Compensation and control sales policies, and sales performance: the field sales manager's points of view

Abstract

PurposeThe purpose of this paper is to analyse the relationship among the compensation system (fixed or commission) applied to salespeople, the system by which they are controlled, and the effects of both on individual performance and sales organization effectiveness. Previous research has been extended in a different country/context, and from the field sales manager's points of view.Design/methodology/approachFirst, a cluster analysis was used to obtain a set of groups of salespeople characterized by their main compensation system (salary and/or commission). Also, ANOVA is used to analyze the significance of the differences due to the different compensation system.FindingsThe empirical data reflect the results of research involving 108 field sales managers and show that the compensation system used for the salespeople has significant effects on individual salesperson performance and sales organization effectiveness and is related to the control system used by the company. Companies with a compensation system based on a fixed salary use behavior control more than companies with a compensation system based on commission; salespeople who receive a greater proportion of compensation as a fixed salary give better individual performance than those who are paid by commission; salespeople who receive a greater proportion of their pay as a fixed salary are more effective than those paid largely by commission. Results do not show relevant differences among countries.Research limitations/implicationsAny generalisation of results is limited by the characteristics of this study, in particular by the sample used and the particular situation of the country analysed (Spain). At the same time, and because the study relies on the subjective judgment of sales field managers' perceptions, the measurement of some concepts is subject to various cognitive biases.Practical implicationsCompensation for salespeople is one of the most important issues in saleforce management as it has a significant effect on motivation, which is critical, given the conditions of their working environment.Originality/valueThis paper analyzes the field sales manager's points of view and not that of the salesperson or the sales team. This provides a closer perspective because field sales managers operate between the salesperson and sales manager. This paper presents a framework based on Baldauf et al.'s and Piercy et al.'s previous research, with two main contributions. The first contribution is the proposed direct analysis of the relationships between various antecedents of effectiveness. The second contribution is the consideration of two dimensions of the effectiveness construct: financial efficacy and field sales manager satisfaction.

Salesforce Control Systems as Direct Antecedents of Salesperson and Sales Unit Performance: A Literature Review

“…Piercy et al [28,35] propose high incentive pay with high behavior control as the most efective, while Küster and Canales [77] state that the security of fixed salary plus the motivational variable part fully develops salesperson's abilities generating better outcomes for the salesperson and the company. Cultural differences between countries -especially uncertainty avoidance -will determinate different results in terms of individual and team performance, of the combinations of fixed and variable compensation.…”

“…We find support to this link in the field sales managers' sample of Babakus et al [12] and Grant and Cravens [16] studies from Australian marketers; the British-based researches of Piercy et al [26,72]; the works of Baldauf et al [38,67,75] in Austria the United Kingdom, and Australia; the multicultural study in Austria, Bahrain, Greece, India, Israel, Malaysia, Nigeria, Saudi Arabia, and the United Kingdom by Cravens et al [69]; and the analyzes of Spanish industrial sector from Verano-Tacoronte and Melián-González [76], and Küster and Canales [77] considering fixed salary as a main indicator of a behavioral-based control system. Moreover, two British studies from sales managers of diverse British industrial and consumer products from Piercy et al [29,78] relate sales manager behavior-based control level together with behavior-based competences, with salesperson behavior performance.…”

“…These can include external people, salesperson, sales manager, sales executive, or dyads between them [28,36,70,75,77,78,87,88].…”

Dominant Effect Between Compensation, Leadership and Organizational Culture on Employee Performance Improvement

“…Compensation is a form of reward given by a company for good performance that has been shown by employees in the hope that employees can improve their performance (Kuster & Canales, 2011). Furthermore, Kuster & Canales (2011) mentioned how the compensation system can affect the performance of employees by differentiating the types of compensation into three, namely salary, commission and incentives.…”

“…Furthermore, Kuster & Canales (2011) mentioned how the compensation system can affect the performance of employees by differentiating the types of compensation into three, namely salary, commission and incentives.…”