems, and they have the economic power to purchase those solutions. The problem arises when the marketplace changes and firms do not adjust their orientations and internal cultures to match the needs of the marketplace. In fact, experts estimate that about 30 percent of salespeople fail to meet the performance levels that their firms expect of them because there is a misalignment between internal culture and marketplace realities.6
Why might a firm’s sales and marketing functions be misaligned? What are the consequences of a misaligned culture?
Many firm’s sales and marketing efforts often lack alignment. This misalignment is explainable by two factors: economics and culture. First, the sales and marketing areas often compete over how the company’s budget is divided, each believing the other receives too much of the budget. Second, sales and marketing workers tend to exhibit different job cultures. That is, marketers tend to be more analytical, data-oriented, and project focused. The sales team, on the other hand, is comprised of members who are action-oriented, relationship driven, and short-term focused.14 Perhaps most importantly, the two areas of business are judged differently in regard to their performance. The sales team is often evaluated based upon results—closing sales. Conversely, marketers are judged by the programs they propose, and their success or failure takes much longer to discern. Each group may believe that their contributions are more important than that of other functions.15 Given these fundamental differences, it is hardly surprising that the marketing and sales areas of the firm find it difficult to work together. When there is an alignment gap within an organization, entropy occurs. Entropy is the amount of energy employees expend engaging in nonproductive activities as a result of this mismatch.
When a sales force’s group values differ from the rules, regulations, and managerial systems in place within the firm, describe the gaps that can develop.
· A lack of personal alignment: Gaps that exist between employees’ stated values and their behaviors. An example is when sales leaders do not “walk the talk” or demand that the sales team “do as I say, not as I do.” Likewise, a salesperson might not be honest with a sales manager about what happened on a sales call or the reason a customer canceled an order. Any gap in personal alignment leads to a lack of trust between sales managers and their sales teams.
· A lack of structural alignment: Gaps that exist between the firm’s stated values and the rules, regulations, and managerial systems it puts in place. For example, if a firm says that it encourages its salespeople to behave ethically but then fails to reward ethical behavior when it comes to the reps’ raises and promotions, the sales team will become cynical.
· A lack of a values alignment: Incongruence exists between employees’ personal values and the collective values of the groups within which they work. For example, there will be a lack of a values alignment when a salesperson’s ethical values are higher or lower than the overall ethical values of the group within which he or she works. Incongruent employees and collective values can lead to role conflict where the salesperson is unable to satisfy the firm’s values without violating his or her own.18
· A lack of mission alignment: Gaps that exist when the objectives of the members of the sales team fail to align with the firm’s goals. For example, a lack of mission alignment exists when a firm instructs its sales team to devote time to relationship-building, but its sales force members continue to sell products that maximize their income at the expense of those relationships. Mission alignment gaps can detract from a sales manager’s ability to channel the efforts of his or her sales team in a unified direction.
Contrast how firms with high-performance corporate cultures operate versus firms with low-performance cultures. How does a sales manager change a low-performance culture to a high-performance culture?
Companies with a strong corporate culture tend to be results-oriented and associated with healthy cultural attributes like those listed below:
People-oriented: Workers are treated with respect and their achievements are celebrated. A full-range of rewards and punishments are employed to encourage high-performance standards, and managers at all levels are held responsible for developing workers under their care.
Results-oriented: Workers who excel are identified and rewarded; control systems are developed to collect, analyze, and interpret performance; and sales managers/salespersons who do not meet standards are replaced.
Stress achievement and excellence: Salespersons feel a constructive pressure to be the best, sales managers pursue programs that motivate workers to perform at their highest level, and excellence links cultural metrics to performance measures.
Firms with weak cultures are associated with lower financial performance, and they exhibit a number of unhealthy characteristics that include:
Insular thinking: Members are inward thinking, believing all answers for the firm’s problems exist within the firm. As a result, they avoid looking outside the firm for best practices. Managers may behave arrogantly.
Resistance to change: There is a desire to maintain the status-quo. There is little support for new ideas and the firm’s leaders discourage change.
Politicized internal environment: Problems are resolved, and decisions are made based upon the individual power of the firm’s managers and executives. Rather than doing what is best for the firm, the decisions are based upon what is best personally for individual managers.
