Motivating and Compensating

a Sales Employee
MOTIVATION IS THE CHOICE OF
AN INDIVIDUAL TO…
1. Initiate action on a certain task …
choice;
2. Expend a certain amount of effort on
that task … intensity;
3. Persist in expending effort over a
period of time … persistence.

The amount of effort the sales person

desires to expend on each activity
associated with the job.
 Fig. 8-2 Motivational Conditions

Are the Does better

YES performance YES Does more YES
rewards effort lead to
GREATER
lead to
worth the better EFFORT
effort? greater
rewards? performance?

NO NO NO

The same or less

effort
 Maslow’s Hierarchy of Needs…

n
s tio
ed iza
Fulfilled through:

n e ua l
Self-development,

ct
challenge.

f-a
Managerial actions:

l
Se
Provide/offer advanced
training, assignments to special
projects, more responsibility and
authority.
ne teem

Fulfilled through: Status, recognition.

s
ed
Es

Managerial actions: Recognize sales rep achievements

personally and publicly through title changes, commendation
l letters, promotions.
o cia s
S ed Fulfilled through: Affiliation, friendship, acceptance.
ne Managerial actions: Use team selling, hold social functions, distribute
employee newsletters, hold sales meetings, mentoring.
ne fety

Fulfilled through: Job security, safety, income security.

s
ed
Sa

Managerial actions: Provide safe work environment, set mutually agreed-upon

l performance standards, communicate job performance expectations and consequences
i ca of failure to perform.
l og
s
y sio ed Fulfilled through: Food, shelter, clothing, health care.
e
Ph n Managerial actions: Provide/offer adequate income and good benefits package.
 Hertzberg’s Dual-Factor
Theory

HYGIENE FACTORS MOTIVATION FACTORS

• pay • recognition
• company policies • responsibility
• supervision conditions • challenge
• work • growth opportunities
 Salespeople’s Perceived Reasons for Failure and
Their
Motivational Impact Motivational impact
Perceived reasons Positive Negative
Ability Seek help; get Become
frustrated additional training; and
discouraged; ask for supervisor’s give
up assistance; increase effort

Effort Work harder; make No change in

behavior more calls; work
longer hours

Strategy Change selling No change

in behavior strategy; adapt the
presentation

Task difficulty Work harder; Become

frustrated change strategies;
and discouraged; or seek help
give up

Luck No change in behavior Avoid the

situation
 Career Stages
 Exploration
 Primary concern is finding a suitable occupation
 Underdeveloped skills and knowledge
 Many drop out or are terminated
 Low expectancy instrumentality, high valence for personal
growth
 Establishment
 Primary concern is improving skills and performance
 Lack of promotion may cause disengagement or quitting
 New commitments make pay important
 High expectancy instrumentality, high valence for promotion and
pay
 Maintenance
 Primary concern is maintaining position, status, and
performance
 Have highest sales volumes and percentage of quota and pay
 High valence for recognitions, respect, and pay
 Low valence for promotion
 Disengagement
 Primary concern is preparing for retirement and/or developing
outside interest
Sales Contest Design
Elements
Promote
&
Publicize

Sales
Contest
Design

Attractive
Equally Variety of
Attainable Prizes
Goals
 Causes of Plateauing
No clear career path
Not managed adequately
Bored
Burned out
Economic needs met
Discouraged with company
Overlooked for promotion
Lack of ability
Avoiding risk of management job
Reluctance to be transferred
Fig 9-1 What a Good Sales
Compensation Plan Should Do

Efforts + Control Treat Attract and

Results activities of customers keep good
= sales reps properly people
Reward

Motivate the Good sales Economical yet

salesperson compensation competitive
plan

Security Flexible and

Fair Simple
and stable
incentive
Fig 9-2 Steps in designing a
sales
compensation plan

Identify Establish level

Review job plan’s of
description objectives
compensation

Develop the Decide on indirect Pretest and

method of monetary install plan
compensation compensation
Fig 9-4 Building Blocks for a Sales
Compensation Plan

Others

Profit Others
sharing
Pension Entertainmen
t
Profit Lodging
Moving Expenses Company Car
Sharing
Bonus Insuranc Lodging
e
Salary Commission Paid Travel
Vacation
SECURITY INCENTIVE BENEFITS EXPENSES
S
Method Advantage Disadvantage Best Used

Straight Provides security Direct incentive is For products that require a

salary and stability for easily lost if not lot of presale and/or post-
reps administered properly sale service
Better for directing Represents a fixed For building long-term
and controlling cost customer relationships
sales activities Requires supervision When supervision is available
Ensures proper to direct, control, and for new recruits
treatment of evaluate
For new territories
customers
For missionary sales
Straight Provides a strong Difficult to direct and When a strong incentive is
commissio incentive supervise sales needed to attain sales
n people
Sales people have For products that require
more freedom Customers’ best little presale and/or post-sale
interests may be service
Acts as a
screening method ignored The sale is a one-time sale
Sales people’s
Adequate field supervision is
earnings may not available
fluctuate widely
Company is in a weak
financial position
Company uses part-time or
independent sales people
Bonus Added incentive Added cost To encourage above-normal
Can be used for performance of specific
May be seen as
activities
specific activities - inequitable if not
flexible administered
Fig 9-1 What a Good Sales
Compensation Plan Should Do

Efforts + Control Treat Attract and

Results activities of customers keep good
= sales reps properly people
Reward

Motivate the Good sales Economical yet

salesperson compensation competitive
plan

Security Flexible and

Fair Simple
and stable
incentive
 Possible Combination
Compensation Plans

COMMISSION

BONUS
SALARY
Compensating Cross-Functional
Teams

Shared Reward
Role-reward congruence
Team-member input
Peer evaluations