An Exploratory
Investigation of the
Relationship of Sales
Force Compensation
and Intrinsic Motivation
Ellen Bolman Pullins
In an era of relationship selling, one practical concern forsales management has been how to best compensate salespeople to achieve long-term and changing objectives. Intrinsic and ex-trinsic motivation have long been a concern of sales research, but researchers have done little to relate motivation to the various components of a compensation system. Intrinsic and extrinsic mo-tivation and relationship selling have not been linked either. This article explores these issues to develop a framework for future re-search on these topics. We first review a theoretical perspective and exploratory data from 19 interviews with sales managers.
Using these two mechanisms, we present a series of propositions about the relationship of compensation, motivation, and relation-ship selling. © 2001 Elsevier Science Inc. All rights reserved.
INTRODUCTION
One has only to pick up the latest issue of Sales and Marketing Management to discover how businesses are changing their sales force compensation structures [1–4].
These changes are occurring as businesses are emphasiz-ing long-term relationship sellemphasiz-ing [3, 5]. “Some busi-nesses are abandoning short-term revenue targets all to-gether . . . . Incentive programs are taking on a proactive,
Address correspondence to Ellen Bolman Pullins, Assistant Professor of Marketing, University of Toledo, 2801 W. Bancroft Street, Toledo, Ohio 43606, USA.
customer-focused cast too” (p. 48) [5]. This may be par-ticularly important in business-to-business selling, where smaller customer bases make a long-term orientation and positive relationships even more critical [6].
For example, IBM changed its compensation system in 1996 to recognize teamwork, use fewer performance measures, give incentives for working with distributors, spread out compensation payments, and create a system that was consistent around the world. According to Bob Wylie, Manager of Incentive Strategies, IBM Canada, “There was an attitude that if it’s outside my territory and outside my measurements, I don’t get paid for it, and I don’t get involved” (p. 66) [2].
Obviously sales managers would like for their reps to put forth the extra effort when required, but this incentive orientation may be problematic for certain behaviors. One area of concern to managers now is how to get sales-people to develop long-term relationships, rather than fo-cus on short-term volume. But if the long term is “outside my measurements” . . . .
This article begins with a discussion of why motiva-tion might be important to long-term relamotiva-tionship devel-opment. Then I describe the theory and current knowl-edge of intrinsic motivation and present a qualitative, exploratory study of these issues. Nineteen interviews were conducted with sales managers, each of whom man-aged at least four salespeople. I develop a series of propo-sitions for relating sales compensation methods to long-term relationship development strategies. The propositions are based on both the body of literature about intrinsic moti-vation and the results of the qualitative study.
LITERATURE REVIEW
Compensation and Long-Term Relationship Building Strategies
Compensation structure has been an ongoing topic of interest in sales management, especially as a component of management and control systems [7–9]. Managers, however, have yet to resolve the debate between salary and commission. A question of interest is how salary ver-sus commission structures impact sales strategy (for ex-ample, long-term relationship building versus short-term volume orientation). One possible answer is their effect on intrinsic motivation. Intrinsic motivation is defined here as the human need to be competent and in control of one’s own destiny, to engage one’s interests and exercise one’s capacities [10]. Research shows high levels of in-trinsic motivation lead to a less critical, more relaxed atti-tude and less negative emotional tone [11], increased routine breaking [12], increased creativity [13], working smarter [14], and increased use of win-win negotiation tactics [15]. These results are consistent with a long-term relationship building strategy, established between two or more individuals representing their businesses.
There are many reasons businesses refocused their at-tention on nurturing relationships with customers. Worldwide competition, industry consolidation, turbu-lent markets, and rapid shifts in customer needs and wants make flexibility a prerequisite to strong perfor-mance. Other market forces contributing to these trends include greater differentiation of products and services, demand for a better value, the expansion of support ser-vices, deregulation, and technological advances [8]. In addition, the estimated cost of a sales call exceeds $200, and the cost of soliciting new business exceeds maintain-ing current customers [16]. These factors encourage busi-nesses to work closely with customers to maintain their business base, increase their flexibility, and decrease costs.
Dwyer and his colleagues [17] observe “the lack of at-tention to antecedent conditions and processes for
buyer-ELLEN BOLMAN PULLINS is an assistant professor of Sales and Marketing at the University of Toledo and received her PhD from the Ohio State University. Her research in the areas of customer response to personal selling and salesperson development has appeared in Journal of the Academy of Marketing Science, Journal of Personal Selling and Sales Management, and Journal of Business and Industrial
Marketing, as well as several national conference proceedings.
