Sales and Purchasing Management Case Study

Sales and Purchasing ManagementCase Study 2From John Zieglerâ€s perspective as sales manager, 1) write a report onannual performance 2) prepare a detailed action plan for his personalimprovement for the next periodARAPAHOE PHARMACEUTICAL COMPANYAs he reread the annual report that he had prepared for Phil Jackson, hisregional sales manager, John Ziegler, shook his head and kept repeating tohimself, “What a year!”He could not forget the surge of pride he felt when his district sales managerasked him to call Phil Jackson to let him know whether or not he wanted toaccept a promotion to district sales manager for the Dallas area. As heremembered, he couldnâ€t get to the telephone quickly enough, and it was onlyafter Phil had asked him how his wife had taken the news, that he realized thathe had forgotten to ask her. He immediately telephoned Lynn and found thatshe was thrilled both with his promotion and the move to Dallas even thoughneither one of them had been there before. Lynn was particularly pleased thather company had a sales opening in Dallas and she felt that she could obtain atransfer to that city. John once again expressed his appreciation to his salesmanager, Betsy Warner, for all of the help that she had given him so that hecould qualify for the promotion.John had joined Arapahoe Pharmaceutical as a sales rep immediately aftergraduating from San Francisco State University. While he had been interestedin science in high school, and he had taken one course in chemistry andanother course in biology at San Francisco State, he was more interested inmarketing communications. When Arapahoe Pharmaceuticals recruited at thecollege in his junior year and again in the spring of his senior year, Johndecided that he might combine the interests in science and marketingcommunications as a sales representative. He was interviewed, hired, andassigned to a territory near Omaha in Betsy Warnerâ€s district. Johnâ€swillingness, personality, and communications skills, plus Betsyâ€sencouragement and guidance, helped him in quickly achieving above averageproductivity and allowed him to win a transfer to a territory in the greatermetropolitan Denver area. The new territory offered him additional experience inworking with food and drug chain headquarters, large hospitals, and drugwholesalers. John reviewed these experiences with considerable pleasure ashe recalled the events of the past year.Summer 20131Sales and Purchasing ManagementBetsy worked regularly with him, and delegated to him some of the training ofnew sales reps, which he found both challenging and rewarding, especiallywhen the new sales trainee did well. His selling skills flourished as did hisincome and the recognition of his achievements by Betsy and the regional salesmanager. A year later he was selected to attend his companyâ€s leadershiptraining program, which was a milestone in his career.Even before his first trip to Dallas, John was asked by Tom Boyle, the generalsales manager, to spend a couple of days at the corporate headquarters inPhiladelphia with him and various department heads in marketing, legal andhuman resources. They were all very complimentary about his pastperformance and how much he deserved his promotion. However, each of themin a different way seemed to repeat the same message: “Managing people isdifferent from selling products.” How well the events of the past year were tobear that out. The thrust of Boyleâ€s message was a bit different. He wantedJohn to realize that he had full confidence in his ability, that John had earnedhis promotion, and that although John was a sales rep one day, and a districtsales manager the next, the company recognized the change wouldnâ€t takeplace overnight and it would provide him with further training. In the meantime,Boyle advised John that the Dallas district was productive, operating efficiently,and staffed with well-trained sales reps, and that he was not expecting John to“Sweep the district clean” and make radical changes. He also emphasized that(1) John should give the sales reps in Dallas time to get to know him and hethem; (2) he would be surprised and disappointed to discover that all the repsdidnâ€t operate with the same level of efficiency that he did nor use the samemethods he used when he was a rep; (3) he shouldnâ€t try to correct too manydeficiencies at one time; (4) telling someone to do something doesnâ€tnecessarily get it done; (5) everyone doesnâ€t remember hearing something thesame way; and (6) itâ€s better to have three sales reps working with you than tenworking for you.One year later, John realized that at the time he and Boyle talked, he didnâ€tunderstand or appreciate the full meaning of that advice. The legal departmentwanted him to be aware of his increased responsibilities as a manager inspeaking or acting for the company. The various departments in sales,marketing and human resources emphasized the importance of his new roleand his support in administering the companyâ€s promotional programs andgaining the compliance of his sales reps.Increasingly, he realized the duality of his role as a member of managementand of the field sales force. The sales management training programs