CHAPTER 1

PROBLEM STATEMENT AND STUDY PURPOSE

1.1 INTRODUCTION

Todays organisation competes in a fast-moving global marketplace. With technological developments, global communications and demanding customers driving increased competition in most sectors, organisations cannot afford to stand still for long (Holbeche, 2004:32). They exist only when their products and services are sold, and salespeople are usually one of the most important elements of making this happen. Organisations fiscal health depends on their ability to drive revenue, but without mastering sales management, revenue can quickly decline. Salespeople need to concentrate on sales, not on responsibilities that pull them in different directions (Bailor, 2004:53). According to Clarke (1998:29), for any company to succeed, the various departments must co-ordinate their efforts and work together. The sales team relies on other departments for support; without sales every other department is worthless.

The method of selling has also changed and the days of salespeople carrying briefcases overstuffed with brochures and knocking on every door they can find to drum up interest in their organisations products are waning. Todays professional salespeople co-ordinate the resources of their companies to help solve customers problems (Weitz et al, 2004:5).

For organisations to succeed in this new environment the right organisational climate is vital to create high performance. This is about making the most of employee talents and accountabilities, and managing performance in ways which unleash, rather than constrain, employee potential (Holbeche, 2004:32).

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The Long Term Insurance Industry in South Africa had to deal with the changing environment and the introduction of the Financial Advisor Intermediary Service Act of 2002 (FAIS).

The traditional principles of successful sales are being challenged in a changing

South African insurance industry. Sales managers must rethink their philosophies as the Financial Advisory Intermediary Act (37/2002) regulates the rendering of certain financial advisory and intermediary services to clients and provides for matters incidental thereto. Sales managers can no longer simply motivate financial advisors to achieve targets but should also ensure that all new business is compliant and falls within the new legislation.

According to Natenberg (2004:1), sales managers must have a purpose to cope with the added challenges and demands because success comes from purpose. Until a sales manager or financial advisor recognises what needs to be accomplished, there will be a lack of motivation necessary to accomplish anything. Financial advisors burn out easily because they cannot visualise the pot of gold at the end of the rainbow. Everyone wants a driven, high-performance sales team. However, not all sales leaders know how to achieve that. The problem could be motivation.

Many sales managers see money as the answer to their motivational problem but money is not everything. For all their commitment to keep salespeople inspired, sales managers would do well to stop and consider the simple things their financial advisors desire. Only then might sales managers be able to craft programmes or work situations in which sales people can thrive (Gilbert, 2003:30).

Too often people let life pass them by. They try hard to achieve something, but when they do, they ask, Is this all there is to it? That is because they never

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take a moment to enjoy how monumental their achievements are. When you accomplish what you set out to do, be proud (Natenberg, 2004:1).

1.2 PROBLEM STATEMENT

Sales managers in Liberty Life Agency division use various methods of motivation in their respective business units in an effort to increase the performance of financial advisors. These methods include tangible or extrinsic rewards ranging from trophies, gift vouchers, cash, overseas holidays to conferences. Intangible or intrinsic factors include motivational speakers, directive management and more supportive management. However, some of these methods may be perceived as motivating management rather than financial advisors. Management does not always differentiate between the motivational needs of financial advisors with different tenure. This motivation need must differ. But does the current motivational strategy ultimately drive financial advisors to achieve more?

1.3 PURPOSE OF THE STUDY

The study will determine what sales managers perceive as motivational, what financial advisors perceive as motivational and what actually caused a change in behaviour that leads to an increase in performance. This will be achieved by focusing on Sales Management, Motivation and Reward.

The objectives of the study are:

To determine the difference in leadership style perception between financial advisors and sales managers. To determine the factors which most financial advisors perceive as motivational and difference in perception from sales managers.

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To determine the effectiveness of the sales competition Chairmans

Challenge according to financial advisors and sales managers.

To determine the key motivators that drive a financial advisor to achieve success.

1.4 VALUE OF THIS STUDY TO INDUSTRY

Research into the motivational factors that influence a financial advisors performance will be beneficial to all insurance companies with a dedicated sales force, brokerage firms as well as any other organisation that has a sales team.The study will ultimately offer more insight into what motivates a financial advisor to increase his or her production.

1.5 RESEARCH METHODOLOGY

The methodology included a study of South African and international literature as well as researching Liberty Life Agency Division.

1.5.1 RESEARCH DESIGN

The exploratory descriptive research method has been selected for this study in order to clarify certain perceptions and increase the familiarity with the research problem. The exploratory research will also generate data flexible enough to measure attitudes to stated matters.

1.5.2 LITERATURE STUDY

Literature will relate to motivation in the financial services industry in South African as well as in American, European, Australian and Canadian countries.Referral to overseas articles and publications is beneficial to the South African

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context, as these countries have studied the field of motivation in the financial services industry as well as sales environment in depth.

1.5.3 PRIMARY RESEARCH

Questionnaires will be used to collect data from financial advisors and sales managers to determine what they perceive or experience as motivating. Fifteen sales managers and one hundred agents will receive questionnaires with the same questions. All agents and managers will be selected randomly. The management questionnaires will focus on what they perceive as motivating and the financial advisors questionnaires will focus on what they experience as motivational.

The questionnaires comprise of six sections:

Section one: Demographic information

Determining financial advisors, age, location and production status.

Section Two: Leadership Style

Determining the leadership style which the financial advisor perceives from his manager.

Section Three: Ranking extrinsic rewards from most motivational to least motivational.

Section Four: Ranking phrase from most motivational to least motivational.

Section Five: When will a financial advisor find a competition attractive.

Section Six: Open-ended questions

1 Why is the Chairmans Challenge so successful?

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2 - The one thing that made the difference for a financial advisor.

Questionnaires will be e-mailed or delivered by hand to selected managers and financial advisors with clear instructions of what is expected.

1.6 CHAPTER OUTLINE

Chapter 1: Introduction and purpose of study

Chapter 2: Sales management

2.1 What is sales management

The South African Life Insurance Industry

The work functions of a sales manager

The role of a sales manager in the changing insurance industry 2.2 The part motivation plays in sales management

Chapter 3: Motivation

3.1 What is motivation?

3.2 The role of leadership in motivation

3.3 Methods of motivation

3.4 The role rewards and sales competitions play in motivation

Chapter 4: Research Methodology

Chapter 5: Research

Chapter 6: Summary

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CHAPTER 2

THE LIFE INSURANCE INDUSTRY

Life insurance for individuals is a product designed to assure the economic security of the family unit in the industrialised society. As the labour force shifted from agriculture to manufacturing, widows and orphans could no longer rely on the land to support them in the event of the husbands death. Life insurance was developed as a means whereby a man could provide for his family in the event of his untimely death resulting in the loss of the primary income source (Evans &Blase, 1986:84).

In the life insurance industry, the financial advisor legally represents the insurer and has the authority to act on the insurers behalf. The financial advisors job is to make customers aware of their needs and to introduce a product as a solution to those needs. Thus customers satisfaction depends on a good solution to the real need (Rajatanavin & Speece, 2004:244).

2.1 THE IMPORTANT ROLE- PLAYERS

2.1.1 THE CLIENT (Person who purchases a product)

Client means a specific person or group of persons to whom a financial service is rendered intentionally, but excluding the general public.

2.1.2 FINANCIAL SERVICE PROVIDER (Organisations such as Liberty Life)

Financial service providers are defined as persons who furnish advice and/or render intermediary services as a regular part of their business. Intermediary

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service means any act, other than the furnishing of advice, performed by a person for or on behalf of a client or product supplier.

2.1.3 REPRESENTATIVES (Including financial advisors)

Representative means any person who renders a financial service to a client for or on behalf of a financial service provider, in terms of the conditions of employment or any other mandatory agreement, but excludes a person rendering clerical, technical, administrative, legal, accounting or other service in a subsidiary or subordinate capacity (FAIS Act 37 of 2002).

2.1.3.1 The role of financial advisors

A financial advisor uses the financial planning process to help clients meet their life goals. The financial advisor takes a "big picture" view of a clients financial situation and makes financial planning recommendations that are right for the specific client. The financial advisor can look at the needs of the client including budgeting and saving, taxes, investments, insurance and retirement planning.

The financial planning process:

Establishing and defining a professional relationship

Gathering data, including goals

Analysing and evaluating your financial status

Developing and presenting financial planning recommendations and/or alternatives Implementing the financial planning recommendations

Monitoring the financial planning recommendations

(Financial Planning Institute, 2005)

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2.2 THE REGULATORS OF THE SOUTH AFRICAN LIFE INSURANCE INDUSTRY

2.2.1 LIFE OFFICE ASSOCIATION (LOA)

The Life Office Association of South Africa (association incorporated under

Section 21) - referred to as "the LOA" - is a company limited by guarantee and is incorporated under Section 21 of the Companies Act, 1973.

