Major Components of the Model

The model in Exhibit 7.1 suggests that the level of effort expended by a salesperson on each job-related task will lead to some level of performance on some performance dimension. These dimensions include, for example, total sales volume, profitability of sales, and new accounts generated. It is assumed the salesperson’s performance on some of these dimensions will be evaluated by superiors and compensated with one or more rewards. These might be externally mediated rewards, like a promotion, or internally mediated rewards, such as feelings of accomplishment or personal growth.

A salesperson’s motivation to expend effort on a given task is determined by three sets of perceptions: (1) expectancies—the perceived linkages between expending more effort on a particular task and achieving improved performance; (2) instrumentalities—the perceived relationship between improved performance and the attainment of increased rewards; and (3) valence for rewards—the perceived attractiveness of the various rewards the salesperson might receive.

Expectancies—Perceived Links between Effort and Performance

Expectancies are the salesperson’s perceptions of the link between job effort and performance. Specifically, expectancy is the person’s probability estimate that expending effort on some task will lead to improved performance on a dimension. Sales managers are concerned with two aspects of their subordinates’ expectancy perceptions: magnitude and accuracy. The following statement illustrates an expectancy perception: “If I increase my calls on potential new accounts by 10 percent [effort], then there is a 50 percent chance [expectancy] that my volume of new account sales will increase by 10 percent during the next six months [performance level].” Key questions that arise from a salesperson’s expectancies and their implications for sales managers are identified in Exhibit 7.2.

Instrumentalities—Perceived Links between Performance and Rewards

Like expectancies, instrumentalities are probability estimates made by the salesperson. They are the individual’s perceptions of the link between job performance and various rewards. Specifically, an instrumentality is a salesperson’s estimate of the probability that an improvement in performance on some dimension will lead to a specific increase in a particular reward. The reward may be more pay, winning a sales contest, or promotion. As with expectancies, sales managers should be concerned with both the magnitude and the accuracy of their subordinates’ instrumentalities.

Valences for Rewards

Valences for rewards are salespeople’s perceptions of the desirability of receiving increased rewards from improved performance. One question about valences that has always interested sales managers is whether there are consistent preferences among salespeople for specific kinds of rewards. Are some rewards consistently valued more highly than others?

Historically, many sales managers assume monetary rewards are the most highly valued and motivating rewards. They believe recognition and other psychological rewards are less valued and spur additional sales effort only under certain circumstances. Very little research has tested whether salespeople typically desire more pay than other rewards. Thus, the assumption is based largely on the perceptions of sales managers rather than on any evidence obtained from salespeople themselves.

There is evidence to suggest that other rewards are at least as important as financial compensation. One vice president of manufacturing for a large British based company puts it this way, “You can throw money at people—bonuses, incentives, rewards, additional skills training—and they’re all important parts of what the manager offers. But praise is number one. It goes a long way when you give them that pat on the back.” Recent research suggests that more and more companies consider other factors as or even more important than compensation. According to one sales executive, “Good management equals better performance and better motivation.” The use of cash as an incentive has actually been declining. Companies are incorporating other forms of incentives such as debit/gift cards and leisure trips.⁸

An even more extreme view of financial rewards argues that linking pay to performance can have a negative effect on employees’ motivation over time.⁹ In this view, when pay is tied to performance, employees become less interested in what they are doing and more interested in simply capturing the reward. Intrinsic motivation is eaten away by extrinsic motivators like commissions and incentive contests, and employee creativity and quality of work may suffer as a result.

In light of these contradictory arguments and research results, is the conventional wisdom that salespeople desire money more than other rewards wrong? Or do salespeople simply desire a greater variety of rewards and work-related options than individuals in other kinds of jobs? Several studies focused on business-to-business salespeople generally support the conventional view. Their findings suggest that, on average, salespeople place a higher value on receiving more pay than any other reward, including intrinsic rewards like feelings of accomplishment or opportunities for personal growth. More recently, research in a nonsales setting confirms the importance of financial incentives as the primary reward, although recognition among peers was also found to be a significant motivator.¹⁰ Informal surveys affirm that, while there are many different ways to motivate salespeople, compensation is still dominant. Overall, sales executives favor money, but offering other incentives makes sense in some cases. One high ranking sales executive summarized the view of many executives, “I’ll go with cash [as the best incentive]. People can’t always get away for trips. Besides, cash gives them a choice.”¹¹

No universal statements can be made about what kinds of rewards are most desired by salespeople and most effective for motivating them. Salespeople’s valences for rewards are likely to be influenced by their satisfaction with the rewards they are currently receiving. Their satisfaction with current rewards, in turn, is influenced by their personal characteristics and by the compensation policies and management practices of their firm.