heattended during the succeeding months reinforced these points and helpedprepare him for the types of problems he was to encounter.His introduction to the 10 sales reps in the Dallas district went quite well. Hispredecessor, Chuck Morgan, who was retiring after 30 years with Arapahoe,fully reviewed all of the sales statistics for the district and the human resourcerecords of the sales reps. He also gave him the benefit of his thoughts for thefuture and what Johnâ€s immediate concerns should be. John had inherited adistrict that was operating on target both for sales and expenses, and appearedSummer 20132Sales and Purchasing Managementto have no major personnel problems other than one territory that had beenopen for four weeks. Chuck even had two resumes on promising candidateswho needed processing.John telephoned both applicants and scheduled interviews for the followingweek, along with trips of two days each with two of his sales reps. Theinterviews seemed to go well, but they took almost a full day. On his first day athis office the following week, John called the references and previousemployers of both applicants, scheduled a second interview several days laterwith Larry Palmer, the most promising applicant, and, in accordance with thecompanyâ€s interviewing procedure, set up an information session with Larry andhis wife for the following evening. Since this was Johnâ€s first session of thistype, he was pleased that it went well. Jean Palmer, Larryâ€s wife, had numerousquestions about transferring, the amount of travel, and how much extra timethat her husband would have to spend responding to e-mail and othercomputer-type reports. John was glad that he was able to address herconcerns. The telephone conversations with the other applicantâ€s referencesand previous employers had been an interesting experience and tended toconfirm what the applicant had said, except in two instances. A previousemployer and one reference were guardedly enthusiastic about the applicant.When John pressed the issue, the reference refused to say more, while theprevious employer provided specifics which confirmed an earlier impressionJohn had noted at the initial interview. Comments about Larry Palmer allemphasized the great personality he had and what a terrific job they thought hewould do in sales. Following the second interview with Larry Palmer and thespouse information session, John completed the companyâ€s applicant appraisalreports on both applicants and decided that Larry was the better of the two. Hetelephoned his regional sales manager, Phil Jackson, to set up a final interviewfor Larry. Then he faxed Phil his applicant appraisal reports and wrote the otherapplicant a polite turndown letter.The day following Larryâ€s interview, Phil Jackson called to say that while he hadsome misgivings, he had hired Larry to begin training in a class at the regionaloffice the first of the month. Johnâ€s reaction was a sigh of relief because of all ofthe time he had put into the screening and the hope that he wouldnâ€t have to dothat too often. The reports that he completed on his first field trips with his repstook longer to prepare than he anticipated. Coupled with the correspondenceand appraisal reports on the applicants, John realized that communicationswere going to be a bigger part of the job than he had realized. He would have tolearn how to use the computerized information system in a more effective andefficient manner if he were to have the necessary time for his otherresponsibilities.Johnâ€s relationship with his sales reps seemed to go well during the first fewmonths on the job, with the exception of Dick McClure, an above averageproducer, aged 50, with 12 years experience, and the senior man in the district.Dick had been described by Chuck Morgan as a friendly, outgoing individualwith a good sense of humor and a highly individualistic style of selling. As Johnworked with Dick, he was able to confirm in Dickâ€s interaction with hiscustomers, the general description Chuck had given him. However, Dick wasSummer 20133Sales and Purchasing Managementcurt with John, relatively subdued, and at other times almost hostile. For thenext several working trips, John tried to ignore Dickâ€s conduct and concentratedon the calls that they were making and the objectives that they were trying toachieve. At a recent sales meeting, Dick seemed to take delight in beingargumentative and disruptive until John jokingly asked him if he would like totake over the sales meeting. After that, Dick settled down but made almost nocontribution to the discussions for the rest of the meeting.The situation came to a head immediately following a physician call, duringwhich Dick introduced John without indicating who he was or his purpose forbeing there. The physicianâ€s reaction was: “Oh a new rep, eh?” and to Dick,“Are you being promoted?” This forced Dick, somewhat embarrassed, toindicate that John was his new district sales manager. As they left the office, itwas clear that Dick was furious, as he muttered in a sarcastic manner, “Are youbeing promoted?” John decided that it was time to take action, whereupon hesaid emphatically, “Dick, I donâ€t know what is eating you, but I think that itâ€s timethat we get