Unhealthy promotion practices: Promotions are made without the skills and capabilities of the candidates being seriously considered or matched to the positions to which they are being promoted. For example, a hardworking or long-serving sales representative might be promoted to a managerial position even though the person has no long-range vision or ability to create a new culture.
Modifying a firm’s culture so that it aligns with strategy is a difficult undertaking for any manager. There are several actions a sales manager can take to create a strong, high-performing culture that encourages internal unity and an ability to adapt to external changes. First, the sales manager must determine which parts of the firm’s current culture support the firm’s strategy and which do not. Second, the sales manager must communicate honestly and openly to all workers the cultural areas that need to be modified or whether a completely new culture is required. Lastly, the sales manager must take visible actions that communicate a transformation of the existing culture.
Explain the role sales managers play as creators of culture.
Managers who want to change firm culture can take two actions: primary (substantive) or secondary (symbolic). Symbolic actions communicate shifts in an organization’s culture, whereas substantive actions demonstrate that a sales leader is serious about changing the firm’s culture. Managers who take symbolic actions communicate the kinds of behavior they are encouraging. For example, the CEO at infoUSA, a company that maintains and sells databases of North American businesses and consumers, takes symbolic action by meeting regularly with the firm’s sales and marketing managers to ask for ideas for business growth. Likewise, a sales manager who wants to encourage a customer orientation might symbolically assume responsibility for a major account while substantively modifying the evaluation criteria for the sales team to include customer satisfaction ratings.
What types of actions can a sales manager take to increase the probability of successfully interacting with someone from a different culture?
The increasing level of global business occurring around the world requires that sales managers and their employees understand cultural differences in order to work together and prosper. The key is to understand cultural differences and take advantage of the broader perspectives they offer in terms of finding managerial solutions. For example, sales managers must understand that in the United States, workers are generally encouraged to act individually; whereas, in most Asian societies, group business decisions are more likely to be made. Also, it is considered healthy behavior in Western societies to compete for promotions and incentives. In other cultures, however, salespeople try to maintain group harmony rather than competing with one another.
The likelihood of developing interpersonal relationships increases when salespersons and managers are sensitive to different cultural practices. For example, when a salesperson enters a sales meeting with a potential customer from a different culture with a general understanding of that person’s cultural beliefs, the salesperson’s words, actions, and body language can be tailored to maximize the potential of successfully interacting with that individual. Likewise, understanding other cultures allows sales managers to behave correctly in global sales situations, which will minimize conflicts and build better relationships with both customers and their sales team.
Discuss how nonverbal communication might impact sales situations.
When humans communicate nonverbally, the unstated is often as, or more, important than what is clearly articulated. Nonverbal communications are therefore important for both the buyer and seller and can include:
· Appearance: different cultures have distinct expectations about facial hair and attire that includes formality of dress. Europeans tend to dress more formally than Americans.
· Posture: involves how a person sits or stands. In Asian cultures, a person of lesser status does not tower over or turn their back on a superior. In low-power distance societies, like Scandinavia, such actions are viewed to be less important.
· Space/Distance: the physical distance between the customer and the salesperson. Americans generally prefer a larger “zone of comfort” around their bodies than do Latin Americans, for example. Middle Eastern males and Hispanics operate in spaces of 0 to 18 inches. By contrast, most Americans and Western Europeans feel comfortable in zones of 18 inches to three feet. Asians generally prefer a space of three feet or greater.
· Sense of smell: refers to body odors and colognes/perfumes. In certain cultures, strong body odor is accepted; in other cultures, body odors are viewed as being offensive.
· Hand gestures: can mean something other than intended. The O.K. sign in the United States is considered offensive in most European nations. When conducting business or eating with customers from Arab nations, using your left hand is considered rude.
· Handshakes: Americans are more likely to shake hands firmly, whereas the British are more likely to shake hands softly. Hispanics are more likely to offer a moderate handshake and a frequently repeated grasp.
· Physical contact: in Spanish cultures, friends touch constantly. However, in most Asian nations, touching is seldom observed and almost never practiced on the head. This is particularly true in Thailand.
· Eye contact: prolonged or direct eye contact is considered aggressive in some cultures, while it is a sign of honesty in others.