Satisfaction

Is it possible to pay a salesperson too much? After a salesperson reaches a certain satisfactory level of compensation, does he or she lose interest in working to obtain still more money? Does the attainment of nonfinancial rewards similarly affect the salesperson’s desire to earn more of those rewards? The basic issues underlying these questions are whether a salesperson’s satisfaction with current rewards has any impact on the desire for more of those rewards or on different kinds of rewards. The relationship between satisfaction and the valence for rewards is different for rewards that satisfy lower-order needs (e.g., pay and job security) than for those that satisfy higher-order needs (e.g., promotions, recognition, opportunities for personal growth, self-fulfillment). Maslow’s theory of needs hierarchy,¹⁴ Herzberg’s theory of motivation,¹⁵ and Alderfer’s existence, relatedness, and growth theory¹⁶ all suggest that lower-order rewards are valued most highly by workers currently dissatisfied with their attainment of those rewards. In other words, the more dissatisfied a salesperson is with current pay, job security, and other rewards related to lower-order needs, the higher the desire to increase those rewards. In contrast, as salespeople become more satisfied with their attainment of lower-order rewards, the value of further increases in those rewards declines.

The theories of Maslow, Herzberg, and Alderfer further suggest that high-order rewards are not valued highly by salespeople until they are relatively satisfied with their low-order rewards. The greater the salesperson’s satisfaction with low-order rewards, the higher the desire for high-order rewards.

Perhaps the most controversial aspect of Maslow’s and Alderfer’s theories is the proposition that high-order rewards have increasing marginal utility. The more satisfied a salesperson is with the high-order rewards received from the job, the higher the value he or she places on further increases in those rewards.

Research in industrial psychology provides at least partial support for these suggested relationships between satisfaction and the valence of low-order and high-order rewards. Some of the evidence is equivocal, though, and some propositions—particularly the idea that high-order rewards have increasing marginal utility—have not been tested adequately.

In general, research suggests that salespeople who are relatively satisfied with their current income (a lower-order reward) have lower valences for more pay than those who are less satisfied. Most of these studies also report salespeople who are relatively satisfied with their current attainment of higher-order rewards, such as recognition and personal growth, tend to have higher valences for more of those rewards than those who are less satisfied. However, the evidence is mixed concerning whether salespeople who are relatively satisfied with their lower-order rewards have significantly higher valences for higher-order rewards than those who are less satisfied, as the theories would predict.¹⁷

Demographic Characteristics

Demographic characteristics, such as age, family size, and education, also affect a salesperson’s valence for rewards. At least part of the reason for this is that people with different characteristics tend to attain different levels of rewards and are therefore likely to have different levels of satisfaction with their current rewards. Although there is only limited empirical evidence regarding salespeople, some conclusions can be drawn from studies in other occupations.¹⁸ These conclusions are summarized in Exhibit 7.5.

Generally, older, more experienced salespeople obtain higher levels of low-order rewards (e.g., higher pay, a better territory) than newer members of the sales force. Thus, it could be expected that more experienced salespeople are more satisfied with their lower-order rewards. Consequently, they should have lower valences for lower-order rewards and higher valences for higher-order rewards than younger and less experienced salespeople.

A salesperson’s satisfaction with their current level of lower-order rewards may also be influenced by the demands and responsibilities he or she must satisfy with those rewards. A salesperson with a large family to support, for instance, is less likely to be satisfied with a given level of financial compensation than a single salesperson. Consequently, the more family members a salesperson must support, the higher the valence for more lower-order rewards.

Finally, individuals with more formal education are more likely to desire opportunities for personal growth, career advancement, and self-fulfillment than those with less education. Consequently, highly educated salespeople are likely to have higher valences for higher-order rewards.

