The more a salesperson performance evaluation system is behavior-based rather than outcome-based,

Compensation & Benefits Review, Vol. 47, No. 2, pp. 81-90, 2015

13 Pages Posted: 19 Aug 2015 Last revised: 28 Sep 2017

Date Written: 2015

Abstract

Effective management and motivation of salesforce is crucial to the success of sales organization as it ensures proper salesforce focus on market needs and successful achievement of organization goals. Sales organizations have two main approaches for managing the behavior of their salesforce, namely, behavior-based (monitoring) and outcome based (incentives). A behavior system evaluates the salesforce in light of the selling process, while an outcome system evaluates the salesforce in light of results. This research identifies key characteristics of behavior- and outcome-based systems along with its benefits and drawbacks and suggests selection criteria for appropriate choice of behavior versus outcome measures. The study explains agency theory and highlights the underlying logic of short-term behavior of salespeople when compensated with incentives. Research also provides performance matrices for measurement and evaluation of financial impact of behavior and outcome control. The behavior-based and outcome-based control systems are at the extremes, and many sales organizations function in the middle, balancing the two. Finally, the study provides a numerical illustration to design an optimal performance measurement scenario based on behavior- and outcome-based measures.

Keywords: behavior control, outcome control, agency theory, fixed pay, variable pay

Suggested Citation: Suggested Citation

Madhani, Pankaj M., Managing Salesforce Performance: Behavior versus Outcome Measures (2015). Compensation & Benefits Review, Vol. 47, No. 2, pp. 81-90, 2015, Available at SSRN: https://ssrn.com/abstract=2645706

Abstract

Forms of control systems used in salesforce evaluation and based on the monitoring of outcomes or of behaviors are described, contrasted, and evaluated in terms of emerging theories in economics, organization theory, and cognitive psychology. Generally, the principles of behavior control as opposed to outcome control are found to be consistent with these theoretical perspectives with exceptions as noted, though studies of descriptive trends suggest that outcome control remains useful as a sales management philosophy. The authors conclude with a set of propositions intended to stimulate research on the managerial and behavioral consequences of the two control philosophies.

Journal Information

The Journal of Marketing (JM) develops and disseminates knowledge about real-world marketing questions relevant to scholars, educators, managers, consumers, policy makers and other societal stakeholders. It is the premier outlet for substantive research in marketing. Since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline?

Publisher Information

Sara Miller McCune founded SAGE Publishing in 1965 to support the dissemination of usable knowledge and educate a global community. SAGE is a leading international provider of innovative, high-quality content publishing more than 900 journals and over 800 new books each year, spanning a wide range of subject areas. A growing selection of library products includes archives, data, case studies and video. SAGE remains majority owned by our founder and after her lifetime will become owned by a charitable trust that secures the company’s continued independence. Principal offices are located in Los Angeles, London, New Delhi, Singapore, Washington DC and Melbourne. www.sagepublishing.com

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Abstract

The authors develop a conceptual model depicting relationships between salesforce control systems, characteristics, performance, and sales organization effectiveness as a framework for testing the propositions formulated by Anderson and Oliver (1987). The results from a study of 144 diverse sales organizations provide support for the relationship between behavior-based salesforce control systems and specific salesforce characteristics, different salesforce performance dimensions, and sales organization effectiveness. The results imply a limited role for incentive compensation in salesforce control systems. They also suggest the need for a proper blend between field sales management and compensation control and identify important avenues for future research.

Journal Information

The Journal of Marketing (JM) develops and disseminates knowledge about real-world marketing questions relevant to scholars, educators, managers, consumers, policy makers and other societal stakeholders. It is the premier outlet for substantive research in marketing. Since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline?

Publisher Information

Sara Miller McCune founded SAGE Publishing in 1965 to support the dissemination of usable knowledge and educate a global community. SAGE is a leading international provider of innovative, high-quality content publishing more than 900 journals and over 800 new books each year, spanning a wide range of subject areas. A growing selection of library products includes archives, data, case studies and video. SAGE remains majority owned by our founder and after her lifetime will become owned by a charitable trust that secures the company’s continued independence. Principal offices are located in Los Angeles, London, New Delhi, Singapore, Washington DC and Melbourne. www.sagepublishing.com

Rights & Usage

This item is part of a JSTOR Collection.
For terms and use, please refer to our Terms and Conditions
Journal of Marketing
Request Permissions

What is sales performance evaluation?

Which of the following method of salesperson performance evaluation has been described as having problems related to the halo effect?

What is the most often used approach for evaluating sales organization effectiveness?

Which of the following is not one of the characteristics of a behavior based performance evaluation perspective?