The LOA is an association of registered long-term insurance companies conducting business in South Africa. The LOA is a forum where member offices can interact to promote their interests and the interests of current and future stakeholders. The LOA recognises that these interests will be served best by a soundly managed economy with the benefits of economic growth being shared by an increasing proportion of our population.

The association, which was established in 1935, seeks to promote the interests of the life insurance industry, and thus also of the insured public, in three ways:

1 The association seeks to promote a better understanding of life insurance among the general population of the country; 2 The association represents the industry and its policy-holders in negotiations with the authorities; 3 It is in the name of the LOA that South African life insurers regulate their industry.

Apart from certain administrative and official functions, the chairman is regarded as the life insurance industry's principal spokesman (Life Office Association, 2005).

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2.2.2 FINANCIAL SERVICES BOARD (FSB)

The government has introduced legislation to regulate the financial services industry under which the long term insurance industry fall. The FinancialServices Board is a unique independent institution established by statute to oversee the South African Non-Banking Financial Services Industry in the public interest. Our mission is to promote sound and efficient financial institutions and services together with mechanisms for investor protection in the markets we supervise (Financial Services Board, 2004).

Policy-holder Protection Rules (effective from 1 July 2001)

The Rules were promulgated as a result of increasing consumerism and the need for market conduct regulation. The purposes of the Rules are:

To enable a policy-holder to make informed decisions with respect to long-term insurance products.

To ensure that Intermediaries and Insurers conduct business honestly and fairly and with due care and diligence.

PPR basically serves to impose obligations on the insurers, insurance intermediaries and the Registrar of long-term insurance (Financial ServicesBoard, 2004).

Financial Advisory and Intermediary Services Bill (FAIS)

FAIS is an all-encompassing legislation that will take Policy Protection Rules a step further and impose obligations on all financial service providers and their representatives. The sales management function within the life insurance industry in South Africa has undergone various changes since the introduction of Financial Advisor Intermediary Service Act of 2002 (FAIS).

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The traditional principles of successful sales are being challenged in a changing South African Insurance Industry. Sales Managers must re-think their philosophies as the Financial Advisory Intermediary Act (37/2002) is to regulate the rendering of certain financial advisory and intermediary services to clients and to provide for matters incidental thereto.

South Africa is behind the UK in implementing legislation to regulate the life insurance industry. The new legislation had a massive impact on the UK life insurance industry with Standard Life cutting 360 jobs from its direct sales force and is closing 10 branches as a massive restructuring programme. This reduces the jobs in their direct sales division from 630 across the UK to 270 (Henshall,2004:12).

2.3 THE CURRENT SATE OF THE SOUTH AFRICAN LIFE INSURANCE INDUSTRY

The half-year statistics for the long-term insurance industry to June 2005 show a solid performance by the industry which now manages assets in excess of R913 billion, representing an increase of 19% (from R765 billion) on June 2004.

Total new business premium inflow was up 14% on the comparable six-month period in 2004, to R 21 billion,

However, new business premiums collected on recurring Retirement Annuity

(RA) products over the six months to June 2005 have declined by 5% to R 660 million when measured against the previous six months to December 2004, and by 21% against the comparable six months to June 2004.

Lapses remain an issue that the industry seeks to address. FAIS compliance should also contribute to improving the lapse rate in the second half of the year. In addition, if the current upfront commission regime is changed to a regime of

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as-and-when commission as suggested by the LOA, further contributes to keeping policies on the books.

Other salient statistics (against the comparable six-month period):

Total Group Schemes and Pension Fund income rose 15% from R 23,1 billion to R 26,7 billion, with both lump sum and other group premium income showing steady increases

Investment Income increased 7% to R 20,5 billion

Total Income (Individual Income, Group Schemes and Pension Fund, and Investment Income) rose 12% to R 88 billion

Benefits paid out rose 19% to R 65,9 billion.

Expenses increased 11% to R 10,9 billion

Actual tax paid increased by 32% to R 2,7 billion

(Life Office Association, 2005).

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CHAPTER 3

SALES MANAGEMENT

The American Marketing Association defines sales management as the planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, rooting, supervising, paying and motivating as these tasks apply to the sales force (Van der Walt, et al., 1997:400). There is a substantial and rapidly expanding body of evidence, some of it quite methodologically sophisticated, that speaks to the strong connection between how organisations manage people and economic results (Kreitner & Kinicki, 2001:4). Organisations fiscal health depends on their ability to drive revenue, but without mastering sales management revenue can decline rapidly (Bailer, 2004:53).

Competitive and financial pressures will increase and, according to Parmar (2003:9), sales trends for the future include a sales environment that will prove tougher, with less business and smaller discretionary budget to achieve it but a larger number of people fighting for market share. Inexorably higher budget goals and even less job security as demand on performance increases.

The financial services industry is no exception and in the past decade, competitive pressures in financial services have increased significantly. The number and complexity of products and services offered to consumers and business have also risen dramatically (Foley, 1999:6). The global financial services industry also had to deal with increased legislation regulating the industry. The increased legislation and competitive pressures must be managed by sales managers in order for any organisation to stay profitable.

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3.1 SALES MANAGEMENT TASKS

The sales managers job is to build a successful sales team. This is not an easy task and requires continuous effort (Clarke, 1998:168). Brooks (2004:10) agrees that managing and leading a successful sales organisation is not easy. But if certain key principles are borne in mind organisations can grow strategically, flourishing in the long term and being great place for every one. Top performing financial advisors consider their sales manager a resource. Sales managers represent a wealth of experience and objective ideas (David, 2000:18). Some of the key job tasks of a sales manager are as follows.

The sales managers task cycle

Figure 3.1 Sales managers job

Planning

EvaluatingOrganising

CommunicatingRecruitment

MotivatingTraining

Leading

Source: Clarke 1998

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3.1.1 PLANNING

Strategic plans form part of the organisations overall plan for the future and short range plans governs organisations for one year or less. The ongoing planning process is part of the sales managers function: it guides production on a month-to-month and year-to-year basis (Longenecker et al, 1997:377). Sales managers planning will include forecasting and setting overall sales and profit targets for the branches or financial advisors (Clark, 1998:9). According to Van der Walt et al. (1997:400), planning also includes identifying strengths, weaknesses, opportunities and threats to the sales team.

3.1.2 ORGANISING

Without some kind of organisational structure operations eventually become chaotic and morale suffers. Structures must determine the sales managers span of control, unity of command and extent of authority he can be delegating(Longenecker et al, 1997:383). In order for an organisation to achieve its objectives, a sales manager must organise. The organisational process consists of the following: first, defining the companys objectives; second, determining the specific activities that must be performed in order to accomplish the objectives; third, accumulating closely related activities and assigning individuals to fill positions; and last, co-ordinating and evaluating (Clark 1998:34).

3.1.3 SELECTION OF SALES STAFF

There is only one way for a financial services organisation to succeed, let alone grow, through these tough times: by attracting and retaining the most qualified and capable financial advisor. Financial advisors are the future of the insurance industry, creating lifetime value by generating and maintaining hundreds, and even thousands, of customer relationships (Greenberg, 2003:11). The quickest way to destroy an organisation is to staff it with inept, incompetent people. Yet

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the appointment of the wrong person for the job is made every day (Clarke, 1998:60). But be warned hire and fire with care, look for people who want to sell and work hard. Sales management will encourage good sales people to stay and will provide sales managers with the information needed to terminate financial advisors unwilling or unable to do the job (Test, 2004:6).

3.1.4 TRAINING OF SALES STAFF

Is there any general agreement on what constitutes effective sales training? According to: Ashcraft (2004:16), a good working definition might be: "Those elements that enable sales people to master the skills, concepts, behaviors, and attitudes that influence customers to make positive purchasing decisions." Training must be sophisticated, continuous, and imbued with real-world applications. Sales leaders shouldn't ask how many calls the sales person is making; they should address the results of each call (Ashcraft & Stacher, 2004:16). Even natural-born sellers need reinforcement and coaching (Bird, 2003:6).