Job Experience

As people gain experience on a job, they are likely to gain a clearer idea of how expending effort on particular tasks affects performance. Experienced salespeople are also more likely to understand how their superiors evaluate performance and how particular types of performance are rewarded in the company than their inexperienced counterparts. Consequently, a positive relationship is likely between the years a salesperson has spent on the job and the accuracy of his or her expectancy and instrumentality perceptions.

In addition, the magnitude of a salesperson’s expectancy perceptions may be affected by experience. As they gain experience, salespeople have opportunities to sharpen their selling skills; and they gain confidence in their ability to perform successfully. As a result, experienced salespeople are likely to have larger expectancy estimates than inexperienced ones.¹⁹

Psychological Traits

An individual’s motivation also seems to be affected by psychological traits. Various traits can influence the magnitude and accuracy of a person’s expectancy and instrumentality estimates, as well as valences for various rewards, as summarized in Exhibit 7.6. People with strong achievement needs are likely to have higher valences for such higher-order rewards as recognition, personal growth, and feeling of accomplishment. This is particularly true when they see their jobs as being relatively difficult to perform successfully.²⁰

The degree to which individuals believe they have internal control over the events in their lives or whether those events are determined by external forces beyond their control also affects their motivation. Specifically, the more salespeople believe they have internal control over events, the more likely they are to think they can improve their performance by expending more effort. They also believe improved performance will be appropriately rewarded. Therefore, salespeople with a high internal locus of control are likely to have relatively high expectancy and instrumentality estimates.²¹

There is evidence that intelligence is positively related to feelings of internal control.²² Those with higher levels of intelligence—particularly, verbal intelligence—are more likely to understand their jobs and their companies’ reward policies quickly and accurately. Thus, their instrumentality and expectancy estimates are likely to be more accurate.

Finally, a worker’s general feeling of self-esteem and perceived competence and ability to perform job activities (task-specific self-esteem) are both positively related to the magnitude of expectancy estimates.²³ Since such people believe they have the talents and abilities to be successful, they are likely to see a strong relationship between effort expended and good performance. Also, people with high levels of self-esteem are especially likely to attach importance to, and receive satisfaction from, good performance. Consequently, such people probably have higher valences for the higher-order, intrinsic rewards attained from successful job performance, although the lone study to examine the impact of self-esteem on salespeople’s reward valences failed to support this proposition.²⁴

Performance Attributions

People try to identify and understand the causes of major events and outcomes in their lives. These are called performance attributions. A given individual might attribute the cause of a particular event—such as good sales performance last quarter—to the following:

1. Stable internal factors that are unlikely to change much in the near future, such as personal skills and abilities.
2. Unstable internal factors that may vary from time to time, such as the amount of effort expended or mood at the time.
3. Stable external factors, such as the nature of the task or the competitive situation in a particular territory.
4. Unstable external factors that might change next time, such as assistance from an unusually aggressive advertising campaign or good luck.

The nature of a salesperson’s recent job performance, together with the kind of causes to which the rep attributes that performance, can affect the individual’s expectancy estimates concerning the likelihood that increased effort will lead to improved performance in the future.²⁵ Various attributions’ likely effects on the magnitude of a salesperson’s expectancy estimates are summarized in Exhibit 7.7.

As Exhibit 7.7 indicates, expectancy estimates are likely to increase if recent successful sales performance is attributed to either stable or unstable internal causes or to stable external causes. For instance, salespeople are likely to attach even higher expectancies to future performance where they take credit for past success, as the result of either superior skill (stable internal cause) or personal effort (unstable internal cause). Salespeople’s expectancies are also likely to increase where past success is attributed to a perception that the task is relatively easy (stable external cause). However, if past successful performance is attributed to an unstable external cause that could change in the next performance period—such as good luck—there is no basis for salespeople to revise their expectancy estimates in any systematic way.