This incentive orientation may be
problematic.
seller exchange relationships is a serious omission in the development of marketing knowledge” (p. 11), and Mac-Intosh and his colleagues state “empirical evidence of the antecedents and processes of buyer-seller relationship development is practically nonexistent” [2]. These au-thors propose researchers consider factors (like motiva-tion) that lead to the development of buyer-seller rela-tionships. Still, researchers do not yet understand the inter-relationships of compensation, motivation, and rela-tionship building.
One perspective that considers a relationship between compensation, motivation, and adaptive selling is that pro-posed by Weitz and colleagues [18]. They propose that in-centive compensation may result in lower levels of intrinsic motivation and that intrinsic motivation relates to adaptive selling strategies. However, researchers have not tested these relationships or elaborated on the types of compensation. This article builds on their work. I consider various compen-sation mechanisms, preliminary evidence from a qualitative study, and focus on developing long-term relationships.
Defining Intrinsic Motivation
Intrinsic motivation has been an ongoing interest in the sales management literature since Oliver’s initial work [19], and there have been three separate research streams dealing with intrinsic and extrinsic motivation of sales-people. We define intrinsic motivation a little differently, consistent with the cognitive and social psychology tradi-tions (specifically self-determination theory [10, 20]).
Intrinsic motivation is the human need to be competent and self-determining in relation to the environment, to engage one’s interests and exercise one’s capacities [10]. In general, most people seek situations where they be-lieve they will be competent, yet challenged. This should be true for the types of individuals who seek business-to-business sales positions, as well.
When a person adopts an intrinsic motivational orien-tation, the satisfaction of internal desires is salient. The ability to satisfy motives, such as curiosity, guides the se-lection of activities. The form of actual engagement in
the activity will be guided by those motives. When a per-son takes an extrinsic motivational orientation, the nature of the reward controls the selection of activities. A focus on the external reward guides engaging in the activity [21]. When intrinsically motivated behavior becomes re-warded or controlled, the activity becomes a means to an end, rather than interesting in its own right. A salesperson who focuses on closing sales the last week of the quarter to make quota or earn a bonus is one example. When ex-ternal factors promote choice and are responsive to initia-tions, they may help shift to an intrinsically motivated orientation. An example situation is the salesperson who is given freedom by his or her manager to pursue a new client base not previously targeted.
There are two major issues concerning motivation: (1) What influences motivation?, and (2) What are the re-sults of motivation? We need to understand the rere-sults of motivation to see why understanding motivation in the sales force is important, and to see that motivation, in fact, can influence relationship selling. We will turn now to this important question.
Results of Motivation
Recalling an event that is inherently interesting leads to more intrinsic motivation, unless it is controlling or extrinsically motivating. Current theory and research show that if intrinsic motivation is high, the event is ap-proached positively, flexibly, creatively and with a more open mind. Personal relationships may be improved and selling may be more adaptive and use smarter strategies. Intrinsic motivation seems to be consistent with behav-iors that would be conducive to the relationship building process. We will briefly summarize the findings related to these outcomes of intrinsic motivation.
Researchers found people who are Intrinsically moti-vated have a less critical, more relaxed attitude and less negative emotional tone than extrinsically motivated peo-ple [11]. In addition, McGraw and McCullers found that paid subjects had more difficulty breaking set (deviating
What factors will influence a saleperson’s
intrinsic motivation?
from a learned pattern) on puzzles than nonpaid [12], and Amabile demonstrated that people are more creative when intrinsically motivated [13]. Controlling events im-pair creativity. Each of these factors is conducive to building long-term relationships.
Several psychology studies on intrinsic motivation have specifically looked at relationship issues. Hodgins, Koestner, and Duncan considered college student rela-tionships with their parents, and their interactions across all of their relationships, in two different studies [22]. Study 1 asked college students to record every interaction of 10 minutes or more that they had with their parents for three weeks. They rated honesty and got qualitative rat-ings of interaction, disclosure, and esteem. The purpose of the study was to determine if intrinsic motivation and relationships could be two naturally coexisting needs. They found that students with a personality trait of intrin-sic motivation had more pleasant interactions with their parents, had higher self-esteem, and were more honest. It supported the idea that intrinsic motivation promotes open, nondefensive interaction. They believe that this oc-curs because the intrinsically motivated individual doesn’t have to worry about influence or feeling threat-ened. These results were replicated, across all of the stu-dents’ relationships, by using the same method.