Sales managers weeding through financial advisors administrative workload isnt enough. Focus on long-term, ongoing training programmes. Very often what happens is you do a great job recruiting then you forget to provide sales people with the rest of what they need to be successful. Sales managers need to focus on process, as well consider managing leads and opportunities more effectively through metrics (Bailor, 2004:53). Before sales managers dismiss unsuccessful financial advisors, it must be determined if these financial advisors were ever properly trained. Sales is a profession that needs constant learning and improvement (Test, 2004:7).

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3.1.5 LEADERSHIP

Leadership involves clearly informing sales people what their salient job activities are, how to perform those activities, and how successful performance of those activities can lead to receipt of organisation rewards. Sales researchers interest in this perspective is understandable given that the sales force compensation, supervision, motivation, and control systems are typically designed around such approach. Research showed some empirical support for using sales management practices that are designed around contingent reward motivational processes (Dubinsky et al.,1995:18 ).

3.1.6 MOTIVATING THE SALES FORCE

Motivation is an energy released in the form of a drive directed towards a goal (Clark1998:118). Motivating financial advisors is one of the core responsibilities of sales managers (Murphy, 2004:1265). While it may seem like enough to keep yourself motivated all the time, its just as and if not even more important to keep your sales staff constantly reaching for new heights (Robertson, 2004:2).

3.1.7 COMMUNICATION WITH SALES TEAM

Communication between sales managers and financial advisors is extremely important. Sales people want guidelines from their supervisors, and the management staff wants input from their team (Keefe, 2003:13). Meetings are a necessary part of any sales organisation. Top financial advisors should attend meetings with the attitude; the more you learn the more you earn. For this reason goals must be set as to what sales managers want out of a meeting. Sales managers must be innovative and use meetings to initiate steps to become better, more informed or skillful in the topics of discussion (Sirianni, 2004:56).

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3.1.8 EVALUATING AND CONTROLLING

Organisations seldom function perfectly when executing plans. Sales managers must monitor operations to discover deviations from plans (Longenecker et al, 1997:384). Sales managers will be checking that results are in line with pre-determined budgets and targets (Clark, 1998:9). This includes the establishment of performance standards and recording of actual performance (Van der Walt, et al., 1997:401). Corrective action is required when performance deviates significantly from the standard in an unfavourable direction. To prevent the deviation from recurring sales managers must analyze the cause of the deviation (Longenecker et al, 1997:384).Evaluating performance (appraisals), providing feedback, and taking corrective action (Clark, 1998:9).

3.2 OTHER SALES MANAGERS JOB FUNCTIONS

3.2.1 BUILDING A CULTURE

Everyone wants a driven, high-performance sales team. However, not all sales managers know how to achieve that. The problem could be the sales culture.Organisational culture is the set of shared, taken for granted implicit assumptions that the group holds and determines how it perceives, and reacts to various environments (Kreitner, 2001:68). Creating a changeable culture is also about removing the barriers to flexibility, such as misaligned rewards systems, conflict between team members, and a manager who will not release people or development (Holbeche & Park, 2004:34).

Financial services companies everywhere are talking the sales culture talk, but execution is still faltering. People in the field will not start thinking in terms of

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sales management until they understand the need for more sales and the ethics of the process (Bird, 2003:6).

3.2.2 INSTILLING ETHICS IN THE SALES FORCE

The stress and problems associated with not achieving a target are nothing compared to the embarrassment and chaos caused from unethical behavior. If a sales managers career is based on sound business practices, an ethical sales team culture can be achieved. It simply requires the ability to lay down the ground rules, the tenacity to stick to the principles, and the discipline to continually reinforce them (Bator, 2002:4). Understanding future clients needs must always precede any attempt to sell, and trust and rapport must be developed before selling begins. Integrity and high ethics are the basis for long-term selling success (Foley, 1999:6).

3.3 SUMMARY

Motivation plays an important part in every single job function of a sales manager. If a sales manager recruits a new financial advisor he must be inspiring, during training, motivational to build a high-performance culture, communication must lead to more sales and to achieve this it must be motivational. Studies have shown that sales managers leadership style affects the ability to motivate. In the next chapter we will look at the complex issue of what motivates financial advisors. Various motivating factors, leadership styles and sales contest will be discussed in depth.

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CHAPTER 4

MOTIVATORS THAT INFLUENCE FINANCIAL

ADVISORS PERFORMANCE

The sales manager spends considerable time, energy, and resources at attempting to influence a sales persons effort through sales system components including compensation, job design, organisational climate, and special incentives (Verbeke et al., 2004:386). Motivation policies dont just engage the interest of staff, they are also valuable tools in directing motivations towards organisations goals (Coles, 2002:13). The most important goal for any organisation is profitability and, according to Blanchard & Muchnick (2003:32), profits are the applause organisations get for taking care of customers and creating a motivating environment for employees.

Life insurance sales are tough and financial advisors need a place to find motivation, encouragement and inspiration (Piontek, 2004:4). There are various methods, behaviours and factors that can achieve the ultimate goal of increasing performance. These will be discussed further in this chapter.

4.1 MOTIVATION

Motivation is an energy released in the form of a drive directed towards a goal (Clark1998:118). While it may seem like enough of a challenge for sales managers to keep themselves motivated all the time, it is even more important to keep sales staff constantly reaching for new heights (Robertson, 2005:1). After any motivational initiative a financial advisor can be placed in one of the five stages of the change ready model. The desired result of any motivational effort from sales management is moving all financial advisors down the change ready model to sustained momentum.

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Figure 4.1, Change Ready Model

1.2.3.4.5.

Zero IntentContemplatingPlanning &Visible actionsSustained

changePreparationMomentum

Source: Federman & Santi, 2004:11

Only when financial advisors function in the sustained momentum phase can peak performance be achieved. Peak performance is the highest level of performance a financial advisor can achieve. This is achieved when a financial advisor surprises acceptable performance by exerting discretionary effort. The foundation of peak performance in any organisation is discretionary effort. Discretionary effort is the difference between a financial advisor who does enough to get by and one who brings the maximum amount of labour and services to the job, it separates acceptable sales people from super sales people(Skinner, 2000:37-41).

The remainder of the study will show the various elements that can influence a sales person to move down the change ready model and ultimately to achieve peak performance.

4.1.1 EVERY SALES PERSON HAS HIS OWN HOT BUTTON

The insurance industry is looking for new ways to keep its sales forces happy and productive. An organisation makes a big mistake if it doesnt listen to its financial advisors. The idea is for the organisation to align itself more closely with financial advisors rather than dictating what it thinks financial advisors need to know. It is a problem when management doesnt understand its people. It is important to ask and find out what makes people tick and what motivates each financial advisor because each financial advisor has his own hot buttons. The

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challenge for the sales manager is to try to look at each member of the team and play to whatever that individuals motivator happens to be. Some are motivated by money, others by time off and still others seek recognition (Courter, 2001:50).

The top financial advisors achieve because they are already motivated.

Whatever prizes and incentives organisations offer, top financial advisors will try to win the prizes and incentives. Even if organisations reset the performance criteria higher, top financial advisors will still try to win. Its moving the middle mass that everybody seems to talk about. Managers attempting to move the middle mass must remember different things motivate different people (Shalo, 2004:24). When it comes to sales incentives one persons perk may be another persons pile of junk (McCall, 2003).

Management can increase average performers production if they link financial advisors personal goals to the organisations goals. There is a reason each financial advisor goes to work and successful motivators know what that reason is for each financial advisor. Really successful motivators understand not only the reason, but also how the reason ties into the financial advisors life goals. Management can help financial advisors to think and articulate appropriate life goals (Strelecky, 2004:14).

According to Rinaudo (2004:72), financial advisors in the life insurance industry will only know what motivates them if they can answer the following question: What is in it for me? When financial advisors understand what truly drives them, they will feel it and their body will show it. Once financial advisors are conscious of that drive, they will do much more to reach new heights of success.

The answer to a financial advisors question: What is in it for me? is that specific advisors hot button. Managers need to realise that every financial advisor has a unique hot button. It is the sales managers job to find every financial advisors hot button and keep hitting it (Pollack, 2003:13).

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Each generation feels the impact of the era in which it grew up. A manager today has to be aware that what motivates a 50-year old person may not motivate a 40-year old person and certainly will not motivate someone who is 30 or 20 (Courter, 2001:56). According to Gilbert (2003:31), a smart manager has incentive programmes based on the ages of their employees:

20s Lifestyle incentives are very well received by this demographic group and include high-end electronic products such as DVDs and MP3 players.

30s They are more settled and therefore more interested in larger, more permanent items, such as a big TV screen and power tools. 40s Things that make them feel special are great motivators and the freedom to choose between rewards.

