1 - How Do Firms Value Sales Career Paths?

Abstract
Business leaders typically view sales force compensation decisions as critical given the boundary role sales forces play between a company and its customers. Yet it is unclear how firms determine whether one sales career path drives more pay than another. In this study, we show how specialization within an industry, a firm or a sales occupation benefits sales managers and salespeople differentially throughout their careers. Specifically, we revisit the issue of compensation in sales organizations, in a way that relates specialization to compensation. We specify a model examining the influence of career history on more than 76,000 salespeople’s and 13,000 sales managers’ pay over 17 years. In particular, our theory and findings highlight that firms appear to secure their customers’ relationships thereby investing at a higher rate in sales managers’ seniority than in that of salespeople’s up to a point after which the marginal returns of seniority will decrease at a faster rate for sales managers than for salespeople. Consistent with earlier accounts pertaining to the multiplier effect of sales managers, we also show that sales managers’ industry and sales occupation experience are valued at higher levels and rates than salespeople’s whose tasks are considered more versatile (i.e., less industry- or sales-specific). Finally, we suggest that sales occupation experience is the most salient type of experience. We discuss the implications of our findings for research on sales compensation policies.

Authors: Alireza Keshavarz, Dominique Rouziès, Francis Kramarzc, Bertrand Quelin, Michael Segalla and Michael Ahearne
 

2 - The Effect of Pay Comparisons on Sales Organizations Performance

Abstract
Salespeople are implicitly encouraged to compare their pay to that of their best paid colleagues as sales organizations typically celebrate the achievement of top performers and link pay to performance. This paper offers substantive insights about the impact of pay comparisons on salespeople’s performance. Analyses of about 14,000 salespeople’s pay checks and performance measures in about 300 firms and 100 geographical areas, suggest that salespeople engage in pay comparisons with company superstars. Specifically, our results indicate that salespeople who are either lagging behind or closely approaching the pay of their superstar colleagues have lower performance levels compared to those in the middle of the pack. In addition, we find that comparisons with local superstars hurt more highly paid salespeople whereas comparisons with national superstars hurt more lower paid salespeople. We discuss how these results can help managers design better sales force compensation plans, an issue typically ranked among their top preoccupations.

Authors: Maria Rouziou, Dominique Rouziès and Dawn Iacobuci