it out in the open. Youâ€ve been complaining from the day that Iarrived. Youâ€re sarcastic, uncooperative, and just as cool as ice. If you and I aregoing to continue to work together, things had better change. I donâ€t know whatI have done that has upset you, but whatever it is or whatever Iâ€ve said, itcertainly wasnâ€t international and Iâ€m sorry. Youâ€re too good a person to goaround perpetually angry. What the heck is bothering you?”Dickâ€s reaction was an angry, somewhat subdued and embarrassed, “I justguess itâ€s not really your fault or anything that you did. Iâ€ve been here 12 yearsand Iâ€m the best rep in this district. Chuck even told me so. And darn – you getpromoted and Iâ€m left hung out to dry. Man, thatâ€s gratitude for you!”Now that the problem was out in the open, John realized how long Dick hadbeen carrying his anger locked up inside himself, and felt sorry for him. Withthat, he said, “Dick, Iâ€ve sure been blind. Letâ€s knock off and sit downsomewhere to talk this thing out.” Three hours later they shook hands andparted on a much better understanding. Their relationship improved steadily,and now as John reflected on the districtâ€s productivity for the past year, herealized that Dickâ€s support had been of paramount importance in terms of thedistrictâ€s overall success.Thinking about the successful year reminded him of Peggy Doyle, the salestrainee who was doing such a terrific job. She was the one who had taken LarryPalmerâ€s place. When he thought of Larry Palmer, he winced thinking about themistake that he had made. Larry was the first sales rep that he had recruited.He had completed the basic sales training class, but just barely. The report fromthe sales training manager was anything but encouraging. Larry had difficultyacquiring the necessary product knowledge and his scientific communicationskills were marginal at best. The qualities that saved him from being droppedfrom the sales training class were his desire, his willingness to work, and thefact that he was such a great guy—everybody loved him! NotwithstandingLarryâ€s shortcomings, John was convinced he could turn Larry around. Heworked with him every opportunity he had, quizzed him, coached him, andSummer 20134Sales and Purchasing Managementdrilled him in an effort to improve his knowledge and skills so that Larry could beable to capitalize on his sincerity and personality.As the months wore on, John became increasingly aware that while Larryâ€scustomers liked him, he couldnâ€t sell and his sales showed it. It was a toughdecision John had to make to let Larry go, and an even tougher decision toimplement, but John realized it really was in everyoneâ€s best interests. As helooked back on all the time and effort he had put into Larryâ€s ultimate failure,John realized that it was at the expense of the time and effort he should havespent with his more productive sales reps. He also realized that in spite of theoverwhelming evidence, he had carried Larry much longer than he probablyshould have, and was thankful that Phil Jackson did not remind him of it.Sometimes, however, events have a bright side. As much as John regretted theamount of time that it took to recruit Larryâ€s replacement, he felt that he hadlucked out with Peggy Doyle. She seemed to do everything right. In the fourmonths since sheâ€d been in the territory, sales had taken a noticeable increaseand her enthusiasm was infecting the other sales reps in the district. Johnhoped her progress and productivity would continue on in this manner for a longtime to come. Some performance data for Peggy and the other reps are shownin Exhibits 1 and 2.Peggyâ€s performance, however, did not eliminate the logjam that recruiting herhad created in Johnâ€s other activities. Her interviews, reference checking, earlysales orientation and training, plus the extra time he had spent over the last fewmonths helping Larry try to succeed, extended the intervals since he lastworked in the field with his above average sales reps, to the extent that severalwere beginning to make humorously sarcastic comments about being“orphans.” John tried to explain that they were practically self-sufficient, whileothers needed his help more urgently. While they were willing to listen, Johncould see that they werenâ€t buying into his excuse.To further compound the problem, he received an e-mail that his semiannualappraisal interviews were to begin within 30 days. This would be the secondtime he would be holding these performance reviews, but it would be the firsttime alone since Phil Jackson had helped him. As John began to review the tripreports and correspondence in each sales repâ€s file, along with salesperformance data generated from the companyâ€s computerized database(Exhibits 1 and 2), he realized the files of the above average producers wererelatively thin. If it hadnâ€t been for performance data, John would have been at aserious loss to justify his appraisal of their productivity.Preparing for and conducting the performance reviews took a lot of time andthis was when he really earned his salary. When the reps and John haddifferent evaluations, the differences were resolved and then it became a matterof jointly agreeing on a plan of action to close