· Body angles: refers to how one positions themselves relative to others. For example, in Japan, the person with the least status, such as the salesperson, bows lower than the customer. In addition, one should never turn one’s back on or tower over a superior in Asia.
Why is it important for sales managers to understand their own tendencies to be ethnocentric?
One way for a sales manager to overcome ethnocentrism is to become aware of the beliefs that can distort perceptions and cause misinterpretation of customers or sales team. In effect, learning about your own cultural beliefs allows you to recognize the incorrect analysis that we engage in when we encounter behavior influenced by another culture.
How does culture impact the management of the global sales force in regard to designing a sales organization, selecting, training, motivating, compensating, and evaluating outside the home country?
Operating in multiple locations, with managers and salespersons representing myriad cultures, makes it difficult to employ a single system to supervise salespersons. This is due to different behaviors and motivations that exist in countries and cultures. Even with diverse personnel and practices, sales managers are expected to supervise diverse sales forces from afar with expertise and aplomb.
How will the increasing diversity of the U.S. population affect how firms hire and manage their sales personnel and sell to potential clients?
CEOs know that as the demographics of a nation shift, to remain competitive they must diversify in order to meet the needs of their diverse customer bases. Business scholars suggest that there is a relationship between a diverse workforce and firm performance and that when managed correctly diversity leads to competitive advantage. Also, a diverse sales force is better able to meet and form relationships with a diverse customer base.
Offer several reasons why a sales manager should embrace diversity.
Hiring a diverse workforce can offer the firm a sales and marketing advantage. Managers today believe that a diverse sales force can better understand and serve a diverse customer base. Sellers who share similar cultural traits with buyers often form stronger relationships.
Supporting diversity can reduce a firm’s total costs. Salespeople who feel valued for what they can contribute will experience greater job satisfaction and longevity with their firms. Thus turnover and hiring costs should be lower.
Hiring a diverse workforce is believed to lead to more creative problem solving and decision making. This is because diverse groups of workers are more likely to suggest creative solutions to problems than homogeneous groups. One study reported that innovative companies reported higher levels of diversity than non-innovative firms.
Answers for Chapter Caselets:
Caselet 15.1
Long Island Manufacturing
Jim Johnson is the new sales manager for Long Island Manufacturing (LIM), a supplier of products for restaurants in the greater New York City area. Johnson spent the first month of his tenure at LIM analyzing the culture of his new firm. He’s noticed that although the company sets annual and quarterly goals for its sales force, penalties aren’t imposed when the goals are not met. Also, salespeople appear to meet their sales goals late in the performance period by negotiating lower prices with their customers. In addition, accounts often receive poor customer service. Jim Johnson realizes that if he is to change the firm’s sales culture, he must take action.
Questions
What actions would you recommend that Johnson take?
Johnson should take both symbolic and substantive actions. One example of symbolic action is to override a poor customer decision rendered by LIM. For example, Johnson could watch for a decision in which the customer service does not prioritize for a better customer and then say: no, we are going to take care of this very important customer. Another symbolic act would be to raise these issues via emails and at the next meeting of the sales force. Substantive actions include making the quarterly goals mandatory OR face penalties. For example, if the salesperson does not meet what are fair and attainable goals then they would not earn their commission. Another substantive action would be to identify, counsel, offer to help improve, and then fire a low performing salesperson. This would both communicate and offer evidence that the sales manager is serious about changing the sales culture of the firm.
How difficult will it be for Johnson as he attempts to realign the internal culture with LIM’s external strategy if the firm’s upper managers don’t support his actions?
Without the support of LIM’s upper management, it will be impossible for Johnson to change the internal culture to match the external marketplace. Often upper managers have known the sales team for many years and they “cave-in” rather than holding supervisees to clearly set goals. This tells the sales force and other firm managers that there are no consequences for failing to meet goals. If a firm wants to change their culture, there must be consequences to not meeting assignments and goals.
Caselet 15.2
China Enterprises N.A.
After more than 20 years, China Enterprises has a number of field salespeople who are of Hispanic and Asian heritage. Likewise, a large number of customer service and support employees within the China Enterprise’s Los Angeles headquarters are first- or second-generation Americans whose parents immigrated to the United States from Asia and Mexico. The national sales manager at China Enterprises is John Aquino, a first-generation Filipino American. Aquino feels he should analyze the firm’s HR policies and practices to ensure that current and future salespersons will not be discriminated against and that there is opportunity for advancement within the firm.