Suppose a salesperson performed poorly last quarter. Exhibit 7.7 indicates the impact of that poor performance on the individual’s expectancy estimates is influenced by the causal attributions of the person. If the salesperson attributes poor past performance to stable causes that cannot be changed in the foreseeable future, such as low ability (stable internal cause) or a difficult competitive environment (stable external cause), his or her expectancy estimates are likely to be lower. Interestingly, research suggests that when salespeople attribute poor performance to stable internal causes (such as low ability), they blame themselves for the failure and may seek help from others in order to improve their performance next time. However, if the poor performance is attributed to an unstable internal cause— such as not expending sufficient effort to be successful—the person’s expectancies may actually increase. The person may believe performance can be improved simply by changing the internal factor that caused the problem last time—by expending more effort.

A key to the application of attributions to performance is the accurate analysis of the salesperson’s behavior and attitudes. If, for example, the salesperson consistently blames the customer, the competition, or the economic situation for poor performance when, in fact, the poor performance is due to internal factors (lack of effort or ability), then it is unlikely the problem can be easily corrected. Fortunately, research suggests that in most cases salespeople are realistic of their assessment of the attributing success or failure to specific external and internal factors.

Management Implications

The relationships between salespeople’s personal characteristics and motivation has two broad implications for sales managers. First, people with certain characteristics are likely to understand their jobs and their companies’ policies especially well. They also perceive higher expectancy and instrumentality links. Such people should be easier to train and be motivated to expend greater effort and achieve better performance. Therefore, as researchers and managers gain a better understanding of these relationships, it may be possible to develop improved selection criteria for hiring salespeople who are easy to train and motivate.

Second, and more important, some personal characteristics are related to the kinds of rewards salespeople value. This suggests sales managers should examine the characteristics of their salespeople and attempt to determine their relative valences for various rewards when designing compensation and incentive programs. Also, as the demographic characteristics of the sales force change, a manager should be aware that salespeople’s satisfaction with rewards and their valences for future rewards might also change. There is little doubt that understanding the nature of the relationship between the salesperson’s personal characteristics and motivation is difficult and requires a unique understanding of each individual. The Leadership box highlights how important it is to understand each individual in order to maximize their motivation.

Career Stages

Research has identified four career stages through which salespeople go: exploration, establishment, maintenance, and disengagement.²⁶ Typical paths of progression through these four career stages are diagrammed in Exhibit 7.8.

The Problem of the Plateaued Salesperson

Plateauing, or early disengagement, is not an isolated phenomenon among salespeople. Indeed, it has been suggested that 96 percent of all companies have a problem with plateaued salespeople.²⁷ Moreover, as many as 25 percent of all salespeople operate in a comfort zone that reduces or eliminates the motivation to be a high performer.

Supervisory Variables and Leadership

According to one highly regarded theory of leadership, a leader attains good performance by increasing subordinates’ personal rewards from goal attainment and by making the path to those rewards easier to follow—through instructions and training, by reducing roadblocks and pitfalls, and by increasing the opportunities for personal satisfaction.³⁰

This theory suggests that effective leaders tailor their style and approach to the needs of their subordinates and the kinds of tasks they must perform. When the subordinates’ task is well defined, routine, and repetitive, the leader should seek ways to increase the intrinsic rewards of the task. This might be accomplished by assigning subordinates a broader range of activities or by giving them more flexibility to perform tasks. When the subordinate’s job is complex and ambiguous, that person is likely to be happier and more productive when the leader provides relatively high levels of guidance and structure.

In most occupations, workers perform relatively well-defined and routine jobs, and they prefer to be relatively free from supervision. They do not like to feel their superiors “breathing down their necks.” Business-to-business salespeople, however, are different. They occupy a position at the boundary of their companies, dealing with customers and other nonorganization people who may make conflicting demands. Salespeople frequently face new, nonroutine problems. Consequently, evidence shows B2B salespeople are happier when they feel relatively closely supervised, and supportive supervision can increase their expectancy and instrumentality estimates for attaining extrinsic rewards. Closely supervised salespeople can learn more quickly what is expected of them and how they should perform their job. Consequently, such individuals should have more accurate expectancies and instrumentalities than less closely supervised salespeople. But, as we discussed, close supervision can increase role conflict since it can reduce flexibility in accommodating and adapting to customers’ demands.

Another organization variable related to the closeness of supervision is the firm’s first-level sales managers’ span of control. The more salespeople each manager must supervise (the larger the span of control), the less closely the manager can supervise each person. Therefore, the impact of span of control on role perceptions and motivation variables should be the opposite of the expected impact of close supervision, although this is changing as the result of technology.