Blais and his colleagues conducted another relation-ship study. They also found support for the role of intrin-sic motivation in adult long-term relationship develop-ment and continuation [23]. They proposed that when relational behaviors are intrinsically motivated, partners see relationship problems more as challenges than as has-sles and may be less distressed by such events. They are inclined to deal with relationship problems that arise. In-trinsically motivated partners also should be more open to learn and improve their social competencies. Partners under less intrinsic motivation experience tension and anxiety and are more rigid and vulnerable to less adaptive problem solving. These researchers found intrinsic moti-vation accounted for 61% of men’s and 55% of women’s relationship happiness. It explained 32% of the variation in adaptive behaviors for both men and women [23]. Similar findings showed that love and happiness were
closely related to attributions of intrinsic motivation to self and partner [24].
Limited work in the sales area also has addressed the outcomes of intrinsic and extrinsic motivation [e.g., 14, 18, 25]. For example, Sujan considers the notion of working smarter, rather than harder [14]. Working harder involves persistence or intensity, whereas working smarter involves making better choices about the ap-proach to use. Sujan tests this notion with a mail survey of 123 companies. He measures reward orientation (in-trinsic versus ex(in-trinsic), attributions, and working harder versus smarter. He found that attributions about reasons for failures affect whether a salesperson works smarter or harder after a failure. An attribution of failure to lack of effort would result in working harder, and attributing failure to strategy would result in working smarter.
From considering both the theory and the empirical findings surrounding intrinsic, there is a strong reason to believe that intrinsic motivation will be related to the long-term development of relationships. An event that is inherently interesting leads to more intrinsic motivation, unless it is controlling or extrinsically motivating. If in-trinsic motivation is high, the event is approached posi-tively, flexibly, creatively and with a more open mind. Personal relationships, at least, are enhanced (although this has yet to be generalized to business relationships). Salespeople are more likely to work smarter and be more adaptive in their selling approach. Each of these charac-teristics of intrinsic motivation is consistent with behav-iors that would be conducive to the buyer-seller relation-ship building process. Given this, it is important to understand what factors will influence a salesperson’s in-trinsic motivation.
Influencers of Intrinsic Motivation
We briefly explore here the factors that might influ-ence intrinsic motivation. Work in psychology and in selling [e.g., 26–28] have shown that organizational fac-tors, like climate, can influence intrinsic motivation. Per-haps the most explored influence is that of rewards. In an organization, compensation represents the most
cant source of rewards. In this section, we will focus spe-cifically on the effect of rewards on intrinsic motivation. As we consider these effects, we examine where com-pensation fits in these rewards. We conclude this section with a review of findings specific to the effect of sales force compensation on intrinsic motivation.
The psychology literature [10, 20, 29] has emphasized exploring the effect of external rewards on intrinsic moti-vation. Deci [29] has proposed four different types of rewards: task noncontingent, task contingent, perfor-mance contingent. and competitively contingent rewards. For a reward to affect intrinsic motivation negatively, it must be salient and expected. Also, it must be perceived as controlling the person’s behavior. Much of the empiri-cal work on what affects intrinsic motivation focuses on rewards. Deci and Ryan [10] outline four types of re-wards, with various implications for intrinsic motivation [10]. Sales compensation systems use each of these re-wards.
Task noncontingent rewards are given for participation (i.e., pay for presence). Researchers found these rewards have no negative effect on intrinsic motivation, because they are not controlling. Deci paid college students $2 to attend a puzzle solving session and found no effect on in-trinsic motivation compared with subjects who partici-pated and were not paid [29]. Pinder replicated this study [30]. Salesperson salary would represent an example of task noncontingent rewards.
Task contingent rewards are given for actually doing a task. Deci found that giving students $1 for each puzzle completed decreased intrinsic motivation, compared with task noncontingent and no reward conditions [29]. Ross qualified these findings, noting that the reward had to be salient and desirable to have the effect on intrinsic moti-vation [31]. Danner and Lonky found that, in addition, the task itself had to be intrinsically interesting [32]. Fi-nally, Swann and Pittman found that negative effects were offset by providing the students with positive feed-back about their performance [33]. In another study, Caldwell, O’Reilly, and Morris found that MBA students
whose tuition was reimbursed by their companies showed lower levels of intrinsic motivation for their pro-gram [34]. Salesperson spiffs based on volume would be an example of task contingent rewards.
