Advanced SearchSearch Tips
Investigating Dynamics in Salesforce Compensation Plan
facebook(new window)  Pirnt(new window) E-mail(new window) Excel Download
 Title & Authors
Investigating Dynamics in Salesforce Compensation Plan
Jung, Hojin; Kwon, Kyoung-Min;
  PDF(new window)
This study explains about a phenomenon where the structure of the compensation plan for a single salesperson may vary as he/she gains experience. Unlike past studies that implicitly assume the limited effect on salesperson's experience, our result predicts that a salesperson will make an effort at every period early in his/her career without any commissions in order to gain experience. However, if one cannot expect any marginal returns of accumulated efforts, the sales manager must provide commissions on the high volume of sales at each period, to facilitate a high effort of a salesforce at earlier periods. Our paper provides important implications about dynamics in the compensation plan, which has not been addressed in the past studies but has frequently been witnessed in practice.
Salesforce Compensation;Dynamics in Compensation Plan;Salesperson Experience;
 Cited by
A. K. Basu, R. Lal, V. Srinivasan, and R. Staelin, "Salesforce compensation plans: An agency theoretic perspective," Marketing science, Vol.4, No.4, pp.267-291, 1985. crossref(new window)

R. Lal and R. Staelin, "Salesforce Compensation Plans in Environments With Asymmetric Information," Marketing Science, Vol.5, No.3, pp.179-198, 1986. crossref(new window)

R. C. Rao, "Compensating Heterogeneous Salesforces: Some Explicit Solutions," Marketing Science, Vol.9, No.4, pp.319-341, 1990. crossref(new window)

J. S. Raju and V. Srinivasan, "Quota-Based Compensation Plans for Multiterritory Heterogeneous Salesforces," Management Science, Vol.42, No.10, pp.1454-1462, 1996. crossref(new window)

A. Gaba and A. Kalra, "Risck Behavior in Response to Quotas and Contests," Marketing Science, Vol.18, No.3, pp.417-434, 1999. crossref(new window)

A. Kalra and M. Shi, "Designing Optimal Sales Contests: A Theoretical Perspective," Marketing Science, Vol.20, No.2, pp.170-93, 2001. crossref(new window)

S. M. Lee, "A Study on the Difference Job Satisfaction Between Korean Brand and Foreign Brand in the Restaurants Business," The Journal of the Korea Contents Association, Vol.6 No.7, pp.119-126, 2006.

G. John and B. Weitz, "An Empirical Investigation of Factors Related to the Use of Salary Versus Incentive Compensation," Journal of Marketing Research, Vol.26, No.1, pp.1-14, 1989. crossref(new window)

R. Lal, D. Outland, and R. Staelin, Salesforce Compensation Plans: An Empirical Test of the Agency Theory Framework, Graduate School of Business, Stanford University, 1990.

M. Ghosh and G. John, "Experimental Evidence for Agency Models of Salesforce Compensation," Marketing Science, Vol.19, No.4, pp.348-365, 2000. crossref(new window)

L. Argote and D. Epple, "Learning Curves in Manufacturing," science, Vol.247, pp.920-924, 1990. crossref(new window)

I. Kwon, "Incetives, Wages, and Promotions: Theory and Evidence," Rand Journal of Economics, Vol.37, No.1, pp.100-121, 2006. crossref(new window)