50s Let them develop a programme as away to motivate them. They are interested in acquiring financial security for the twilight years and therefore money is a big motivator.

Sales managers must determine every financial advisors values, because values drive behaviour and behaviour drives the ability to learn, produce, excel, and succeed. Financial advisors core values will always determine whether or not they are likely to be happy and prosperous sales people. Measuring values will reveal what motivates an individual. It exposes driving factors behind performance. Financial advisors are influenced by money; however, money in itself is not a driving factor. Achieving a certain lifestyle in accordance with one of the core values may be a driving factor (Sirainni, 2004:60).

According to Courter (2001:58), the strongest motivator in the world is to create a more positive experience. The question is how can you help people create new and positive things in financial advisors lives? Managements answer must empower financial advisors to hit their own hot button as often as possible.

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4.1.2 THE IMPORTANT ROLE LEADERSHIP PLAYS IN MOTIVATION

Building an organisation to which employees want to commit means going beyond the rhetoric of value statements and corporate social responsibility policies. It is about managers and leaders walking the walk and building a new basis of trust. Recent Roffey Park surveys suggest that many employees want to see a more open, democratic and ethic style of leadership. Under such leadership employees are treated as adults. Organisations have a strong sense of purpose to which employees can readily subscribe. In such context, they are more likely to commit to the organisation and want to give their best (Holbeche & Park, 2004:35). Effective leaders win the trust and respect of their team members. They excel at empowering others and letting them know that what they do is important (Blanchard & Muchnick, 2003:17).

In order for a leader to get commitment he must sell his financial advisors on his ideas and try to give them reasons to achieve them. Then let them decide whether to do it. Good financial advisors will buy into plans and programmes that will help them increase their sales plans (Test, 2002:4). Leading effectively means more than just getting results, it means getting commitment of the team. Many people focus on the result part and forget about their people. Their definition of success is the teams short-term output. The true test, on the other hand, is to win the respect of the team, keep their motivation running high, and help them reach new heights. As a result the team will consistently perform well over time even if the leader is not around (Blanchard & Muchnick, 2003:26).

Shared leadership which is an important team process, can play a critical role in accomplishing the selling teams objectives. Encouraging shared leadership requires keeping selling teams as small as possible while allowing them sufficient time to mature and develop productive working relationships. Shared leadership where appropriate can foster positive team attitudes, beliefs and behaviours, which make selling more effective (Perry et al., 1999;35). Leadership is the

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process of getting everyone to go the place they are supposed to go (Blanchard & Muchnick, 2003:103).

The literature has shown strong support for the transformational leadership style in sales management. Transformational leadership raises subordinates awareness of the importance of the value of designated outcomes, and gets employees to transcend their own self interest for the sake of the organisation. Such means enhance the employees motivation and self-confidence (Dubinskey et al., 1995:17).

While managers can enforce acceptable performance, leadership is needed to unleash discretionary effort. Transformational leadership approach holds the most promise for encouraging discretionary effort. It advocates leading rather than merely managing (Skinner, 2000:37). Blanchard & Muchnick (2003:19) refer to leading people as the opposite of trying to control them.

Characteristics of transformational leadership:

Charismatic Leadership: Have a vision, strong influence, sense of mission and also instill pride and command respect.

Inspirational Leadership: Demonstrate self-determination and commitment to attain objectives and present optimistic and achievable view of the future.Intellectual Stimulation: Explore new ways to achieve organisation problems, vision and mission.Individualisation Consideration: Treat each employee as an individual. Attentive to unique concerns, give them personal attention and provide them with individual development (Dubinskey, et al., 1995;17).

Encouraging peak performance involves getting financial advisors to do things they generally dont have to do unless they want to. An organisation has a performance culture if financial advisors choose to do what they have to do.

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Sales managers must foster the conditions which encourage such behaviour (Skinner, 2000:37).

The quality of the sales organisation is directly linked to the quality of its front-line managers. Those managers greatly influence turnover, productivity and profitability, and they help build a base of engaged customers. If organisations want to improve the quality of the sales department, organisations should improve the quality of the front-line managers. Managers make the difference(Smith, 2004:1). According to Holbeche & Park (2004:35), investing in leadership development at all levels should be seen as a priority if organisations want to achieve a motivated sales force that will achieve company goals.

4.1.3 IMPORTANCE OF THE SALES MANAGERS RELATIONSHIP WITH FINANCIAL ADVISORS

If a financial advisor was not engaging in adaptive selling behaviours, the first impulse of a manager may be to focus on the abilities or motivation of the under-performing financial advisor. This impulse is misplaced and adopts a narrow viewpoint of the problem. A sales manager who wants to foster higher levels of adaptive selling behaviours should assess the quality of the working relationships. The quality of the relationship is dependent upon the contributions of and exchanges between both managers and financial advisors (DelVecchio, 1998:31). Good leaders get to know people beyond their job titles, they find out what makes each individual on their team special (Blanchard & Muchnick, 2003:44).

If financial advisors feel distant from their managers, they are likely to lack certainty as to whether management fully and accurately tracks process, which in turn could reduce confidence in their own effort to performance assessments (Verbeke et al (2004:386). This can only be done by communicating openly and

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honestly with your financial advisors; it is impossible to motivate if you do not communicate. The best way to communicate is to spend time with financial advisors (Evenson, 2003:23).

According to Blanchard & Muchnick (2003:69), the key to effective leadership is the relationship management builds with their sales team and if management wants to motivate their sales team and help the organisation to prosper through tough economic times they must start believing in them.

4.1.4 THE IMPORTANCE OF ORGANISATIONAL CLIMATE AND CULTURE

The right organisational climate is vital to creating high performance. This is about making the most of employee talents and accountabilities, and managing performance in ways which unleash, rather than constrain, employee potential (Holbeche & Park, 2004:34). The most successful organisations in their industry take on a posture of nurturing, training and trying to find out what motivates employees (Courter, 2001:50).

According to Brooks (2004:10), the reason for a small financial services companys growth from zero to sales of over 100 million dollars was a total obsession with creation and perpetuation of a sales culture. One that recognises, celebrates, rewards and even reveres sales but not at the risk of having an inferior infrastructure that supports and provides a strong operated backbone to the sales effort.

While sales managers can enforce what is considered acceptable performance, they can only create the conditions through which financial advisors can achieve peak performance (Skinner, 2000:37). Financial advisors need to concentrate on sales, not on responsibilities that pull them in different directions. Eliminating administrative or unnecessary tasks allows financial advisors to be more efficient

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(Bailor, 2004:53). The best way to motivate and attract the best financial advisors is to have a sales department that is run in a way that allows financial advisors to be successful (Test, 2002:4). According to Ruquet (2004:31), bedsides big bugs what really attract and motivate younger financial advisors are quality home life, continuing education, in-house mentoring, long-term investment, special compensation or perks, participation in industry events and a positive work environment.

However, Donoho (2002:48) identified the following five sales culture killers that will be counterproductive for sales and team motivation:

Rampant gossip

Playing favourites

Intense competition

Lack of communication

Over-manipulation

Sales managers should look out for these and other culture killers that will impact negatively on their team.

4.1.5 SETTING GOALS

Success comes from purpose. Until such time as financial advisors recognise what they want to accomplish, they will lack motivation necessary to accomplish anything. Financial advisors burn out easily because they lack vision and ask themselves: Why am I doing this? Financial advisors cannot visualise the pot of gold at the end of the rainbow (Natenberg, 2004:1). Motivation is something that comes from within. To be motivated in the insurance industry, financial advisors must set goals that they want to achieve. No one can be motivated if goals are not set. Goals should be realistic, otherwise financial advisors will only get discouraged when they dont hit that high goal. Financial advisors should set moderate goals and build up from each goal they achieve. This will also give

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financial advisors positive reinforcement that they can hit the goal (Gaedeke & Jow, 1995;23).

Managers should learn to dangle the right carrot daily and get the results the organisation wants for the bottom line. However, this is not an exact science.Managers should reward and motivate financial advisors to achieve their daily goals. Keeping financial advisors motivated daily is like feeding the body. It fuels the right kind of activity from day to day and it is vital to both short- and long-term growth. Goals for the sales team must be realistic and attainable, even for the newest person on the team (Carlsen, 2003:14).

Financial advisors are more motivated to succeed at something if they personally choose to attempt it. Therefore, managers should involve financial advisors in choosing the goals that need to be accomplished and how they should be achieved. Linking the financial advisors personal goals to the organisations goals will lead to successful long-term relationships (Strelecky, 2004:14). Setting individual goals encourages financial advisors to take active roles in making the organisation successful and nine times out of ten, financial advisors will set their own goals higher than those you want to set for them (Helzberg Jr, 2003:11).

