Facing a Sales Team Conflict: Should I Let Go of Mr. X or Find a New Dealer?

Hi, I work for a B2B company operating in specialty and fine chemicals. We are an all-India company and have Sales Executives located in select cities all over India.

Background of the Issue

In 2014, Kerala was not covered by a specific Sales Executive. As Head of Sales and Marketing, all such regions come under my direct attention. I was involved in responding to dealer/customer inquiries, quoting, negotiating with customers, and making customer visits. At the end of HY2014-15, when we reviewed, we found that compared to other regions, we made very good sales at good margins. The reason was particularly good sales by a dealer.

Motivation and Recruitment

In order to motivate him, we checked what he would expect us to do to help him grow the business further. He suggested appointing a Sales Executive in our company rolls, which would help him cover more customers. We readily agreed and asked him to look for suitable candidates. After checking different candidates, he recommended a candidate (Mr. X) who he believed would help us improve the business further in the region. A formal interview was conducted, and we selected him.

Current Situation

Mr. X joined us in April 2015, and I gave him a brief to work with the dealer and promote the business further. After two months, we found that the dealer and Mr. X were at loggerheads. They were unable to work together, and Mr. X recommended that we discontinue with this dealer and operate with an alternate dealer. As Mr. X is on our rolls, the dealer is unable to comment. He is saying, "Allow me to do my work. I will give you the same result or a better result compared to the previous year."

Decision Dilemma

I am unclear about what I should do—whether to give the notice period salary to Mr. X and terminate him, appoint an alternate dealer, have two dealers, or transfer Mr. X to an alternate location. I do not want to elaborate on the misunderstanding between Mr. X and the dealer because both have some positives and negatives. The relationship Mr. X had prior to his appointment is different from once he is appointed. For me, the results are important.

Your thoughts and suggestions are welcome. I need to discuss the solution suggested with my HR because if Mr. X is not happy, he could spoil our company's reputation in the market.

Questions from the Strategic Director

Questions put to you by our Strategic Director (SD) in order to suggest solutions:

- Is Mr. X performing well independently?
- Have you given exclusivity to the dealer for the region?
- Is the dealer still performing as he used to previously?

Quoting our SD, "The dealer, when he recommended Mr. X, thought that Mr. X would be of help to him, but it has proved counterproductive. It looks like there is a power struggle between the dealer and Mr. X, and in no way should it affect the sales of the company as a whole. Ideally, you may demarcate territories for the Dealer and Mr. X. That way, they do not have to interact with each other, and the friction will cease. There is no point in terminating the dealership with the 1st dealer since he is known in the market."

Transfer your salesman to another area for a win-win solution.

Sometimes, irreconcilable differences arise, and they can only be sorted out by keeping the two parties totally away. If X is a competent salesperson, transfer him and look for someone else to replace him.

A dealer is an important person who gives you access to the market.

This is for Termination & Gratuity case - Termination for failure to achieve targets without an inquiry is not valid. SC 790

240 days of service in the 5th year will be treated as 5 years for gratuity. Ker. HC 826

Thank you, M/s FREDANTH, NATHRAO, and SURENDRA HRCITE, for your views and suggestions.

Performance of Mr. X

a) The performance of Mr. X is not great; it is average. He is citing the non-cooperation of the dealer as the main reason for him not delivering results.

Dealer Strategy and Growth

b) We do not give exclusivity to dealers. However, as the business grows and our products are well-accepted, we start appointing additional dealers, attaching them to specific customers to avoid cross-selling. We are yet to reach that phase in this market.

Current Dealer Performance

c) Yes, the dealer performance continues to be good, but there is scope for further growth. However, due to a misunderstanding between the two operating people, growth is hindered (dealer version). We are trying out your suggestion of keeping the dealer and Mr. X away from each other.

Regards

Employee Transfer and Performance Management

Given that the dealer's performance is proven and still good, it's better to TRANSFER the employee—I presume that you would have a Transferability Clause in all your Appointment Letters, such as 'can be transferred anywhere in India'. Use it. If he refuses, you would have grounds to take appropriate action against him. Hiring another person to service the same market would lead to far greater problems later, including the employee beginning to 'feel' indispensable... avoid it.

However, please look into another angle too. Is there any clash between the credit for the Achieved Sales Targets of the dealer and the employee? Could it be that some work of the employee is being shown as that of the dealer, maybe inadvertently, and that is the cause for the friction? Just a thought.

Regards,
TS

First, I must appreciate that the poster has provided:

- A very detailed description of the problem, leaving out nothing that matters.
- Responded immediately to the request for clarification.

