Business and Management INK

How to Manage Salesforce Performance Measures? An Optimal Choice Between Behavior Versus Outcome Approaches

August 26, 2015 1942

CBR_42_1_72ppiRGB_powerpoint[We’re pleased to welcome Pankaj M. Madhani of ICFAI Business School (IBS) in India. Dr. Madhani is the author of “Managing Salesforce Performance: Behavior Versus Outcome Measures” which appeared in the most recent issue of Compensation and Benefits Review.]

As selling is an unique and independent occupation, effective management of salespeople plays a critical role in realizing their full potential and hence contributes immensely to the success of sales organization. Sales organizations have two main approaches for managing the behavior of their salesforce, namely, behavior-based (monitoring) and outcome-based (incentives). A behavior system evaluates the salesforce in light of the selling process, while an outcome system evaluates the salesforce in light of results. This research identifies key characteristics of behavior- and outcome-based systems along with its benefits and drawbacks and suggests selection criteria for appropriate choice of behavior versus outcome measures.

Behavior measures attempt to control the process of selling as opposed to just the outcomes while outcome measures focus on getting the results and are essentially indifferent to how those results are obtained. The study explains this behavior with the help of agency theory and highlights the underlying logic of short-term behavior of salespeople when compensated with incentives. Research also provides performance matrices for measurement and evaluation of financial impact of behavior and outcome control. The behavior-based and outcome-based control systems are at the extremes, and many sales organizations function in the middle, balancing the two. Finally, the study provides a numerical illustration to design an optimal performance measurement scenario based on behavior- and outcome-based measures.

You can read “Managing Salesforce Performance: Behavior Versus Outcome Measures” for free by clicking here. Want to know about all the latest research from Compensation and Benefits Review? Click here to sign up for e-alerts!


857da02a30227a2416653fe028aa8c16Pankaj M. Madhani earned bachelor’s degrees in chemical engineering and law, a master’s degree in business administration from Northern Illinois University, a master’s degree in computer science from Illinois Institute of Technology in Chicago, and a PhD in strategic management from CEPT University. He has more than 28 years of corporate and academic experience in India and the United States. During his tenure in the corporate sector, he was recognized with the Outstanding Young Managers Award. He is now working as professor at ICFAI Business School (IBS) where he received the Best Teacher Award from the IBS Alumni Federation. He is also the recipient of the Best Mentor Award. He has published various management books and more than 240 book chapters and research articles in several refereed academic and practitioner journals such as World at Work Journal and The European Business Review. He is a frequent contributor to Compensation & Benefits Review and has published 15 articles on sales compensation. His main research interests include salesforce compensation, corporate governance, and business strategy.

Business and Management INK puts the spotlight on research published in our more than 100 management and business journals. We feature an inside view of the research that’s being published in top-tier SAGE journals by the authors themselves.

View all posts by Business & Management INK

Related Articles

The Role of Place in Sustainability
Business and Management INK
October 28, 2024

The Role of Place in Sustainability

Read Now
Turning to Glitter in Management Studies – Why We Should Take ‘Unserious’ Glitter Serious to Understand New Management Practices
Business and Management INK
October 24, 2024

Turning to Glitter in Management Studies – Why We Should Take ‘Unserious’ Glitter Serious to Understand New Management Practices

Read Now
Utilizing Academic-Practitioner Partnering for Societal Impact
Business and Management INK
September 17, 2024

Utilizing Academic-Practitioner Partnering for Societal Impact

Read Now
Trippin’ Forward: Management Research and the Development of Psychedelics
Business and Management INK
September 9, 2024

Trippin’ Forward: Management Research and the Development of Psychedelics

Read Now
Using Ethnography to Explore Entrepreneurial Extracurricular Activities

Using Ethnography to Explore Entrepreneurial Extracurricular Activities

Co-authors Birgitte Wraae and Nicolai Nybye reflect on the inspiration behind their research article, “Learning to Be “Me,” “the Team,” and “the Company” Through Entrepreneurial Extracurricular Activities: An Ethnographic Approach,” published in Entrepreneurship Education and Pedagogy.

Read Now
The Future of Business is Interdisciplinary 

The Future of Business is Interdisciplinary 

By actively collaborating with industry, developing interdisciplinary programs and investing in hands-on learning opportunities, business schools can equip graduates with the specific skills and experiences that employers are seeking.

Read Now
The Co-Creation Edge in Marketing Education

The Co-Creation Edge in Marketing Education

In this article, co-authors Maria Petrescu, John T. Gironda, Anjala S. Krishen, Adina Dudau, J. Ricky Fergurson, Steven A. Stewart, Philip Kitchen, and Monica Fine reflect on the inspiration behind […]

Read Now
0 0 votes
Article Rating
Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Dr.Uma Sreedhar

It’s a wonderful article and a very apt in the current scenario. This is very useful for faculty teaching Wage and salary administration and also for those who handle Sales and Distribution paper.
Dr.Uma Sreedhar