Managers should clearly articulate what needs to be accomplished and why.

Often, the problem with getting financial advisors to accomplish things is not that they are unmotivated, it is because they are uninformed. Managers should take time to explain what must be accomplished. (Strelecky, 2004:14). Setting clear goals for performance tells financial advisors what is expected of them and what they can expect from management. When expectations are clear, attainable and measurable, they motivate financial advisors (Helzberg Jr, 2003:10).

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4.1.6 RAH-RAH SESSIONS

Organisations want to give financial advisors the tools they need in order to succeed and are using outside speakers who can teach specific skills and motivate employees at the same time. The point is that organisations often believe they can bring in an outside cheerleader motivational speaker when what they really need to do is to deal with their internal organisation culture. Bringing in a cheerleader may make some people feel good for a moment, but it wont bring about a broader change (Courter, 2001:50). Short rah-rah speeches dont have a long lasting effect, because they dont change the underlying problems (Cummings & Strout, 2001:53). The problem is that many programmes promote behaviour change to become a better person rather than behaviour change to improve business results.

4.1.7 PRIDE

Pride increases performance-related motivators, specifically a financial advisors self-efficiency as well as willingness to adapt his selling strategies and to work harder. It also stimulates financial advisors to engage in organisational citizenship behaviours. Because pride results from positive evaluations from significant others, instilling pride is a potentially fruitful management tool. While pride might occur when financial advisors succeed at difficult tasks, it can also be triggered through task accomplishments that confirm what significant others expect. The dangers is when financial advisors are already committed and they discover that they cannot reach the expectations of their managers, this might damage ones self and lead to destructive behaviour or withdrawal (Verbeke, et al., 2004:386).

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4.1.8 VERBAL RECOGNITION

The words managers use and the actions they choose can motivate financial advisors to new heights. By learning how to positively charge financial advisors, managers can create a dream sales team. Every word managers say, everything managers do can inspire, uplift and challenge financial advisors to be their best. Positive people give positive charges that boost energy (Evenson, 2003:21). Positive attention and approval can be habit forming. This starts during childhood with praise, reward and recognition. We all want and need people to notice us and at times we feel our self-worth is measured by the opinions of others. Financial advisors have the same needs and the more they accomplish the more chances they have to receive special compliments from others (Scholp, 2004:80).

In order for financial advisors to do their best they must know how to be their best. Managers should tell financial advisors what is excepted of them and how they would like financial advisors to behave. When financial advisors do something right, managers should tell financial advisors what they like about those actions and be as specific as they can. When managers are with financial advisors they should be on the lookout to catch them doing something right (Evenson, 2003:24). Praise is most effective when it is specific, sincere, and given as soon as possible after behaviour occurs. It should also be consistently applied only to situations where praise is warranted, but not given every single time, this helps people to praise themselves and not on others to do it all the time

(Blanchard & Muchnick, 2003:85).

To be motivating a manager should be sincere in everything he does. When a manager praises good sales performance he must choose words that genuinely convey his thoughts. When managers discuss areas of improvement or poor performance they must choose words that will constructively turn your corrective session into a motivational session where the financial advisor comes away

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feeling worthy and wanting to improve (Evenson, 2003:22). Managers should always be as positive as possible and always give positive feedback before constructive criticism. Selling is hard, and there are plenty of negative experiences in the field. When financial advisors know you support them and have confidence in them, they will give you better results (Test, 2004:5). Show appreciation, financial advisors can easily feel as though they and their contributions to the organisation are being taken for granted, unless a sales manager tells them otherwise (Robertson, 2004:1).

Financial advisors who are self-motivated can also have a motivational need. Almost every one is motivated by different things. Managers motivate to get financial advisors to behave in a certain manner and sometimes financial advisors need encouragement when things are not going properly. Managers need to understand that a compliment is important when a good job was done. Reprimands may be necessary but the way its done can also be motivating (Feiertag, 2003:16).

Organisations must be very careful so that the rewards and compensations do not become the financial advisors motivation to do well. Let at best the reward be a feeling of pride in doing a job well. In other words, praise a lot more than you reward or compensate (Evenson, 2003:21).

Recognition from peers and the boss, such as a verbal or written thank-you have become strong incentives for financial advisors because being singled out and having someone say you did a good job speaks at a whole different level (Kalra & Mengze, 2001:170).

It is important that sales managers create opportunities to celebrate a financial advisors success because too often financial advisors let life pass them by. They try hard to achieve something, but when they do, they ask: is this all there is? Thats because they never take a moment to enjoy how monumental their

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achievements are. Remind financial advisors that they accomplished their goals and the blood, sweat and tears is worth it. Managers should encourage financial advisors who win an award, they must post the plaque and if they received a big commission cheque they must frame it (Natenberg, 2004:1). Most important everyone is motivated by a round of applause (Gilbert, 2003:31).

Understanding the role that recognition plays in fostering loyalty could prevent having to replace the organisations top financial advisors next year or can help attract the independent brokers who want to leave their unmotivating companies (Chang, 2004:25).

4.1.9 THE EFFECTIVENESS OF NEGATIVE REINFORCERS OR FEAR

MOTIVATING

Negative reinforcers should be a small part of the sales managers repertoire and should decline over time and if it doesnt financial advisors will start to resign. Negative motivators can work but sales managers should really be careful about when they use negative motivators, because negative motivators are short term and can turn on the sales manager rather quickly (Chang, 2003:24).

Tyler Winkler, the new senior vice-president of sales and business development for SecureWorks, greeted his team with this threat: Make your numbers in three months or youre out. He publicly posted performance numbers for each of his sales people and criticised them in front of the entire group. He does not believe in being buddies with his sales team because they mess up and think it is okay because we are going for a beer later. However, surprisingly his sales people became a legion of loyalists (Cummings et al., 2004:56). Cathy Smith, CEO ofELREPCO, an electronics manufacturing firm in the US, made a bold statement to her sales team: Whoever is at the bottom in six months wont be here. Since then the sales person from the bottom has moved into the middle of the pack and

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a sales star has expressed fear of loosing his footing (Marchetti, 2003:50). Negative motivators as long as they arent taken to an extreme can sometimes provide a much-needed kick in the pants to financial advisors who are slacking off or even unaware of their poor performance (Chang, 2003:24).

Bearing down on their sales force, making their associates know they better produce or else, is about the worst way to motivate sales associates. Sales managers do not have all the answers any more than their financial advisors do.Taking a my way or the highway approach to managing people can have the opposite effect (Helzberg Jr, 2003:10). Tough love seems to work best for sales people whose performance can be clearly measured. For others, workplace bullying can backfire (Cummings et al., 2004:56).

The extreme opposite also applies and not telling financial advisors that there are negative consequences for poor performance, or not setting clear baselines by which performance is judged, are seemingly positive motivators that can backfire(Chang, 2003:24).

4.2 SALES CONTEST

Sales contests are used as a motivating mechanism to induce greater effort from sales people (Kalra & Mengze, 2001:170). Sales managers should make sure that all incentive programmes motivate some sort of behaviour for a particular reason that the corporate plan dictates (Shalo, 2004:24).

4.2.1 SALES CONTEST DESIGN

There is a common observation that well-designed contests motivate sales people. Selecting an appropriate contest design is a crucial issue for sales

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managers and for contest success (Verbeke, et al, 2004:386). Successful contests must be designed around corporate goals. Sales managers should have an influence in disseminating organisational rewards to sales personnel. If sales people do not feel that their transformational manager has an influence in the rewards they receive, they are likely to be less motivated (Dubinskey et al.,1995:17).

Organisations planning incentive programmes for their sales force must be willing to inject some degree of flexibility into the design. Despite all the preparation and pre-planning the unanticipated happens and threatens to derail the whole programme. Sales managers should put the programme on hold, assess the situation and re-organise before proceeding. Maybe targets need to be downgraded or reweighed to better reflect the current business situation (Gilbert, 2003:31).

If the objective is to motivate the high-quality sales people the contest should have fewer winners and larger spreads. On the other hand, if the emphasis is on maximising effort levels from lower-ability sales people the contest should have more winners with smaller spreads. The problem in designing a sales contest is that high-producing sales people will expend less effort as their probability of winning will be high and low-producing sales people may elect not to participate as their chances in the contest will be low (Kalra & Mengeze, 2001:170).

Constraining the number of winners too severely will likely harm preference and motivation towards sales contests (Verbeke et al (2004:386).