Another related supervisory variable is the frequency with which salespeople communicate with their superiors. The greater the frequency of communication, the less role ambiguity salespeople are likely to experience and the more accurate their expectancy and instrumentality estimates should be. Again, however, frequent contact with superiors may increase the individual’s feelings of role conflict. At the same time, research suggests that salespeople who have a strong identification with their manager exhibit higher performance levels; however, over identification (the relationship between manager and salesperson becomes too close) can have a negative impact.³¹

Incentive and Compensation Policies

Management policies and programs concerning higher-order rewards, such as recognition and promotion, can influence the desirability of such rewards in the salesperson’s mind. For these rewards, there is likely to be a curvilinear relationship between the perceived likelihood of receiving them and the salesperson’s valence for them. For example, if a large proportion of the sales force receives some formal recognition each year, salespeople may think such recognition is too common, too easy to obtain, and not worth much. If very few members receive formal recognition, however, salespeople may believe it is not a very attractive or motivating reward simply because the odds of attaining it are so low. The same curvilinear relationship is likely to exist between the proportion of salespeople promoted into management each year (the opportunity rate) and salespeople’s desire for promotion.³²

Another issue is preferential treatment for “stars.” The goal of recognition and other forms of incentives is to motivate people to do better, but what happens when one star demands and receives much more than the average or even much more than the company’s other top performers?

A company’s policies on the kinds and amounts of financial compensation paid to its salespeople are also likely to affect their motivation. As seen, when a person’s lower-order needs are satisfied, they become less important and the individual’s valence for rewards that satisfy such needs, such as pay and job security, is reduced. This suggests that in firms where the current financial compensation is relatively high, salespeople will be satisfied with their attainment of lower-order rewards. They will have lower valences for more of these rewards than people in firms where compensation is lower.

The range of financial rewards currently received by members of a sales force also might affect their valences for more financial rewards. If some salespeople receive much more money than the average, many others may feel underpaid and have high valences for more money. The ratio of the total financial compensation of the highest-paid salesperson to that of the average in a sales force is the earnings opportunity ratio. The higher this ratio is within a company, the higher the average salesperson’s valence for pay is likely to be.

Finally, the kind of reward mix offered by the firm is a factor. Reward mix is the relative emphasis placed on salary versus commissions or other incentive pay and nonfinancial rewards. It is likely to influence the salesperson’s instrumentality estimates and help determine which job activities and types of performance will receive the greatest effort from that salesperson. The question from a manager’s viewpoint is how to design an effective reward mix for directing the sales force’s efforts toward the activities believed to be most important to the overall success of the firm’s sales program. This leads to a discussion of the relative advantages and weaknesses of alternative compensation and incentive programs, the topic of Chapter 11.

Questions

1. You are Terri Ann Masters. What would you do about Jason Benjamin?
2. What would you do with these younger salespeople who are looking for new opportunities inside the company?
3. Offer ideas on why Jason’s performance might have slipped after all these years with the company.

Situation

Maven Software provides unique solutions for dental offices that want to fully integrate their patient records, billing, insurance filing, and outbound patient correspondence. Maven started out in 1987 in St. Louis as a local provider of forms utilized by doctors and dentists for record-keeping. Bob Perkins (Bob Sr.) started the firm, and when he retired in 2011 Bobby (Bob Jr.) took over as CEO. In an amazing evolution, the company has become a leading provider in the United States of integrated software solutions for dentists (they made the decision in 2005 to fully devote their efforts to that one market).

Arthur Grabber is one of the three original employees hired by Bob Sr. Arthur was the original salesperson for Maven and for years devoted his time and energy to “beating the bushes” for business—originally largely by phone and, where possible, by face-to-face sales calls. The transition to a technology product focus was a little rough for Arthur, but his relationships with key clients he developed and nurtured over many years helped him overcome the product transition. Arthur is 55 and plans to retire at age 60. Instead of being “the” salesperson for Maven, he is now one of 23 client executives who live in geographically dispersed locations throughout the United States. The sales director is a very competent woman named Leona Jones, who came to Maven in 2015 after a ten-year career in sales management with Merck.