We don't often see such a detailed post on the forum.

Opinion on the Problem

With reference to the problem at hand, my opinion is as below:

- The dealer is good and is achieving good sales, with growth that has traditionally been better.
- He was expecting that having a salesperson for the company would help, as the salesperson would also cover some areas, popularize the product, and generate leads.
- Very obviously, the salesman has not done the above. Blaming the dealer for the salesman not generating leads is misguided. He is not there to feed the salesman. The salesman should be feeding the dealer.
- I see absolutely no reason why the dealer would not cooperate. He wants the business. His own sales and profitability depend on it. (Or do you have a system where he gets a lesser margin for sales raised by the salesman?)
- The only other cause could be if the way he was selling and growing the market is different from the salesman's approach (do you have training? Was he trained properly? Is he following that? And yes, was Kerala growing differently - dealer following a different procedure approach to pricing and distribution as compared to other territories where salespersons are available?)

(There would be a better analysis if I knew the actual market and product, but that is not possible on this forum, so we go by generalities.)

Next Steps

So, where does this go?

It is obvious that the salesman is unfit for the job.

Whether he is unfit for that particular territory or he is unfit in general, I will leave it to your judgment.

However, you need to support your dealer who has given you growth that other territories didn't have. Else your sales will suffer, at least in the short term. If your product is not a monopoly, you will suffer badly since the dealer will find another supplier and simply sideline your product.

So remove your salesman from that territory. Terminate him or give him some other area.

And if the dealer still feels a good salesperson is necessary, check whether you can compensate him for appointing a salesperson in his company specifically to push your product.

Regards

Dear TS,

Sashwatha Banerjee, thank you for your views and comments. I appreciate your kind guidance on a difficult issue facing me. I am proceeding very close to the general suggestions given - I have demarcated the areas and allowed the dealer to work as he did before. I have asked the salesman to promote the products in areas not covered by this dealer and have given him fresh targets. It remains to be seen how he performs.

I hope your approach works.

Of course, you must remember that nothing in business or HR works like a textbook case, so you need to improvise and monitor as it proceeds. You need to use your judgment from your own long experience.

I would suggest never forgetting the loyalty of your well-performing dealers, as they will make or break your company in the end.

By the way, seniors, is there a reason why I am not able to appreciate any of the posts in this thread???

The dealer added to the sales volume, and the idea of appointing a sales executive was a later thought. To improve, a sales executive was appointed. Of course, the issue became counterproductive. The desired result, such as the sales target, could not be achieved. The issue certainly arose at the origin itself since the sales executive was recommended by the dealer, and the company conducted a formal interview. Perhaps some issues went unnoticed during the appointment. A dealer may not be able to cover larger areas and relies on the sales executive to focus on the sales target to further the business. The sales executive is the path through which the dealer can sail to achieve the maximum target:

1. Let the sales executive be given maximum area coverage and progress checks once every fifteen days. Gradually expand the business area so that another dealer may be appointed for business progress.

2. The dealer may cover the sales and customers beyond his reach. Certainly, one more dealer is required to push the dealer to make progress. This will likely solve the problem for both the dealer and the sales executive.

3. The real problem may be that both the dealer and the sales executive are covering the same areas already in focus. It would be better to expand into new areas to avoid alienation, which may not yield better results in the long run. Consider transferring the sales executive to another area of operation and installing a new sales executive, either through transfer or a new appointment, which you may not like to do at present.

4. Call both the dealer and the sales executive to discuss the issue. Explain to them the importance of working in mutual understanding for their benefits and for the company. This approach should work out.

Best of luck...

All the best in your efforts. However, please also bear in mind one particular possibility—the dealer may feel constrained or restricted if he wants to expand into areas you have earmarked for the employee later on. I suggest keeping some additional territories in mind to be given to the dealer that don't clash with those of the employee in case he wants to add later on.

@Saswata Banerjee - I'm not quite clear on the "why" part of your remarks: "By the way, seniors, is there a reason why I am not able to appreciate any of the posts in this thread?" Can you please elaborate?

Regards,
TS

In general, every thread has an "appreciate" button at the end of each post. I click to register my appreciation of a good post or point. This entire thread, that button is missing. I can't appreciate any of the posts, though some of the points are very well made.

Remove the salesman from the zone (either transfer or retrench) and appoint another salesperson on the dealer's payroll. Reimburse the monthly/annual cost of the candidate to the dealer. You may follow the same practice whenever/wherever you have to appoint a salesperson until you operate a full-fledged office in that particular area.