How is it that the same few agents always win your agencys sales contest and so few of the other agents get excited about contests? The answer according to Bishop (1999:7) is twofold, motivation and achievability. Expectancy theory posits that an individuals motivation is determined by his or her expectancy, instrumentality, and valence estimates and that higher motivation results in an increase in effort:

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Expectancy represents an individuals estimate of the extent to which increased effort will lead to greater performance.Instrumentality represents an individuals estimate of the extent to which greater performance will lead to additional rewards.Valence is an individuals estimate of the attractiveness of these additional rewards. Sales people will typically not have high valence for intrinsic rewards (motivated by the value of the work itself) until they are satisfied with the extrinsic rewards (motivated by incentives offered by management) (Verbeke, et al,(2004:386).

According to Marchetti (2004:19), short-term sales contests work best when rolling out a new product or service for the first time. According to Verbeke et al(2004:386), if the sales manager is actively involved in training and coaching, sales people prefer limits to be placed on the number of potential winners. This could be to make the award more special and that the result was a direct reflection on their effort and the sales managers input.

If the same financial advisors win most of the sales contests, other financial advisors can start to believe that winning is not achievable for them. This can be rectified by structuring competition to reward the most improvement, thus leveling the playing field (Bishop, 1999:7).

There are a lot of different competition concepts and rank order sales contests give winners rewards based on their rank order of sales performance. Few examples of rank order sales contests are:

Multiple winner format: where a pre-specified number of winners share the award equally. Winner takes it all: where the top-ranked sales person with the best performance gets the entire reward.

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Variation of winner takes all: where the winner is awarded entries into a lottery, number of entries increase with the sales levels and a higher probability to win.

ROT: where top award is given to multiple winners and a second lower value award also given to multiple winners (Kalra & Mengze, 2001:170).

Determining the duration of a sales contest is always very difficult. However, Verbeke et al (2004:386) provide us with the following guidelines. Sales people with more years experience are more likely to prefer longer duration contests. Sales people possessing higher advancement desire and higher status-based need for achievement are more likely to prefer shorter duration contests.

Sales contests can also have a bad influence on sales teams and, according to Marchetti (2004:19), short-term motivation contests can do more harm than good for a sales team. Short-term sales contests can lead to a syndrome referred to as a coin-operated sales force, they do not work unless you put a coin in.

4.2.2 SALES CONTEST REWARDS

Fueling the need for recognition insurance companies create incentives to motivate their sales force, including summer contests, cruises, ribbons reflecting number of policies written or different premium levels achieved and plaques to reflect the sales accomplishments for the year. It is designed to provide recognition and it works (Scholp, 2004:80). Whether it is travel, merchandise, or even a pat on the back in front of peers, incentives and recognition programmes can pack a powerful performance punch, and a few companies see them as an indispensable weapon in their motivational arsenal. One study by the SITEFoundation, a research trade organisation for travel executives, found that a properly designed incentive can boost performance by up to 44% (Chang, 2004:26).

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The way in which sales people are rewarded is being amended to more effectively meet the needs of sales people and organisations. This demands a two-way street mentality to achieve success, success must be shared and rewards delivered in a manner that individuals appreciate (Budden, 2003:7).

4.2.2.1 The importance of choosing the right rewards

Customizing organisation rewards are important, there is no one-size-fits-all strategy to motivate financial advisors and implementing an incentive programme financial advisors do not want can actually be demotivating (Chang, 2003:24). In order for a prize to be perceived as a reward, it must be something the contestant considers a reward. The carrots at the end of the stick only work if the donkey likes carrots. The better a sales managers relationship with his sales team, the better he knows what kind of recognition reinforces the behaviour he wants to encourage. Recognition should come soon after the rewarded behaviour, it should be specific, and it should not be so elaborate as to appear insincere (Helzberg Jr, 2003:10). Without a sophisticated incentive programme, personalisation rarely takes more than asking employees what interests them.Incentive programmes can be designed to instead of rewarding closing deals rather to reward sales people for changing the behaviours that improve the way the company sells (Chang, 2004:27). Effective reward and recognition systems that differentiate and reinforce good performance but offer a degree of individual choice of how performance is rewarded, also play a vital part in creating high performance (Holbeche & Park, 2004:34).

Todays employer needs to offer a balance of benefits to his employees. A single mother with children may be motivated by flexitime or availability of day care. A single man just out of college with no family may want money to buy a new car. A savvy employer needs to identify all these differences and recognise that one size does not fit all (Courter, 2001:54). For many financial advisors the incentive programme is not even about the prize. Rather, its that winning to tell your peers that you were good enough to reach the top. The best of the best sees

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himself as part of the leadership team and wants to be recognised among his peers in that way (Chang, 2004:26)

4.2.2.2 Value of non cash incentives

The real value of non-cash incentives is not in motivating or rewarding the top performers. Its most valuable in motivating the middle-level performers, the part of the sales force that can drive the most growth for a companys products and ultimately, its bottom line (Shalo, 2004:22). It is important to remember that motivation is not always about money (Courter, 2001:54). It is often the little things in life that matter. Sales managers should take a sales person who has been struggling and has been showing good effort and improvement out to a nice lunch to review his progress. The improved salesmans attitude and increased sales will more than pay for the meal (Test: 2004:6). For all their commitment to keep sales people inspired, sales managers would do well to stop and consider the simple things that their sales people carve. Only then might they be able to craft programmes or work situations in which their sales people can thrive(Gilbert, 2003:30)

Sales people like rewards and recognition, and a Sales person of the month plaque works wonders to boost morale and increase sales (Test, 2004:6).According to Shalo (2004:22), non-cash incentives are better because they are visible and the pride employees take in these is also called: Trophy Value. Using a catalogue gives sales people the power to choose, provides them with the opportunity to regularly look at the selection and keeps them encouraged to achieve their goals throughout the month (Carlsen, 2003:14).

According to Shalo (2004:25), the following must be remembered for effective non-cash incentives:1. Make the award truly special, that will increase the value of earning the award and increase the effort to receive it.

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2. Items or services that participants would not purchase on their own are more likely to attract attention of colleagues. 3. Maximise the social reinforcement, encourage the participants to think about the admiration that will result in achieving the award and the performance that leads to it. 4. Vary award types to meet diverse needs.

Perks are a compelling way to encourage sales people to keep smiling and selling. Pay and commission are expected but perks are special. Perks are tangible evidence that the organisation recognises that an employee went above and beyond.

One size does not fit all when it comes to sales incentives, one persons perk may be another persons pile of junk. Knowing the sales force is the key in providing the right perk for the right person. Sales people respond to well-articulated goals, so they will want to know exactly what it takes to get a particular perk. Simple gestures can be meaningful, dont get trapped into thinking all perks must have a monetary value attached. A hand written note, e-mail or voicemail from the boss can be very effective (McCall:2003).

According to Evans & Blas (1986:80), life insurance financial advisors rewards are much more than cash. It is the closeness to the client and the satisfaction of knowing you provided a vehicle for a client to carry through on. It reinforces the feeling that you are doing good and provide a valuable service.

4.2.2.3 Cash versus non cash incentives

If you ask any sales person what he wants, he tells you hed rather have cash because he wants to pay the bills but then a cash bonus becomes just one more way to earn money (Chang, 2004:25). The award type is of high importance for most sales people and cash awards are generally most preferred (Verbeke, et al, (2004:386).

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It is very rarely about the money, even in sales, because if someone is good in sales, he is going to make money wherever he goes. The work atmosphere is key to keeping people, and if people are happy where they are working they will tend to stay there (Chang, 2004:28). Non-cash incentives provide a lasting memory, giving sales people something with value so that they end up with a trophy (Chang, 2004:25). Cash incentives have no trophy value, because beneficiaries cannot remember what they spent the money on and become unmemorable (Shalo, 2004:22)

Many sales managers offer sales people more money and never realise that what they really need is support, training and motivation (McCrea, 2003:39).Motivating sales people who are average is not a financial approach, it is more about coaching (Cummings, 2001:53). The Goodyear Tire & Rubber Company tested in the mid-1990s the effectiveness of cash versus non-cash incentives. The non-cash incentives group increased its sales by 46 % more than the cash group did (Chang, 2004:26).

Switching from a cash incentive programme to non-cash can create the perception that sales people are loosing something even if they are receiving something of equal value. Because of this it may be better to use a non-cash incentive programme in a newer programme rather than replacing existing cash incentive programmes (Shalo, 2004:22).

