Outcome vs. Behavioral Control Systems. Definitions, theories and examples Impact on salespeople Implications for managers Where on the continuum “should” a firm be and why Relationship to compensation. Recall from the Jamestown Case. Low Control (OUTCOME). High Control (BEHAVIOR).
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Direct with commission, low supervision
Direct with salary, high supervision
Oriented toward personal bottom line
“Get off my back”
Take customers’ side more than management’s side
Generates short-term results: sales, growth, etc.
BEHAVIOR CONTROL (high % salary)
More oriented toward mutual benefit
Relatively cooperative w/ mgmt.
Tends to see mgmt’s viewpoint more when balancing customer interests
Generates strategic results: customer satisfaction, new product introduction, lower turnover, etc.Impact of Control Systems: How Salespeople Think, Feel, Behave
Mercer/Compensation & Benefits Review Survey- 1994
Food and Beverages
Soaps, Cosmetics, Consumer Packaged Goods
Lesley Barnes, “Finding the Best Sales Compensation Plan,” Sales and Marketing Management, (August 1986), pp. 46-49.
Assess the firm’s marketing and sales objectives, and current performance of the sales force
Determine aspects of job performance to be rewarded (desired instrumentalities)
Assess personal characteristics of salespeople and their valences for alternative rewards
Determine most attractive and motivating mix of rewards
Decide on most appropriate level of total compensation
Decide on form and % of incentive-Commission,Bonus, Contest
(short-term incentive awards)
Communicate the program to the sales force
Do analysis to determine the cost of program under various scenarios/ modify plan if necessary.Steps in Designing Compensation Programs