Questions:
What policies should Aquino examine with regard to hiring, training, evaluating, and compensating his sales force and customer service employees?
There are a number of policies that Aquino should examine: (1) do advertisements clearly state that minorities and women are strongly encouraged to apply; (2) what has been the composition of applicant pools for managerial and sales jobs; (3) do training programs consider different learning styles brought to the class by minority employees; (4) have minority new-hires left training at higher rates than other new-hires; and (5) is culture considered when evaluating sales representatives?
What managerial practices should Aquino consider?
Aquino might want to consider internships for minority/women college students and offer all new hires mentors to help them learn more quickly and reduce turnover.
What other functional areas within the firm should Aquino work with during and after the study is complete?
He should coordinate with human resources who may have data on many of these categories. Aquino should also work with legal to insure the firm is following all required laws and regulations regarding equal opportunity.
Why is such a study necessary?
Because Aquino is not sure how “diversity friendly” China Enterprises has been. The study should offer an objective view of the current situation so that Aquino can move forward with new or modified policies and practices.
Role Play:
James, Gerry, and Helen should meet to discuss if the current arrangement where expatriate sales managers are given a 40 percent differential is sufficient and how RPG, Inc. should compensate their managers who are living overseas. The role play should take the following approach. First, Helen should be able to provide James and Gerry with accurate cost of living in each of the four major cities represented in Europe. For example, renting a home and living in London can be very expensive. If an RPG manager was making $100,000 in the US and then receives $140,000 to live in London, this may be problematic. The first step is to learn what an average manager with equal responsibility receives in each of the four cities listed in the case. One approach is for you to provide Helen with salary figures she can share with James and Gerry.
Second, what is fair? That is, what expenses should RPG pay for their expatriates? Most global firms may pay housing, additional money for food, travel, security, and children’s education. Again, Helen should provide some standard practices for global firms like RPG.
Once a solution has been reached, James must communicate this to upper management and gain their approval prior to responding to the four European sales managers. Certainly, it is a benefit to participate in an overseas assignment, but sales managers living overseas also want to feel appreciated and rewarded. Said differently, everyone loves living in a nice location, but when their compensation does not allow them to enjoy that location, they begin to question their decision to work overseas for three years and wonder why their company is not taking care of their needs.
Self-Assessments:
In your copy of Sales Management, you will find an Access Code Card. By using this code at www.pearsonhighered.com/tanner, you will gain access to the SAL program. Students will find an Access Code Card in their copy of the book as well.
IIIB1 – What’s the Right Organizational Culture for me?
In the section on Team Selling, there is a self-assessment box that asks students to go on-line or use a CD to determine: “What’s the Right Organizational Culture for me?” Knowing which type of organizational culture best suits an individual will assist them in selecting a career.
IA4 – How well do I Handle Ambiguity?
In the second self-assessment, students can determine how well they handle ambiguous situations. When working globally or with customers/co-workers from different cultures there will be significant times that are ambiguous. This self-assessment will offer additional feedback for students who may not be sure how well they would perform in cross-cultural situations.
Using Videos:
To access these videos, go to www.pearsonhighered.com/tanner and consider the two videos selected for this chapter. Listed below are potential ways to introduce each video and questions that can be asked to spur discussion after you show the videos.
Video 1: The Winning Business Culture – Bill McDermott
Bill McDermott discusses his firm’s culture or “secret sauce” that has led to success. First, McDermott states that prior to 9/11 lots of firms had cultures that were about making money and becoming rich. He likens these cultures to a sugar high that do not lead to long-term success or satisfaction. Cultures have to be something we can believe in. First, a firm must have a clear vision about the way they feel and act. Second, McDermott appointed a number of people who met and came up with what values and actions should be embraced. These include: a focus on the customer, accountability, team work, professionalism, and passion. Such values have to be accepted by the firm, they cannot be imposed by a manager in the corner office. Potential questions for the class that they can answer during the video or you can ask afterwards:
1. What does McDermott mean by his “secret sauce”?
2. Why do “sugar high” cultures not sustain a salesperson?
3. How did McDermott’s firm change their culture?
4. Who must reward correct internal cultural behavior?
Video 2: Aligning Sales with Marketing – Jeff Grill
Jeff Grill is VP of Marketing, for Mimeo.com and he discusses how marketing can support the firm’s sales efforts. To have the greatest impact on sales success, marketing can provide materials and support “B” and “C” salespersons. “A” salespersons probably need less help from marketing. Marketing needs to understand and provide what the sales force needs at each step of the selling process. Since Mimeo.com has trouble attracting salespersons in a tight labor market, it is important for marketing to help them succeed and help increase sales revenue. Potential questions for the class that they can answer during the video or you can ask afterwards:
1. Why should marketing support sales?
2. Why is it important for marketing to help “B” and “C” salespersons?
3. How important is it for marketing to understand the sales process? Why?
4. How well does Grill understand the importance of aligning sales and marketing?
Full Case Recommendations:
Case 5: Wellco Distributors
This case looks at the efforts and responsibility of the sales manager to insure that the sales force is representative of the customer base. One way to introduce the case is to ask students if they have ever met someone from another culture or part of the United States who they had trouble understanding. For example, if students are primarily from NY City, they may have met people from the south who spoke more slowly and were not as blunt in their communications. Likewise, students from the south or west might offer stereotypes for people from other parts of the US. Remind the students that what they are offering are stereotypes—not all persons from any area or ethnic group always behave or act the same. A second question for students to ponder is: when you go home for a visit and go out with your friends from high school, how comfortable are you? Most will say very comfortable. You might also ask people if they prefer to buy or deal with salespersons that are more or less like themselves.
Case 12: Cannon Associates
This case considers the need to realign the internal sales culture with the external marketplace. One way to get students’ attention is to ask them: “How would you like to work as an inside salesperson at Cannon Associates”? Given the entropy and hostility that appears to be present there, few students would readily agree that this would be a positive work environment. Additional follow-up questions include:
How important is a positive work environment to you? Why?
When salespersons exhibit entropy in their actions, how does this reduce their being able to work together?
What impact does entropy have on serving customers?
Should Rick consider firing an outstanding salesperson that has trouble working with the team and following rules? Why?
If a salesperson is fired, what message will this send to the remaining salespersons?
If Rick cannot resolve this issue, should he be replaced? Why?
Other In-Class Exercises:
Exercise1:
A New Compensation System – One Size Fits All?
Fred Johnson finally managed a compromise on the representation issue at the meeting by allowing each European office to send up to three people, if they wished, but no more. This decision had not been voted upon. Everyone had agreed. Now he could start to tackle the introduction of the pay by performance, bonuses, and merit pay for next year.
Johnson started the meeting with an overview of the situation in the USA. It had been three years since the new compensation system had been introduced. In general, a link between the use of this system and increased computer sales was evident. Even though an earlier compensation system had failed miserably, the current one appeared to be successful. No problems were anticipated and Johnson proclaimed “that he was strongly convinced the pay by performance system should be introduced worldwide!”
The Northwest European representatives voiced their carefully considered, but positive remarks. Then the Italian representative, Mr. Gialli, began describing his experience with the compensation system. In his country, the pay by performance experiment did much better than he had expected during the first three months. But the second three months were disastrous. Sales were dramatically lower for the salesperson that had performed best during the initial period. After many discussions, Gialli finally discovered what was happening. “The salesperson who received the bonus for the previous period felt guilty in front of the others and tried extremely hard the next period NOT to earn a bonus.”
The Italian manager concluded that for the next year of the experiment, the Italian market should be divided into nine regions. All sales representatives within one region should be allowed to allocate the bonus earned in their new region either to individual performers or to share equally among all members. The blunt Dutch manager’s reaction was: “I have never heard of such a crazy idea.”
Questions:
How does culture impact attitudes toward a compensation system? Why is Johnson receiving different responses to his proposal?
Culture impacts both the perception of merit pay and the acceptance of competition in the workplace. In this circumstance, the US manager wants to implement a compensation system in all sales territories. Generally, this is not a good idea, since some cultures are more collectivistic and group oriented (for example, Italy). The Dutch manager sees nothing wrong with paying for merit and cannot understand why the salespersons should divide the sales commissions.