4.2.2.4 Travel incentives

Unlike cash or merchandise, travel creates lasting memories in the minds of the participants that really turn them on. Workers who make trips share their experiences with co-workers back at the office, which often inspire those who werent rewarded to try harder so they get to go next time (Allen, 2004:13). Travel awards will be more effective when the sales manager and sales force relationship is of good health (Verbeke, et al, (2004:386).

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As with any other sales strategy managers have to show that an incentive plan works, which typically means proof of increased sales and Return on Investment.Even companies that aggressively use incentives to push up sales, however, rarely think of non-cash rewards and recognition as anything other than a line item in the sales budget (Chang, 2004:27). While many organisations recognise that theres an urgent need to review reward strategy, its often handled with trepidation because of a lack of suitable measurement and perception of extreme complexity. Many employers are simply not maximising the returns they could achieve (Budden, 2003:7).

4.3 CONCLUSION

Sales managers must first get the support and involvement from executives.

Sales management initiatives are fragile. No other kind of major initiative needs as much support from the top. Senior managers must get involved in monitoring, acknowledging, recognising and reinforcing the process (Bird, 2003:6). Executives, sales managers, agencies and agents will have to change and grow, they should not fear change, they should fear not changing (Courter, 2001:58).

According to Shalo (2004:22), a combination of cash, non-cash incentives, merchandise, and gift certificates are the best way to motivate and reward a diverse sales force. Positive impacts of contests include increasing motivation and morale of sales people, leading to greater effort, and resultant performance improvements on targeted goals, revenue generation, and contributions to sales and profit (Verbeke, et al, 2004:386).

Sales managers should also realise the ability and desire to be motivated either exists or doesnt exist in the salesperson. You cannot put it there, you can only fire it up. You are better served to invest your efforts in those who are self-

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starters and detach yourself from the well-meaning but ultimately futile effort to stimulate weak producers. You can win with winners, even in tough economy. High achievers set standards that inspire others to believe that the impossible can be accomplished (Helzberg Jr, 2003:10).

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CHAPTER 5

RESEARCH METHODOLOGY

In chapter 1 paragraph 1.5 mention was made of the research methodology that will be used to compare sales managements and financial advisors perceptions of performance motivators in the long-term insurance industry.

The research methodology used will have affect the results of the study. For this reason the following aspects of the research methodology used in this study will be discussed in more detail.

Information on the population

Nature of sampling and strategy for selecting

Questionnaires sent out and returned

Nature and design of research questionnaires.

The demography of the respondents will be discussed in more detail at the end of this chapter. The statistical analysis and the results will be discussed in chapter 6.

5.1 INFORMATION ON POPULATION

Liberty Life is a listed company on the Johannesburg Stock Exchange. The study focused on Liberty Life Agency Division which is one of the distribution channels. The other distribution channels are Broker Division, SBFC (Standard Bank Brokers) and Franchise.

Agency Division consists of 41 branches, each with a manager and a total of 750 financial advisors nationally who represent Liberty Life directly in the market.

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Liberty Life Agency branches in South Africa

Johannesburg22

Pretoria3

Cape Town6

Durban6

East London1

Nelspruit1

Port Elizabeth1

Bloemfontein1

Total42

5.2 NATURE OF SAMPLING AND STRATEGY FOR SELECTING

Over 50% of the research population is from the Johannesburg and Pretoria area. For this reason it was decided to focus on this area. This strategy will make the sample representative of the population but also increase the effective control of the distribution, completion and gathering of questionnaires.

Questionnaires were distributed by Liberty Life Agency Division Sales

Development and Accreditation (SD&A) team and Jeff Paul (Head of SD&A

Agency and Franchise) oversaw this process. The Sales Development and Accreditation (SD&A) team are responsible for training within the Agency and visit branches across the country weekly. During a branch visit the SD&A team members gave questionnaires to managers, as well as between 5 and 10 questionnaires, depending on the size of the branch, to financial advisors with different tenure to complete.

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5.3 QUESTIONNAIRES SENT OUT AND RETURNED

A total of 200 questionnaires printed on white paper were distributed to financial advisors of which 123 (61.5%) were returned. A total of 30 questionnaires printed on yellow paper were distributed to

Agency managers of which 27 (90%) were returned.

Financial advisors could return completed questionnaires as follows:

1) Return questionnaire to manager who will return it to SD&A team member

2) Give questionnaire directly to SD&A team member

3) Fax the questionnaire directly to the number provided on the questionnaire.

Sales managers were given options 2 and 3 above.

All completed questionnaires were gathered by Jeff Pauls office from the various SD&A team members.

5.4 NATURE AND DESIGN OF REASEARCH QUESTIONNAIRES

The questionnaires comprised six sections:

Section 1: Demographic information

Determining financial advisors age, tenure, gender and production status.

Section 2: Leadership style

Determining the leadership style which the financial advisor perceives from his sales manager. The questions were based on a questionnaire used by Dubinsky

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et al (30: 2001), published in Journal of Sales Management and Personal Selling. Likert scale was used. The respondents and the total number of questions in this section are 32.

The following five-point scale was used:

1 = Never

2 = Seldom

3 = Sometimes

4 = Often

5 = Mostly

Section 3: Ranking extrinsic motivational rewards

Respondents were given 10 different tangible motivational rewards to rank from most attractive and motivational being 1 to least attractive and motivational being 7.

Section 4: Ranking non tangible & tangible rewards/motivational factors

Respondents had to choose only the top 5 motivational factors and had to rank only the chosen 5 from 1 (being the most motivating) to 5 (being the least motivating of the top 5 chosen).

Section 5: Determining what makes a competition attractive for financial advisors Respondents had 4 options to choose from and another. If another was selected it had to be motivated.

Section 6: Open-ended questions

1 Why is the Chairmans Challenge so successful?

2 - The one thing that made the difference for a financial advisor

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5.5 QUESTIONNAIRE PRE-TESTING

It was decided to test the questionnaire informally before it was sent out. The informal test focused on the type of questions and on the questionnaire construction.

The pre-test also provided an opportunity to determine whether:

some questions were irrelevant and had to be omitted

questions had to be added

some questions had to be reformulated

the questionnaire instructions were clear and well-formulated.

The questionnaire was also tested to determine what statistical process would be used with each question.

5.6 STATISTICAL ANALYSIS

Questionnaires for sales managers and financial advisors were divided into two groups. Both groups of respondents questionnaires were given a number starting with M001 for sales managers or F001 for financial advisors.

Sections 1 to 5 data was captured on an Excel spreadsheet. Totals were calculated to determine averages for interpretation. All the fields in section 3 that were not completed were allocated a response of 7. Section 6 was analysed manually by grouping respondents with similar answers in order to determine most common answers. All analyses were done by Chris Oosthuisen.

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5.7 CHARACTERISTICS OF RESPONDENTS

The analysis of a few characteristics of respondents gives an indication of age, tenure at Liberty Life, performance and gender.

5.7.1 ANALYSIS OF THE AGE OF RESPONDENTS

Table 5.1 illustrates the age of financial advisor and manager respondents.

Table 5.1

Percentage of participating financial advisors and sales managers per category

AgeFinancial advisorManager

Younger than 3016.26%0.00%

Between 31 and 4032.52%40.74%

Between 41 and 5032.52%33.33%

Between 51 and 6014.63%25.93%

Older than 614.07%0.00%

TOTAL100%100%

Table 5.1 shows that 65% of financial advisors fall between the ages of 31 and 50.

5.7.2 ANALYSIS OF THE PRODUCTION OF FINANCIAL ADVISORS

Table 5.2 shows the percentage of financial advisors who did a certain amount of production.

Table 5.2

Average production of financial advisors since June 2004 expressed in percentage per category

Average monthly production

since January 2004Percentage

Less than416666 pcrs per month22.13%

More than416666 pcrs per month11.48%

More than550000 pcrs per month18.03%

More than750000 pcrs per month22.13%

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More than 1000000 pcrs per month11.48%

More than 1250000 pcrs per month5.74%

More than 1500000 pcrs per month9.02%

According to Table 5.2, it appears that 22.13% of respondents did less than

416666pcrs and 25% more than 1000000pcrs per month.

5.7.3 ANALYSIS OF THE TENURE OF FINANCIAL ADVISORS AND SALES MANAGERS

Table 5.4 shows the tenure of financial advisors and managers in percentages.

