The impact of matching sales compensation with characteristics of the salesperson, the strategic business unit, and the corporation

Sales force compensation presents an important strategic decision to many firms. It has been widely acknowledged that the compensation of the sales force may be used to enhance sales, control sales force activities, and improve customer relationships (Coletti and Cichelli 1991, Stanton and Buskirk 1987, and Gomez-Mejia and Balkin 1992). Despite the acknowledged importance of sales force compensation, the marketing literature on the topic is rather limited. Of the existing sales compensation studies, most simply pit the two main types of compensation systems (i.e., behavior/salary and output/incentive) against each other (Oliver and Anderson 1994 and Cravens et al. 1993). The literature to date has neglected to consider the idea that the effectiveness of the compensation system may be contingent on other factors. This study serves to expand current knowledge concerning the effectiveness of sales force compensation by examining possible moderators. Based on contingency theory, it is proposed that the effectiveness of type of compensation cannot be adequately assessed without consideration of these factors. It is hypothesized that the fit between the chosen type of compensation and other variables will determine the overall effectiveness of the compensation program. Thus, this study addresses the following key research question: Does a good fit between the type of compensation and other variables impact employee satisfaction, stress, turnover intentions, and/or performance? To test the proposed hypotheses, two empirical studies were conducted. Study 1 employed a survey methodology. Questionnaires were mailed to approximately 1,000 salespeople from public firms within the service industry. Approximately, 21% of salespeople completed and returned the questionnaire. Questionnaires included multi-item scales for the dependent measures and some of the independent measures. The remaining measures were obtained from secondary company information. Multivariate analysis of covariance and planned comparisons were used to test for moderator effects. Study 2 proposed a conjoint methodology. In total, 500 additional service salespeople were mailed a questionnaire of which 20% responded. This questionnaire asked participants to report their preferences for certain job situations offering different manipulations of the independent variables. (Abstract shortened by UMI.)