If the salespersons work in a collectivist culture, why might they want to share their commissions?
Because the sales team may feel their combined efforts lead to success and the commissions should be split based upon seniority or some other criteria they might determine.
In the US, Maslow suggests the highest level is self actualization. In Japan, however, the highest good is harmonious relationships both within and with the patterns of nature.
Could Johnson allow a pay by performance system, but allow individual rewards in individualistic cultures and groups rewards in collectivist societies?
Certainly there can be different compensation systems in different cultures. Possible alternatives would be to let each salesperson compete against their previous year’s performance rather than competing against all other salespersons in their territory or country. Likewise, some cultures prefer a set salary and a year-end bonus based upon the success of the entire sales team.
Exercise 2:
Who Broke the Watch?
Jean Safari was investigating a serious error made by a Japanese salesperson at the Japanese subsidiary of a US multinational firm. A computer had been broken and as a result, data entry was behind schedule. Jean asked the Japanese sales manager which salesperson had broken the computer. What action was being taken again him? She was amazed when the sales manager said he did not know. “The entire work group has accepted responsibility,” he told her. As to the specific salesperson responsible, they did not tell me and I did not ask. Even the director of information systems does not know and if he did, he would not tell me either.
But, if everyone is responsible, then no one is, Jean argued. They are simply protecting each other’s carelessness.
“This is not how we see it.” The sales manager was polite but firm. “I understand the salesperson who was responsible was so upset he went home. He tried to resign. Two senior sales reps went to his home and coaxed him back to work. The group knows he was responsible and is ashamed. However, he is new to the sales force and the group feels they did not offer enough training or help to allow him to succeed. That is why the entire sales force has apologized and they have offered to apologize personally to you!”
“No, no, I don’t want that,” said Jean. “I want to stop it from happening again…” She wondered what she should do. Should Jean insist on knowing the name of the culprit? Should the culprit be punished?
Questions:
What is the cultural dilemma seen between the US manager and Japanese workers?
In this situation the US sales manager wants individual responsibility and the Japanese managers see this as a group or collectivistic problem.
Should Jean insist on knowing who the perpetrator was? Why?
No. Jean needs to understand that the problem will be handled by the group which in this circumstance means that many individuals are assuming responsibility not to let the error occur again.
In this scenario has the culprit be punished? Why or why not?
The guilty party has, for want of a better term, “lost face.” This is why he tried to resign, left the office and went home. Japanese workers identify with their employer and to resign is the highest level of remorse. In effect the culprit punished himself!
What would happen if this same exact situation occurred in the US?
It is quite likely the individual who wrecked the computer or lost the software would be reprimanded. This means a written report would go in his file and if something happened again in the future, he might be terminated. Again, the purpose of this exercise is to show the class that different cultures call for different styles and approaches to managing a sales force!
Exercise 3:
Differences between US and Saudi Cultures
This is an excellent question to pose to the class at the beginning of the Chapter or just before you discuss managing/selling cross-culturally. I place this on a power-point and ask the class an overhead question: “How many times did the European salesperson potentially offend the Saudi buyer? Most of the time students will say “five times” because there are five possible actions listed. What is more important is to then ask the class: “Why?” If students are not forthcoming, start calling upon them. For example, John, how important is it to share coffee or a snack when calling on a potential customer from another culture? Later, Mary, what does sharing coffee allow the salesperson to accomplish? Sharon, what signal does NOT accepting a snack send to the potential customer? Additional questions should be listed and posed for each of the five scenarios. This adds realism when you begin talking about the impact of culture on sales success.
A European salesperson visits a Saudi business person to sell him machinery. The Saudi offers the salesperson coffee which is politely refused (he had been drinking coffee earlier); he sits down and crosses his legs exposing the sole of his shoe; he passes sales literature to the Saudi with his left hand; asks about the Saudi’s wife, and stresses the need to make a quick decision.”
How many times did the European salesperson potentially offend the Saudi buyer?
FIVE TIMES!
He turned down his host’s hospitality to share coffee;
Showed disrespect by exposing the soles of his feet;
Used an “unclean” hand;
Was “Over-familiar;”
And showed impatience with the host!
Although the Saudi may have realized the actions were not intentional, the European salesperson was in a weakened position in comparison to competitive salespersons!
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