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6e SM Module08
6e SM Module08
Learning Objectives
1. 2.
3.
4.
Explain the key components of motivation; intensity, persistence, and direction. Explain the difference between compensation rewards and non-compensation rewards. Describe the primary financial and non-financial compensation rewards available to salespeople. Describe salary, commission, and combination pay plans in terms of their advantages and disadvantages.
Ingram
Schwepker Jr.
Learning Objectives
5. 6.
7.
Explain the fundamental concepts in salesexpense reimbursement. Discuss issues associated with sales contests, equal pay for equal work, team compensation, global compensation, and changing a reward system. List the guidelines for motivating and rewarding salespeople.
Ingram
Schwepker Jr.
Ingram
Schwepker Jr.
Motivation
The force within us that activates our behavior. It is a function of three distinct components, Intensity, Direction, and Persistence.
Motivation
Intensity
Direction
Persistence
Ingram
Schwepker Jr.
Motivation - Intensity
Intensity refers to the amount of mental and physical effort put forth by the salesperson.
Motivation
Intensity
Direction
Persistence
Ingram
Schwepker Jr.
Motivation - Direction
The extent to which an individual determines and chooses efforts focused on a particular goal.
Motivation
Intensity
Direction
Persistence
Ingram
Schwepker Jr.
Motivation - Persistence
The extent to which the goal-directed effort is put forth over time.
Motivation
Intensity
Direction
Persistence
Ingram
Schwepker Jr.
Intrinsic
When doing the job is inherently motivating
Motivation
Extrinsic
When rewards such as pay and formal recognition act as motivators
Ingram
Schwepker Jr.
Compensation Rewards:
Those given in return for acceptable performance or effort. They can include nonfinancial compensation.
Non-Compensation Rewards:
Those beneficial factors related to the work situation and well-being of each salesperson.
Ingram
Schwepker Jr.
3. 4.
Provides an acceptable ratio of costs and sales force output in volume, profit, or other objectives Encourages specific activities consistent with the firm's overall, marketing, and sales force objectives and strategies Attracts and retains competent salespeople, thereby enhancing long-term customer relationships Allows the kind of adjustments that facilitate administration of the reward system.
Ingram
Schwepker Jr.
Intrinsic
Sense of Accomplishment Personal Growth Opportunities
Motivation
Extrinsic
Pay
Job security
Promotion
Recognition
Ingram
Schwepker Jr.
Disadvantages
- Salaries offer little incentive for better performance. - Salary compression could cause perceptions of inequity among experiences salespeople. - Salaries represent fixed overhead.
Ingram
Schwepker Jr.
Disadvantages
- Straight commission plans contribute little to company loyalty. - Problems may also arise if commissions are not limited by an earnings cap.
Ingram
Schwepker Jr.
Schwepker Jr.
Progressive rates:
Rates that increase as salespeople reach prespecified targets.
Regressive rates:
Rates that decline at some predetermined point.
Ingram
Schwepker Jr.
Disadvantages
- It may be difficult to determine a formula for calculating bonus achievement if the objective is expressed in subjective terms. - If salespeople do not fully support the established objective, they may not exert additional effort to accomplish the goal.
Ingram
Schwepker Jr.
Disadvantages
- Combination pay plans are more complex and difficult to administer. - A common criticism of combination pay plans is that they tend to produce too many salesforce objectives.
Ingram LaForge Avila Williams
Schwepker Jr.
Nonfinancial Compensation
Opportunity for Promotion:
The ability to move up in an organization along one or more career paths
Sense of Accomplishment:
The internal sense of satisfaction from successful performance Sales managers should facilitate salespeoples ability to feel this a sense of accomplishment
Ingram
Schwepker Jr.
Nonfinancial Compensation
Opportunity for Personal Growth:
Access to programs that allow for personal development (e.g., tuition reimbursement, leadership development seminars)
Recognition:
The informal or formal acknowledgement of a desired accomplishment
Job Security:
A sense of being a desired employee that comes from consistent exceptional performance
Professional Selling: A Trust-Based Approach Ingram LaForge Avila Williams
Schwepker Jr.
Sales Expenses
Ingram
Schwepker Jr.
Sales Contests Equal Pay Team Compensation Global Considerations Changing the Reward System
Ingram
Schwepker Jr.
Ingram
Schwepker Jr.
Ingram
Schwepker Jr.
Do involve reps from key countries Do allow local managers to decide the mix between base and incentive pay Do use consistent performance measures (results paid for) and emphasis on each measure Do allow local countries flexibility and implementation Do use consistent and indication and training themes worldwide
Ingram LaForge Avila Williams
Schwepker Jr.
Dont assign the planned centrally and dictate to local countries Dont create a similar framework for jobs with different responsibilities Dont require consistency on every performance measure within the incentive plan Dont assume cultural differences can be managed through the incentive plan Dont perceive without the support of senior sales executives worldwide
Ingram LaForge Avila Williams
Schwepker Jr.
Ingram
Schwepker Jr.
Ingram
Schwepker Jr.