6e SM Module08

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Motivation and RewardSystem Management

Module Eight

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Ingram LaForge Avila

Schwepker Jr. illiams

!ro"essional Selling#

A $rust%&ased Approach

Module '#

Motivation and Reward System Management

Learning ()*ectives

1. Explain the key components of motivation; intensity,persistence, and direction.

2. Explain the difference between compensationrewards and non-compensation rewards.

3. Describe the primary financial and non-financialcompensation rewards available to salespeople.

. Describe salary, commission, and combination payplans in terms of their advanta!es and disadvanta!es.

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Learning ()*ectives

". Explain the f#ndamental concepts in sales-expense reimb#rsement.

$. Disc#ss iss#es associated with sales contests,e%#al pay for e%#al work, team compensation,!lobal compensation, and chan!in! a rewardsystem.

&. 'ist the !#idelines for motivatin! and rewardin!salespeople.

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Setting the Stage

1. (hat were the two primary problems

)edEx faced re!ardin! compensation*

2. +ow did )edEx resolve the two

problems*

otivatin! and ewardin! Drivin!/rod#ct ix 0ales at )edEx

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Motivation

he force within #s that activates o#r behavior.

t is a f#nction of three distinct components,

ntensity, Direction, and /ersistence.

Intensity !ersistence+irection

Motivation

Motivation

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Motivation % Intensity

ntensity refers to the amo#nt of mental and

physical effort p#t forth by the salesperson.

!ersistence+irection

Motivation

Motivation

Intensity

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Motivation % +irection

he extent to which an individ#al determines

and chooses efforts foc#sed on a partic#lar

!oal.


MotivationMotivation

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Motivation % !ersistence

he extent to which the !oal-directed effort is

p#t forth over time.


MotivationMotivation

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Motivation# Intrinsic vs. E,trinsic

(hen doin!

the ob isinherently

motivatin!

ntrinsic Extrinsic(hen rewards

s#ch as payand formal

reco!nition act

as motivators

otivation

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$wo &asic -ategories o" Rewards

4ompensation ewards

hose !iven in ret#rn for acceptable

performance or effort. hey can incl#de

nonfinancial compensation.

5on-4ompensation ewards

hose beneficial factors related to the worksit#ation and well-bein! of each salesperson.

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(ptimal Sales Force Reward System

1. /rovides an acceptable ratio of costs and sales

force o#tp#t in vol#me, profit, or other obectives

2. Enco#ra!es specific activities consistent with the

firm6s overall, marketin!, and sales force obectivesand strate!ies

3. 7ttracts and retains competent salespeople, thereby

enhancin! lon!-term c#stomer relationships

. 7llows the kind of ad#stments that facilitate

administration of the reward system.

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$ypes o" Sales Force Rewards

ntrinsic Extrinsicotivation

/ay

/romotion

0ense of7ccomplishment

/ersonal 8rowth

9pport#nitieseco!nition

:ob

sec#rity

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Financial -ompensation#

Straight Salary

7dvanta!es% 0alaries are simple to administer

% /lanned earnin!s are easy to proect.

% 0alaries can provide control over salespeoples

activities, and reassi!nments are less of a problem.% 0alaries are #sef#l when s#bstantial development

work is re%#ired.

Disadvanta!es% 0alaries offer little incentive for better performance.

% 0alary compression co#ld ca#se perceptions ofine%#ity amon! experiences salespeople.

% 0alaries represent fixed overhead.

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Straight -ommission

7dvanta!es

% ncome is linked directly to desired res#lts.

% 0trai!ht commission plans offer cost-control

benefits.

Disadvanta!es

% 0trai!ht commission plans contrib#te little to

company loyalty.

% /roblems may also arise if commissions are not

limited by an earnin!s cap.

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Straight -ommission# !lan ariations

1. 4ommission base< vol#me or profitability

2. 4ommission rate< constant, pro!ressive, or

a combination

3. 4ommission splits< between two or more

salespeople or between salespeople and the

employer

. 4ommission payo#t event< when the order

is confirmed, shipped, billed, paid for, or some

combination of these events

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Straight -ommission# Rates

4onstant rates

/ ates that remain #nchan!ed over the pay period.

/ay is linked directly to performance.

/ro!ressive rates/ ates that increase as salespeople reach pre-

specified tar!ets.

e!ressive rates

/ ates that decline at some predetermined point.

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!er"ormance &onuses

7dvanta!es

% 9r!ani=ation can direct emphasis to what itconsiders important in the sales area.

