The impact of incentive compensation on the salesperson's work habits: an economic model

Article Abstract:

This paper provides a theoretical framework for assessing the likely impact of variations in the remuneration level on a salesperson's income and sales. It is shown how salespeople who display various behavioral responses to financial incentives should have different sets of values for two observable and measurable elasticities e (i) and e (s) (elasticities of income and sales with respect to remuneration). The behavioral responses to financial incentives under consideration are: Salespersons are (1) money sensitive, (2) unresponsive to financial incentives, (3) leisure sensitive, (4) income satisfiers, and (5) 'irrational'. The theory can be applied by observing and measuring the two elasticities e ( i) and e (s), and then inferring salespeople's work habits. The theory is consistent with some empirical data. Practical and normative implications for sales force motivation, compensation plan design, and recruiting are discussed. (Reprinted by permission of the publisher.)

Research, Human resource management, Compensation management, Management research, Incentives (Business)

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Selecting appropriate sales quota plan structures and quota-setting procedures

Article Abstract:

The typical objective of a sales quota-bonus plan (QBP) is to enhance salespeople's performance by granting them a bonus when they reach a prespecified performance level (a sales quota), set higher than the performance level they would achieve otherwise. Even though QBPs are short-term plans, they have long-run profit impacts through their effects on a sales force morale and feelings of equity (or inequity). This is why devising sales quota plans has always been a difficult task. This paper's objective is to discuss how different QBP structures and related quota setting procedures are likely to be selected by management, depending on such situational characteristics as management's objectives, constraints, and available (or collectible) information. (Reprinted by permission of the publisher.)

Compensation and benefits, Bonuses

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The effects of some situational variables on sales force governance system characteristics

Article Abstract:

The objective of this paper is to put the recent outcome-based versus behavior-based control system research in a broader perspective. Through the development of a conceptual framework of sales force control, it is suggested that management should select the most appropriate control devices characterized along three main dimensions (centralized-decentralized, outcome-behavior-based, and quantitative-qualitative), depending on management's sales force selling and control objectives and on the availability and/or costs of relevant information. The proposed conceptual framework accounts for many aspects of the main control theories. (Reprinted by permission of the publisher.)

Control (Psychology)

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