Sales Management: Shaping Future Sales Leaders

Motivating and Rewarding

Salespeople
Chapter 12

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Learning Objectives
 Summarize how motivation has been conceptualized and how
the contributions of past studies can be incorporated into
managerial activities
 Explain the different models of motivation and how sales
managers can utilize them
 Identify generational differences in motivation and how to
adapt motivational approaches for each group
 Describe how managers can utilize different motivational
elements available to sales organizations
 Distinguish different situations in which financial and
nonfinancial rewards should be used to motivate salespeople
 Illustrate how compensation systems can be utilized to
address different motivational needs
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
What Motivates Salespeople?

Intrinsic Motivation Extrinsic Motivation

Factors Factors

 Things that are done because the  External to the job and are done in
person finds doing the activity a order to obtain a monetary or
reward in itself physical reward, a social reward,
 Intrinsically motivated people love or to avoid punishment
their work and take pride in  Wages, incentives, awards, job
feelings of accomplishment it title that reflects status
provides them  Extrinsically motivated people
 Less concern or desire for focus on what they receive or
economic or personal gains don’t receive for their efforts
 Work is not of utmost
importance, it’s what they get
for it

12-3
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Self-Assessment Library
 Go to http://www.prenhall.com/sal/
 Access code came with your book
 Click the following
 Assessments
I. What About Me?
C. Motivation Insights
1. What Motivates Me?

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Understanding What Motivates Sales
Reps: Content Approaches

Maslow’s  Classifies needs by levels: psychological, security,

social, ego, self-actualization
Hierarchy  When needs in one level are met, factors in the next
of Needs level will motivate a person

McClelland’s
 People are motivated by various amounts of these
Needs needs: achievement, affiliation, power
Approach

Herzberg’s  Two-factor approach suggests reps need motivators

Motivation- present and hygiene factors absent or neutral
Hygiene  Motivating factors intrinsic, hygiene factors extrinsic

12-6
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Understanding What Motivates Sales
Reps: Process Approaches

Equity  Rep weighs perceived inputs and outcomes in

comparison to others and decides if effort/reward
Theory ratio is fair, realigns efforts to be rewarding

Expectancy  Rep will choose to behave to give them the highest

motivational force in order to maximize efforts they
Theory find pleasurable and minimize those that aren’t

12-7
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Content Approaches:
Maslow’s Hierarchy of Needs

Definition Application

 Classifies need  Use reinforcements that meet

 Physiological (basic survival needs at each level
needs)  Physiological: salary and bonus
 Security (need to be safe, for  Security: insurance, retirement
shelter)  Social: work/life balance (flex
 Social (belongingness, need to hours, job share, etc.)
have interaction, friendships)  Ego: recognition for
 Ego (need to feel good about accomplishments
yourself, receive recognition)  Self-actualization: satisfaction
 Self-actualization (need to with balance between work
reach fullest potential) accomplishment and home life
 When needs in 1 level are met,
factors in the next motivate

12-8
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Content Approaches:
McClelland’s Needs Approach

Definition Application

 People are motivated by various  Match reps with rewarding

amounts of these needs aspects of job
 Achievement (desire to perform  Achievement: provide
challenging tasks) interesting and stimulating job
 Affiliation (need to be liked)  Affiliation: provide friendly
 Power (need to take charge) relationships and avoid
confrontational situations or
providing negative feedback
(effective leaders)
 Power: tasks where they can
lead, teach or coach

12-9
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Content Approaches: Herzberg’s
Motivation-Hygiene (2-Factor Approach)

Definition Application

 Reps need to have a job with  Consider presence or absence of

motivators present and hygiene groups of factors
factors absent or neutral  Make sure rep finds work
 Motivating factors are intrinsic interesting and challenging
to job  Build motivating factors—
 Achievement, recognition, the opportunities for achievement,
work itself, responsibility, recognition, enjoyable work,
advancement, growth responsibility, and advancement
 Hygiene factors are extrinsic into activities
 Company policies and admin,  Ensure hygiene factors are not
supervision, relationship with considered negative and
supervisor, work conditions, working as de-motivators
salary, relationship with peers,
status, security

12-10
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Process Approaches:
Adam’s Equity Theory

Definition Application

 Rep weighs perceived inputs and  Consider rep’s perception of

outcomes in comparison to others motivators in comparison to peers
 Decides if effort/reward ratio is  Be attentive to comments
equitable, realigns efforts to be regarding concerns about
rewarding fairness
 Inputs: perception of training,  Ask reps to explain their
experience, effort, hardships, etc perception of how they compare
 Outputs: perception of with a top performer
compensation, benefits, status,
job security, etc
 Balancing: compare
input/outcome ratio—equity,
overpayment inequity,
underpayment inequity

12-11
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Process Approaches:
Expectancy Theory

Definition Application

 Rep will choose to behave in the  Focus on highest motivators or on

manner that gives them the highest how to raise the level of lower ones
motivational force to maximize  Understand what value reps
pleasurable efforts and minimize place on different rewards
those that are not  Help improve reps performance;
 Reps value outcomes differently make sure they receive good
(recognition, travel, etc.) training and are prepared; align
 Reps realize different levels of reps to clients whose needs are
effort are required for tasks consistent with their abilities
 Performances have different  Include other performance
likelihoods of producing measures beyond just a sale and
outcomes; some situations are include incentive system that
more certain than others reflects different levels of
performance

