4 - Salespeople: intermediaries in the dynamic management process

Summary

Effect of personal objectives and preferences on salespeople's behavior

Salespeople's reactions are likely to depend on their personal characteristics and preferences. This is the lesson that the management of a branch of an international corporation has learned the hard way (Darmon 1974). The International Agricultural Machine Corporation (IAM), an important producer of agricultural equipment, decided to increase its sales force motivation to improve its sales and profits. For that purpose, sales management increased the remuneration rates, partly linked to sales volume and partly to gross margins. Before it was implemented on a full scale basis, the reaction to new compensation plan had been tested by asking the opinions of a selected group of salespeople. They had been selected according to their co-operative attitudes, as perceived by their respective supervisors. Most of them were senior. As the test group recorded a unanimous favorable reaction, the new compensation plan was duly extended to the whole sales force.

The outcome of this new motivation program after a six-month period was extremely disappointing. The total sales volume was about the same as before. The compensation paid to the salespeople had substantially increased, and consequently, the total company profits had dropped.

Because of these unexpected results, the marketing manager asked an external expert to find out why the new compensation plan had failed and to propose a new solution which would effectively motivate the sales force.

The expert analyzed each individual's reactions to the new compensation plan. The results were illuminating.