Realigning Fixed and Variable Pay in Sales Organizations

Abstract

The attractiveness of the pay policies of sales organizations can be increased by higher levels of match between individual characteristics of sales people and those of the compensation structure. Sales organizations should consider the career life cycle stages of sales people when devising compensation strategies. One type of sales compensation plan does not match all stages of career life cycle for a sales employee. Sales organizations can tailor expectations, motivations, reward strategies, as well as compensation structure according to career life cycle stages. To maximize sales force productivity and hence profitability of the sales organization, sales organizations should strive to find an optimal set of pay mix to motivate sales employees at each stage of career life cycle. This article provides various frameworks for analyzing impact of career stages on salesforce performance. This research identifies diverse variables impacting pay mix of sales employees and suggests a practical approach for enhancing productivity of sales employees across career life cycle stages.