First published in August 2015
Foreign companies that employ personnel in India need to consider cultural differences, not only when choosing and hiring staff in India but also with regard to the organizational structure and team composition of the workforce – especially when assembling a sales team in India. Compared to Europe or North America, for example, India is highly influenced by a hierarchical social structure, which also becomes very obvious when looking at organizational charts of Indian companies and conglomerates: Strong hierarchy where every employee has a clear function and assigned authority within the team – compared to low-hierarchical structures with multiple tasks.
Sales in India – which team structure works best?
National Sales Managers (NSM) generally take care of coordinating and developing all nation-wide sales activities in India – in this context, they are in direct contact with their Regional Sales Managers (RSM). Regional Sales Managers are responsible for their respective geographical sales region. In most cases, companies – depending on the industry – divide the Indian market territory into the sales regions North (Delhi, Haryana, Punjab, Uttar Pradesh), West (Maharashtra with Mumbai, Gujarat, Goa), South (primarily Karnataka with Bangalore, Tamil Nadu with Chennai), and – especially the heavy industry sector – East (West Bengal, Kolkata, Odisha). One sales region is, then, typically handled by several Area Sales Managers (ASM). These ASMs are coordinated by the respective Regional Sales Managers and are often assisted by Sales Executives (SE). It is usually difficult and sometimes not possible or necessary to fill all these positions especially in the beginning stages of your India operations.
In this context, a NSM normally keeps an eye on key customers and adopts an altogether strategic and oftentimes purely managerial role. While NSMs mostly supervise the price structure, revenue generation, and inventory status, they delegate negotiations, customer calls, and the coordination of distributors for dispatch to their Regional Sales Managers. However, one should make sure that also the sales management always keep track of customer relations and know their customer base and market needs – so as to successfully align all sales activities with the characteristics of the Indian market, especially when assembling a new team.
Assembling a Sales Team in India – for India
If you decide to start with a comparatively small sales team in India – or perhaps just one salesperson in the initial orientation and set-up phase – you should carefully consider hierarchical structures and definition of positions, and align the employee’s experience and motivation with the intended role. When choosing the first sales person in India, it does not necessarily need to be the National Sales Manager: Mostly, sales employees– having the right qualifications, experience, and technical skills, who have worked for large-scale enterprises before can be selected for vacant NSM positions. This means that duties are often very specialized and focused within the hierarchical structure, rather than offering experiences in overall business practices, which is an important asset when starting a complete new field as single representative in a comparably small, unorganized corporate set up. However, another import aspect is the willingness to set up and establish a company on the Indian market and tackle operational and comparably smaller issues personally instead of delegating everything from a safe distance.
The stern hierarchical order – which is still quite common in India – also influences the salary structure: An Area Sales Manager usually earns twice as much as a Sales Executive, a Regional Sales Manager twice as much as an ASM – and a National Sales Manager gets twice as much as a RSM, usually more than €50,000 a year. However, in most cases, only larger-scale companies with certain sales revenue and which have already established themselves in India, are able to afford such a comprehensive and complete personnel structure for sales in India.
It is not unusual that foreign companies hire an Indian National Sales Manager, pay that person accordingly, but fail to provide the basic, supportive personnel structure which is necessary to “get things done” in India. The positions of Regional and/or Area Sales Manager remain vacant, mainly due to budget restrictions and financial reasons. Consequently, the NSM, in addition to his primary responsibilities and often rather tedious selling processes in India, must organize the complete sales and sales coordination activities as well as manage and follow up with Sales Executives (hence, actual sales activities), which should actually be done by the middle management. If there is no middle management, however, the tasks of the Regional and Area Sales Managers – for instance, developing regional distribution or identifying new customers and distributors – have to be taken over by the NSM. During market entry in India, it is therefore, usually, not always a good idea to appoint a National Sales Manager as single sales representative for a market with the size of the Indian subcontinent.
Alternatives to National Sales Manager
An alternative to a handsomely paid National Sales Manager is to appoint a so-called Business Development Manager. Whereas this position comprises in fact similar tasks and responsibilities to that of a NSM, it is does not necessarily adhere to the NSM-like status in the hierarchical system and related compensation. Business Development Manager Positions can be ideally filled with technically- and industrially-sound Sales Managers. These, then, can grow – especially in terms of management experience – into the position of a National Sales Manager, having proven themselves in setting up distribution and marketing with the start-up team. Thus, while the payroll remains more or less the same, more vacancies can be filled, and this ultimately makes for a more efficient sales team.
Since, employment titles in India are usually tied to a fixed salary, employees titled ‘National Sales Manager’ will expect to be paid accordingly – regardless of scope of duty and work performance. Employees in India generally know the market value of a certain position depending on industry or size of an organization, and are also well informed about salaries of former employees. Salaries and bonus plans are in fact a common part of typical conversations in Indian companies, as well as among friends and family – absolute secrecy regarding salaries is, therefore, very difficult to maintain in any case.
Reporting an essential factor for generating results
Irrespective of the structure you choose for your sales team to “conquer” the Indian market, reporting should be an integral part of your organizational structure – from the very beginning. Setting goals, managing expectations, reviewing performances, analyzing results, and monitoring the sales team – either from a distance or on-site with the Sales Executives and/or the clients – should be done on a regular but simple basis.
Maier + Vidorno helps you find the right solution for your personnel in India and supports you recruiting Indian employees – feel free to contact us!