Sales force compensation plans: Which best fits your company?

1988 ◽  
Vol 4 (1) ◽  
pp. 97-117
Author(s):  
Joseph Vaccaro
Keyword(s):  
Sales Force ◽  
Compensation Plans ◽  
Force Compensation

An Empirical Analysis of Sales-Force Compensation Plans

1992 ◽  
Vol 65 (1) ◽  
pp. 93 ◽  
Author(s):  
Anne T. Coughlan ◽  
Chakravarthi Narasimhan
Keyword(s):  
Empirical Analysis ◽  
Sales Force ◽  
Compensation Plans ◽  
Force Compensation

scholarly journals Sales force compensation and incentive schemes: Practices in the South African pharmaceutical industry

1999 ◽  
Vol 30 (3) ◽  
pp. 65-71
Author(s):  
Russell Abratt ◽  
Manfred Klein
Keyword(s):  
Pharmaceutical Industry ◽  
Literature Review ◽  
South African ◽  
Sales Force ◽  
The South ◽  
Compensation Plans ◽  
Incentive Schemes ◽  
Management Perspective ◽  
Force Compensation

Compensation plans that incorporate incentive schemes act as a sales force motivator. This study deals with sales force compensation plans from a management perspective, in the South African pharmaceutical industry. A literature review of incentive schemes is provided. Results are reported about the compensation plans and incentive schemes of 38 organisations. The design, implementation, and evaluation of sales force compensation and incentive schemes are discussed. Guidelines for the development of sales force incentive schemes are provided.

Reallocating Fixed and Variable Pay in Sales Organizations

2011 ◽  
Vol 43 (6) ◽  
pp. 346-360 ◽  
Author(s):  
Pankaj M. Madhani
Keyword(s):  
Sales Force ◽  
Goal Congruence ◽  
Compensation Plans ◽  
Factors Affecting ◽  
Sales Organization ◽  
Variable Pay ◽  
Sales Organizations ◽  
Incentive Plans ◽  
The Impact ◽  
Force Compensation

Organizations design and implement incentive plans to attract, retain and motivate their sales force. With the objective of achieving goal congruence between the sales organization and its sales force, many sales organizations implement variable pay plans. However, in the case of the sales carryover, such incentive plans do not always align sales force motivations with organization objectives. This article identifies various factors affecting sales carryover and examines its impact on the sales organization as well as the sales force. This article also recommends various strategies for mitigating the impact of sales carryover and suggests appropriate modifications in sales force compensation plans. By reallocating fixed and variable pay in compensation plans, sales organizations can inhibit the adverse impact of sales carryover and align the objectives of the sales organization and the sales force.

scholarly journals Involving Sales Managers in Sales Force Compensation Design

2020 ◽  
pp. 002224372096917
Author(s):  
Rob Waiser
Keyword(s):  
Sales Force ◽  
Theoretic Model ◽  
Sales Managers ◽  
Incentive Design ◽  
Compensation Plans ◽  
Level Information ◽  
Game Theoretic ◽  
True Knowledge ◽  
Compensation Design ◽  
Force Compensation

Sales force incentive design often involves significant participation by sales managers in designing the compensation plans of salespeople who report to them. Although sales managers hold valuable territory-level information, they may benefit from misrepresenting that information given their own incentives. The author uses a game theoretic model to show (1) how a firm can efficiently leverage a manager’s true knowledge and (2) the conditions under which involving the manager is optimal. Under the proposed approach, the firm delegates sales incentive decisions to the manager within restrictive constraints. She can then request relaxed constraints by fulfilling certain requirements. The author shows how these constraints and requirements can be set to ensure the firm’s best possible outcome given the manager’s information. Thus, this “request mechanism” offers an efficient, reliable alternative to approaches often used in practice to incorporate managerial input, such as internal negotiations and behind-the-scenes lobbying. The author then identifies the conditions under which this mechanism outperforms the well-established theoretical approach of offering the salesperson a menu of contracts to reveal territory-level information.

Managing Sales Force Compensation

2012 ◽  
Vol 44 (2) ◽  
pp. 86-99 ◽  
Author(s):  
Pankaj M. Madhani
Keyword(s):  
Sales Force ◽  
Force Compensation

Sales Force Compensation Design for Two-Sided Market Platforms

2019 ◽  
Vol 56 (4) ◽  
pp. 666-678 ◽  
Author(s):  
Hemant K. Bhargava ◽  
Olivier Rubel
Keyword(s):  
Network Effects ◽  
Sales Force ◽  
Compensation Plans ◽  
Agency Relationship ◽  
Indirect Network Effects ◽  
Compensation Plan ◽  
Sales Agent ◽  
Sales Compensation ◽  
Sales Agents ◽  
Compensation Design

The authors study the use of sales agents for network mobilization in a two-sided market platform that connects buyers and sellers, and they examine how the presence of direct and indirect network effects influences the design of the sales compensation plan. They employ a principal–agent model in which the firm tasks sales agents to mobilize the side of the platform that it monetizes (i.e., sellers). Specifically, the presence of network effects alters the agency relationship between the firm and the sales agent, requiring the platform firm to alter the compensation design, and the nature of the alteration depends on whether the network effects are direct or indirect and positive or negative. The authors first show how the agent’s compensation plan should account for different types of network effects. They then establish that when the platform firm compensates the agent solely on the basis of network mobilization on the side cultivated by the agent (sellers), as intuition would suggest, it will not fully capitalize on the advantage of positive network effects; that is, profit can be lower under stronger network effects. To overcome this limitation, the platform should link the agent’s pay to a second metric, specifically, network mobilization on the buyer side, even though the agent is not assigned to that side. This design induces a positive relation between the strength of network effects and profit. This research underlines the complexity and richness of network effects and provides managers with new insights regarding the design of sales agents’ compensation plans for platforms.

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