Lately, Leona has been thinking a lot about Arthur, his history with the company, and his enormous contributions to its success over 30 years. In a way, she is in awe of his accomplishments. On the other hand, he has been rather slow to adopt technological aids to the sales process (he is reluctant to use social media as a source of client communication, for example). And she is cognizant of the fact that at this stage in Arthur’s career, piling more salary and incentive pay onto him is very unlikely to motivate him to change his basic sales approach. Don’t misunderstand—it’s not that Arthur is a “problem” salesperson; he brings in slightly better sales results annually than the average. But she would like to find a way to address his impending move from the maintenance stage to the disengagement stage of the career cycle.

She picks up the phone and calls Arthur, who is working in his in-home office in a suburb of St. Louis. She asks him to schedule a meeting to catch up on a few things related to planning business for the remainder of the year. During that meeting, she also plans to open up a nonthreatening, friendly dialogue about how Arthur would like to see his last five years with Maven unfold.

Characters in the Role-Play

Arthur Grabber, client executive for Maven Software, based in St. Louis

Leona Jones, sales director for Maven Software, based in St. Louis

Assignment

Break into pairs, with one student playing each character. The student playing Arthur simply needs to get into the character of a salesperson at his stage of the career cycle. The student playing Leona needs to develop a set of issues to bring up with Arthur about important aspects of how to enhance his productivity and satisfaction as he moves into the last few years of employment with the company. The dialogue should be positive, with the goal to come out of the meeting with some specific items for follow-up and implementation.

Catalina Curtis

Catalina is a woman in her 30s with a husband and two small children at home. She was once a television weather forecaster (she would say “meteorologist”) but got fired and was forced to do something else. She thought that working in sales would be for the short term until another television opportunity came about, but she has now been in Land Escape sales for about three years. Trying to make the best of a bad situation, she was very enthusiastic when she first began selling, but her enthusiasm and energy level have been waning as she has realized that she will probably continue doing sales for the long term. She and her husband feel some financial pressure because of their decision to put their children in private school, which is very costly. The economy has been difficult, and Catalina is beginning to believe she cannot succeed no matter what she does.

She is somewhat insecure and sensitive but conscientious and a team player. She likes people and seeks personal relationships with customers and takes a long-term approach. Her philosophy is “if potential customers don’t want to buy right away, I don’t pressure them. I will keep in contact with them and eventually they will come back and buy.” Denise does not care for Catalina’s style and tends to let her operate without supervision, because, frankly, she doesn’t know what to tell her to do better.

Zach Jones

Zach is 25 years old, just two years out of college. He has been with Land Escape for approximately eight months now. He is a perfectionist and highly competitive. Before he came to Land Escape, he had no previous sales experience, but he does have a natural selling skill. He is a little bit of a loose cannon and is not afraid to bend or even break the rules. Needless to say, he is not the least bit self-conscious. Some find him friendly and like his engaging style; however, some are turned off by it and see him as a stereotypical “slick” salesperson.

His goal is to make as much money as possible in a short amount of time. He will decide later whether he wants to stay in sales for the long term; right now he just wants to be young and have fun. He is favored by the sales manager, Denise, who sees him as a potential star because of his early success. As a result, she gives him closer supervision and guidance.

John Sargent

John is the dean of the group at age 53. He has been in Land Escape sales since its inception 12 years ago and was in sales for ten years before that time. He is good at what he does. He says, “I’ve pretty much mastered the art of time-share selling, and I’m cruising along. I know exactly how much effort to make to get the sale, so why should I do any more than that?”

His art-collecting hobby now interests him more than selling, and he has no desire to be promoted to sales manager or move to a different location. John is somewhat resentful that he has a female manager who has less experience than he does and has made it known that he needs no supervision from her. He does well enough that Denise complies and just lets him sell without a close watch.

Denise knows she needs to make some changes, but is not sure what to do. She feels the current compensation plan of 70 percent commission and 30 percent salary is fairly generous, and she even runs the occasional sales contest to boost numbers during the slower months. She had better think of something quickly before the VP gives her a “permanent vacation.”

Questions

1. In what career stage would you place each of the three salespeople?
2. If you were the sales manager, how would you motivate each salesperson? Explain your recommendations.
3. What measures might you use to motivate them as a group?