Table 5.3

Analysis of the tenure of sales managers and financial advisors

TenureFAM

Less than 12 months17.89%0.00%

More than 1 year11.38%0.00%

More than 2 years11.38%33.33%

More than 3 years8.13%7.41%

More than 4 years8.13%11.11%

More than 5 years12.20%22.22%

More than 10 years30.89%25.93%

(FA = Financial advisor & M = Manager)

According to Table 5.4, it appears that 30.8% of financial advisors have been with Liberty Life Agency Division for more than 10 years and that all management respondents are with Liberty for more than 2 years.

The representation of respondents according to Liberty Life Agency classification

Liberty Life Agency classifies its Agency force from As to Es depending on the tenure. Table 5.4 gives a breakdown comparing the respondents tenure with theActual Agency Division tenure.

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Table 5.4

Comparing respondents tenure with actual figures

AgenttenureAgencyResearch

divisionsample

A -12 months and less21.9017.89

B -1 years or more12.8011.38

C -2 years or more10.8811.38

D -3 years or more4.488.13

E -4 years or more49.9451.22

Table 5.4 shows that the research sample is representative of the actual Agency

Division population.

5.7.4 ANALYSIS OF THE GENDER OF FINANCIAL ADVISORS

Table 5.5 shows a breakdown of the gender of financial advisors.

Table 5.5

Analysis of the gender of financial advisors

GenderFinancial advisor

Male94.31%

Female5.69%

Total100%

Out of Table 5.5 it shows that 94.31% of all financial advisors were male.

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CHAPTER 6

DISCUSSION OF THE RESEARCH RESULTS

As mentioned in chapter 1, paragraph ??, the purpose of the study is to determine the difference between the perceptions of sales management and those of financial advisors as to what is motivating. This chapter will consider the respondents perception and rating of leadership styles, motivational incentives and motivational behaviours. The responses of sales managers and financial advisors will then be compared to determine the different variances in perception. The bigger the variance the more significant it would be. The financial advisors score is used as the base to determine the variance.

6.1 LEADERSHIP STYLE

This question tested the different perceptions in leadership style as perceived by sales managers and financial advisors. Statements were made in the questionnaire and the respondents had to respond by choosing never (1), seldom (2), sometimes (3), often (4) or mostly (5). The numbers in brackets indicate the weight allocated to the different choices. The average for every question was calculated to determine the sales managers and financial advisors averages and the deviation of the two averages will be significant.

The first three questions tested the laissez-faire leadership style and a lower average would be more favourable.

Questions four to six tested the transactional leadership style and the remainder of the questions tested the transformational leadership style. A higher rating would be more favourable for both styles.

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Table 6.1

Leadership style as perceived by financial advisors and sales managers

Leadership styleFAMD

1My manager avoids telling me how to perform my job2.712.260.45

2My manager avoids making decisions relevant to me2.261.480.78

3My manager avoids getting involved in my work2.601.780.83

4My manager shows me he/she recognises my

accomplishments4.254.26-0.01

5When I achieve my goals my manager commends me4.454.74-0.29

6My manager points out what I will receive if I do what needs

to be done3.974.19-0.22

7My manager makes me proud to be associated with him/her4.044.040.00

8I have complete faith in my manager4.023.740.28

9My managers vision spurs me on3.513.56-0.04

10My manager sets high standards for my work3.893.850.04

11My manager develops and encourages me3.794.11-0.32

12My manager gives me personal attention when I seem

neglected3.454.07-0.63

13My manager establishes what I want and helps me to

achieve it3.473.81-0.34

14My manager expresses appreciation when I do a good job4.224.44-0.22

15My manager provides me with insights to improve my selling

efforts3.723.81-0.10

16My manager demonstrates active training and coaching for

me3.533.78-0.25

17My manager holds effective meetings for me (I leave

knowing how to do a better job)3.453.81-0.37

18My manager handles his job in such a waythat I consider

him or her effective3.863.780.08

19My manager is eager to recognise and reward my

performance when it is good4.364.63-0.27

20My manager treats me with respect4.574.440.13

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21I find my manager friendly and easy to approach4.544.070.46

22My manager is usually attentive to what I say4.333.850.48

23I usually trust statements made by my manager4.124.040.08

24My manager is willing to listen to my problems4.334.220.11

25I want to have a position in the branch where I have prestige3.614.00-0.39

26I like to be admired for my achievements3.794.59-0.80

27I would like to be an important person in the company /

branch3.684.37-0.69

28I find satisfaction when I influence others in the branch or

company4.124.56-0.43

29I try harder when I am in competition with other people3.643.67-0.02

30To be a real success I have to do better than other

salespeople3.573.74-0.17

31It is important for me to do better than others in the sales

force3.393.63-0.24

32I judge my performance on, if I do better than others3.093.44-0.35

(FA = Financial advisor, M = Manager & V = Variance)

The first three questions tested the laissez-faire leadership style and the biggest variance in leadership perception was identified. Sales managers ratings are 0.83 and 0.78 lower than those for financial advisors, and perceive themselves as more favourable.

Questions four to six tested the transactional leadership style and sales managers perceived themselves as more favourable than financial advisors with the biggest variance 0.29.

The remainder of the questions tested the transformational leadership style. The sales managers perception of their transformational ability was >0.35 than that perceived by financial advisors: My manager gives me personal attention when I seem neglected (-0.63) My manager holds effective meetings for me (I leave knowing how to do a better job) (-0.37)

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I want to have a position in the branch where I have prestige (-0.39) I like to be admired for my achievements (-0.80)

I would like to be an important person in the company / branch (-0.69) I find satisfaction when I influence others in the branch or company (-0.43)

Table 6.2

Analysis of the total average per leadership style as perceived by financial advisors and sales managers

Leadership styleFAMV

Laissez -faire leadership2.531.840.69

Transactional leadership4.224.40-0.18

Transformational leadership3.854.00-0.15

(FA = Financial advisor, M = Manager & V = Variance)

The biggest variance is in the laissez-faire leadership style with 0.69 difference. In all three leadership styles managers self-perception was more favourable than that of financial advisors.

6.2 MOTIVATIONAL INCENTIVES

Section 3 of the questionnaire measured the importance of different tangible motivational rewards as perceived by sales managers and financial advisors. Ten different tangible rewards were listed and respondents had to give each a score between 1 (being very attractive) and 7 (not being attractive). Sales managers and financial advisors average score and variance in perception for every reward were determined. The lowest scores shows the more favoured rewards by respondents.

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Table 6.3

Motivational incentive as perceived by financial advisors and sales managers

Motivational incentiveFAMV

Conference with fellow financial advisors like, Olympus3.603.480.12

Merchandise (TVs, MP3 players, DVD players, Palm pilots ext.)4.034.56-0.53

Corporate clothing or gifts (Liberty branded shirts, jackets, knives ext)4.644.96-0.32

Travel vouchers3.503.590.09

Cash3.134.19-1.06

Tickets for sporting events or music concerts4.394.74-0.35

Overseas trips2.763.00-0.24

Motorcar2.904.00-1.10

Receiving a trophy for your accomplishments4.854.810.04

Gift vouchers (to be used at Game, Woolworths or Pick n Pay)4.024.74-0.72

(FA = Financial advisor, M = Manager & V = Variance)

The top 3 tangible incentives as perceived by financial advisors are:

1. Overseas trips (2.76)

2. Motorcar (2.90)

3. Cash (3.13)

The top incentives as perceived by sales managers are:

1. Overseas trips (3.00)

2. Conference with fellow financial advisors like, Olympus (3.48)

3. Motorcar (4.00)

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The three biggest variances in financial advisors and sales managers perception are:1. Motorcar (-1.10)

2. Cash (-1.06)

3. Gift vouchers (-0.72).

6.3 MOTIVATIONAL FACTORS

The previous questions tested only one motivating factor such as leadership style or tangible rewards. Section 4 of the questionnaire used different motivating factors including leadership style attributes, tangible rewards, intangible rewards, and other potential motivating factors were combined in a list of 20 factors. Respondents had to choose only the top 5 motivational factors and had to rank only the chosen 5 from 1 (being the most motivating) to 5 (being the least motivating).

6.3.1 The top motivational factor

Table 6.5 shows the number of times each factor was chosen as number 1 (most motivating) expressed in percentage. The higher the percentages the more favourable the factor was perceived.

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Table 6.5

The top motivational factors as perceived by financial advisors and sales managers

The most motivational factorFAMV

Motivational speaker from outside your branch or even Liberty5.354.171.18

Threats from your manager like If you do not do X production in the next 3 months you

are fired2.670.002.67

Knowing your manager cares about you, your family and your success5.3516.67-11.32

Product training sessions1.780.001.78

Recognition in front of your peers (production, case count, biggest case size)012.50-12.50

Your own internal drive to be the best17.8625.00