% >on#ses are partic#larly #sef#l for tyin! rewards

to accomplishment of obectives.Disadvanta!es

% t may be diffic#lt to determine a form#la forcalc#latin! bon#s achievement if the obective isexpressed in s#bective terms.

% f salespeople do not f#lly s#pport theestablished obective, they may not exertadditional effort to accomplish the !oal.

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-om)ination !lans

7dvanta!es

% 4ombination pay plans are flexible.

% hey are also #sef#l when the skill levels of thesalesforce vary.

% 4ombination pay plans are attractive to hi!h-potential b#t #nproven candidates for sales obs.

Disadvanta!es

% 4ombination pay plans are more complex anddiffic#lt to administer.

% 7 common criticism of combination pay plans isthat they tend to prod#ce too many salesforceobectives.

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0on"inancial -ompensation

9pport#nity for /romotion

/ he ability to move #p in an or!ani=ation alon! one

or more career paths

0ense of 7ccomplishment/ he internal sense of satisfaction from s#ccessf#l

performance

/ 0ales mana!ers sho#ld facilitate salespeoples

ability to feel this a sense of accomplishment

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0on"inancial -ompensation

9pport#nity for /ersonal 8rowth

/ 7ccess to pro!rams that allow for personal

development ?e.!., t#ition reimb#rsement,

leadership development seminars@

eco!nition

/ he informal or formal acknowled!ement of a

desired accomplishment

:ob 0ec#rity/ 7 sense of bein! a desired employee that comes

from consistent exceptional performance

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Sales E,penses

1. 7 definition of which expenses are reimb#rsable

2. he establishment of expense b#d!ets

3. he #se of allowances for certain expendit#res

. Doc#mentation of expenses to be reimb#rsed

4ontrols #sed in the sales expense

reimb#rsement process incl#de

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Schwepker Jr. illiams!ro"essional Selling#


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Additional Issues in Managing

Sales"orce Reward Systems

1 0ales 4ontests

1 E%#al /ay

1 eam 4ompensation

1 8lobal 4onsiderations

1 4han!in! the eward 0ystem

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A $rust%&ased ApproachModule '#


Sales -ontests#

Recommended 2uidelines

1. inimi=e potential motivation and morale

problems by allowin! m#ltiple winners.

0alespeople sho#ld compete a!ainst individ#al

!oals and be declared winners if those !oals aremet.

2. eco!ni=e that contests will concentrate efforts

in specific areas, often at the temporary ne!lectof other areas. /lan accordin!ly.

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A $rust%&ased ApproachModule '#


Sales -ontests#

Recommended 2uidelines

3. 4onsider the positive effects of incl#din!

nonsellin! personnel in sales contests.

. Ase variety as a basic element of sales contests.Bary timin!, d#ration, themes, and rewards.

". Ens#re that sales contest obectives are clear,

realistically attainable, and %#antifiable to allowperformance assessment.

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Ingram LaForge AvilaSchwepker Jr. illiams

!ro"essional Selling#A $rust%&ased Approach

Module '#Motivation and Reward System Management

+(s o" 2lo)al -ompensation

1 Do involve reps from key co#ntries1 Do allow local mana!ers to decide the mix

between base and incentive pay

1 Do #se consistent performance meas#res?res#lts paid for@ and emphasis on each

meas#re1 Do allow local co#ntries flexibility and

implementation1 Do #se consistent and indication and trainin!

themes worldwide

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+(03$s o" 2lo)al -ompensation

1 Dont assi!n the planned centrally and dictate to

local co#ntries1 Dont create a similar framework for obs with

different responsibilities1 Dont re%#ire consistency on every performance

meas#re within the incentive plan1 Dont ass#me c#lt#ral differences can be

mana!ed thro#!h the incentive plan1 Dont perceive witho#t the s#pport of senior

sales exec#tives worldwide

2 id li " M ti ti d

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2uidelines "or Motivating and

Rewarding Salespeople

1. ecr#it and select salespeople whose personal

motives match the re%#irements and rewards of

the ob.

2. 7ttempt to incorporate the individ#al needs of

salespeople into motivational pro!rams.

3. Ase ob desi!n and redesi!n as motivational

tools

2 id li " M ti ti d

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Ingram LaForge Avila!ro"essional Selling# Module '#

2uidelines "or Motivating and

Rewarding Salespeople

. /rovide ade%#ate ob information and ass#re

proper skill development for the sales force.

". 4oncentrate on b#ildin! the self-esteem of

salespeople.

$. ake a proactive approach to seekin! o#t

motivational problems and so#rces of

fr#stration in the salesforce.

6e SM Module08

Documents

Transcript of 6e SM Module08