12-12
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Dos and Don’ts of Motivating Reps
1
Hire self-motivated people
2
Show trust
3
Capitalize on unique strengths of employees
4
Encourage some people to become experts
5
Empower reps to make their own decisions
6
Offer rewards that are valued by all
7
Develop or remove deadbeats
12-13
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Financial and Nonfinancial Rewards
What motivates you as a salesperson?
 Achieving a team goal and all of us going on a
four-day cruise
 Receiving a gift from the company president at a
company-wide meeting
 The owner’s verbal recognition
 A work environment that lets me work part of the
day at home to balance my family needs
 A trip to Hawaii for reaching a sales goal
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Financial and Nonfinancial Rewards
(continued)

 A personal gift selected for me by the company

president
 Sending me to a seminar that helps me become
more productive
 A trip to a special spa
 Quarterly bonuses. The extra
money helps with the bills
 Being selected for the
President’s club (and the ring
or trip that comes with it)

12-15
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 Components of a Reward Program

Marketplace Organizational Business Total Rewards

Environment Culture Strategies Strategy

How do market How does an How does the Compensation

and industry organization’s strategy of a
Benefits
factors affect culture affect business affect
the rewards a the rewards the the rewards a Work-Life
firm offers its firm offers its firm offers its Rewards
salespeople? salespeople? salespeople?
Recognition
Development

12-17
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Compensation
 Majority of reps compensated under a
combination plan, which includes a salary
component and a variable pay component
 60% use combination pay plans
 20% use straight salary plans
 10% use commission-only plans

12-18
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Base Salary
 Fixed amount of compensation a rep receives
 Cost-of-living allowance (COLA): differential pay
based on higher cost of living in an area
 Good when firm wants rep to offer exceptional
customer service (Saturn), when difficult to trace
role of individual in sale, or when rep is just starting
out, developing his book of business (clientele)
 Advantage: steady income
 Disadvantage: productivity not rewarded, reps
might produce minimal level of work
12-19
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Discussion Question
 If you were to hold a sales contest and offer a trip
as an award, what location would you pick?
 For each generation, identify a location that you
believe they would find particularly motivating
and explain why

12-20
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Variable (Incentive) Pay
 Bonus: lump sum of cash used to reward sales
personnel
 Stock options: allow reps to purchase their company’s shares
at reduced prices
 Team-based pay: reward for group productivity
 Commission: % of the price of the product or service
the rep earns
 Progressive plan: increases % of commission rep earns for
each progressive level of sales
 Encourage rep to sell as much as possible
 Regressive plan: decreases % commission rep earns when
they sell more products and services
 Sets firm limit amount reps can earn when selling an easy-to-sell product or
service (order-takers)

12-21
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Progressive vs. Regressive Plans

12-22
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Commission-Only Plan
 Advantage
 Pay only for successful sales efforts—don’t pay reps
who do a poor job or don’t contribute to the firm’s profit
 Disadvantage
 If sales are slow, reps will receive low income, better
salespeople will leave
 If product takes little effort to sell, reps will earn lots of
money without much effort
 Risk of reps focusing solely on activities that earn the
largest commission

12-23
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Combination Plan
 Includes both salary and incentives
 Designed to capitalize on advantages base
salary and incentive programs offer and minimize
disadvantages
 Base salary = security, incentives = motivation

12-24
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Work-Life Rewards
 Workplace flexibility programs
 Leaves of absence
 Health and wellness programs
 Community
involvement programs
 Care for dependents
 Financial support
programs

12-29
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Fired? For Smoking?
 Assume your employer can demonstrate the job-
related costs of smoking and offers smoking
cessation clinics to all employees. Can you be
fired for smoking?
 Maybe. Scott Rodrigues was fired on his 30th
birthday for being a smoker. The former Scotts
Miracle-Gro (the lawn care company) employee
is suing the company.

Source: “Get Healthy – or Else,” Michelle Conlin, Business Week, Feb 26, 2008, 4023, 58-69.

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Popularity of Recognition Programs
 85% of companies report their sales managers
use recognition rewards

Source: Based on Kornik, Joseph (2007). “What’s It All Worth? 2007 Compensation Survey,” Sales &
Marketing Management Vol. 159, No. 4, pp. 27–39.
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Recommendations for Successful
Sales Contests
 Use them sparingly; if you use contests too
frequently or on a predictable schedule, reps
might hold back on selling until contest starts
 Be selective in what products/services to include;
including new, unproven products and services
helps motivate reps to learn about them and sell
them
 Make the rewards you offer attractive to reps of
all ages and experience levels; use rewards that
motivate all groups

12-32
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Expense Accounts
 Fuel, transportation
 Business trips: airfare, lodging, food, car rentals
 Home office: laptops and software, cell phones, office
supplies and printers, Internet charges, and voice and
data communications systems
 Unlimited reimbursement plan: all expenses are
covered
 Per diem plan: rep is allocated certain amount of money
for each day traveled
 Limited plan: exact amounts for each meal and travel
expense are set
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Comparison of Expense Account Plans

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Personal Development and
Career Opportunities
 Learning opportunities include access to new
educational experiences
 Coursework
 Corporate athlete
 Sales meeting
 Mentoring
 Succession planning

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