the gap between actual anddesired performance. As difficult as it was to achieve the agreement at times,and harder still to implement the agreed-upon plan, John felt that it was at thispoint that he was making a significant contribution to the success of theSummer 20135Sales and Purchasing Managementcompany and the growth and development of the individual sales reps in thedistrict.The second appraisal and counseling session of the year had its peaks andvalleys. It had been a pleasure to provide several with the recognition theirperformances merited, and to help them to further define the goals they wouldachieve for the forthcoming year. The case of Jared Murphy was anothermatter. Jared had been in the training class at the time John was hired. He haddone reasonably well, but hadnâ€t really lived up to his potential. Lately, Jaredseemed to have lost interest. When John challenged Jared†s own evaluation ofhis performance Jared sheepishly commented that he “wondered whether youâ€dlet it pass.” When John pressed him for an explanation of his performance inview of the potential in his territory, Jared quickly replied: “I didnâ€t know youcared that much.”John also stated he felt that Jared had sufficient experience and intelligence toexert the necessary self-discipline to do what was required without a lot ofpersonal attention from him. At this point, John said: “Jared, I think that itâ€s timeto decide whether or not you really have a future with Arapahoe. You definitelyhave the capabilities to be an above average performer. If you really want to doa better job, Iâ€ll make every effort to help you to do a better job, but you will haveto help me and really want to work at it. So what I want you to do is to go home,think about what I said, talk it over with your wife, and we will get together nextWednesday and make a plan for your future.”The problem John faced with Marty Nakai was almost the opposite. Marty was ayoung, single sales rep who had three years†experience in a territory thatrequired quite a bit of travel in the Texas panhandle. He had about every goodquality anyone could want in a salesperson, except maturity and self-control. Hewas smart, eager, highly motivated, and extremely ambitious. His favoritequestion of John was: “What else do I have to do to get promoted?” and heposed that question on every field trip and frequently at sales meetings. Inaddition, John could count on Marty calling him at home on weekends. In a way,John wished he had more sales reps who were as productive and as eagerlycooperative, but he also wished that Marty would develop more patience andself-discipline. While John certainly didnâ€t want to do anything to dampenMartyâ€s enthusiasm, he was running out of ways to help Marty grow up.As he thought about the challenges he had with his reps and the logjam he hadcreated as a result of his recruiting activities, he realized that he had toformalize a set of objectives and specific plans for the coming year to discusswith Phil Jackson during his own coming appraisal session. Although the yearhad been a successful one, their performance on a couple of major productscould have been at a higher level and he would have to figure out some kind ofaction plan to correct that situation. And then there were the territory revisionsto be done to take advantage of the growth potential in the Ft. Worth area. Notthe least important or urgent matter he needed to address was to evaluate hisown performance during the past year and to set some personal objectives.Summer 20136Sales and Purchasing ManagementIn addition, John had to prepare some written comments on the performance ofeach of his reps for the past year to put in their personal files. He thought heshould calculate some ratios from the data in Exhibits 1 and 2 such as salesgrowth, sales to quota, sales per call, sales per physician, expenses per call,and selling expenses as a percent of sales to include in his report on each rep.Also he had to decide what to do about Jared and Marty. Overall, John saw hisproblems were really people problems and people opportunities, and theirinteraction and interdependence were what made his job both challenging andfun.Exhibit 1 Performance Data for Sales reps in the Dallas/Ft Worth DistrictSales RepLarry Palmer (a)Dick McClurePeggy Doyle (b)Tom JonesBill MorrisonSam HannaJared MurphyMarty NakaiTOTALSLast Yearâ€sSales180,000450,000445,000465,000435,000365,000475,0002,815,000This Yearâ€sSales181,000583,000120,000555,000560,000535,000370,000625,0003,529,000Sales QuotaCurrent Year275,000535,000150,000550,000550,000525,000420,000575,0003,580,000(a) Sales and quota figures are for eight months(b) Peggy Doyle has been in her territory for only four months. This yearâ€ssales and quota are for four monthsExhibit 2 Input Factors Affecting Territory CoverageSales RepNº Sales CallsLarry Palmer (a)Dick McClurePeggy Doyle (b)Tom JonesBill MorrisonSam HannaJared MurphyMarty NakaiTOTALS8001,5004001,3001,3501,3501,0501,5509,300AnnualExpenses6,3009,3002,5008,0008,3008,5007,8009,80060,500Nº physicians inTerritory1,6002,1001,6501,8501,8001,9002,0002,20015,100(a) Nº of calls and sales are for an eight-month period(b) Nº of sales and calls are for a four month periodSummer 20137