Performance contingent rewards are given for a speci-fied level of performance. Whereas these rewards are more controlling, they are also more informative about performance. Ryan and colleagues found that if they gave a performance reward and highlighted controlling aspects, it hurt intrinsic motivation; however, if informa-tional components were highlighted, it could actually in-crease intrinsic motivation [11]. In a field experiment of the design of various compensation systems, Jordan in-vestigated the use of a performance contingent incentive program with one shift of workers (pay for cost reduc-tion) versus another shift with a nonperformance contgent incentive. He found that performance contincontgent in-centives reduced intrinsic motivation, whereas the noncontingent reward increased intrinsic motivation [35]. Commission systems are typically performance contingent rewards. With commission, the rewards are salient and expected, consistent with rewards that impact intrinsic motivation. However, these rewards also have a norm for payment, which could counteract the effect on intrinsic motivation.
Competitively contingent rewards have subjects com-pete directly for a limited number of rewards. For exam-ple, one study offered a $5 reward to the best performer in a group and found decreased intrinsic motivation. Sub-jects perceived these rewards as very controlling [36]. An example of competitively contingent rewards in selling might be a sales contest.
Sales force compensation represents all four of these types of rewards. The two most common components of sales force compensation are probably salary and com-mission. Salary is a form of task noncontingent reward, because it is not tied to the completion of a specific task or a specified level of performance. It is similar to pay for participation. Commission is probably most often an ex-ample of a performance contingent reward, because there
. . . highlighted the informational value of
quota.
is a specified quality of performance to obtain the re-ward. A salesperson may have to achieve a certain level of profit, for example. Incentives represent another type of sales force compensation. The type of reward charac-terized by incentives may vary, depending on the nature of the program. Incentives tied to performance objectives would be performance contingent. Spiffs are probably task contingent. Incentive pay won in a competition is competitively contingent. Each type of reward, though, can be a part of a sales compensation program.
In the sales area, this type of work has been sparse. Work by Ingram and colleagues [25] considered compen-sation and motivation. Ingram and Bellenger found that feelings of accomplishment positively related to straight salary, although there was a negative relationship with personal growth [37]. The perspective taken by Sujan more specifically addresses these issues. He proposes
that the use of incentive compensation decreases intrinsic reward motivation, especially early in a salesperson’s tenure, when controlling aspects are highlighted [18].
These studies clearly highlight the importance of sales force compensation in influencing the salesperson’s in-trinsic motivation, as well as the need for more work to understand this area. The area could clearly benefit by a careful examination of the role of each form of sales force compensation in influencing intrinsic motivation. This is especially important if the role of intrinsic moti-vation in buyer-seller long-term relationship develop-ment is demonstrated.
THE STUDY
The major purpose of conducting exploratory research at this stage was twofold. First, I wanted to see if
rela-Managers who were reporting intrinsic
motivation also reported positive
experiences with relationship building.
TABLE 1
Descriptions of Interviews
Industry
Type of
Business Manager’s Title
Number of Salespeople Supervised
Compensation System Components
Industrial Automotive General sales manager 26 Salary and bonus
Cement Sales manager 6 Salary and bonus
Construction equipment International sales manager 7 Salary, commission and bonus
Engineering Sales manager 7 Salary and bonus
Heavy truck components Vice president 26 Salary and bonus
Hydraulic Marketing manager 4 Salary, commission and bonus
Metal manufacturing General manager 7 Salary and commission
Technology Cellular Sales manager 7 Commission and bonus
Computer systems President 7 Salary and commission
Telephone systems, business Sales manager 11 Salary and commission
Service Brokerage Branch manager Unknown Commission and bonus
Business cleaning President 23 Commission (guarantee)
Insurance District manager 9 Commission
Market research General manager 5 Salary and commission
Recruiting Director 6 Commission
Wholesale Food broker Sales manager 21 Salary and bonus
Furniture (manufacture and sell to retailers) Regional manager 30 Commission
Giftware imports Sales manager 16 Salary
tionship selling was really as prevalent as believed. If so, I wanted to see if it was related to motivation and com-pensation. The second purpose was to get sales manag-ers’ views on the effect of sales force rewards and com-pensation on intrinsic motivation.
Subjects
The study reported here was an exploratory study us-ing a qualitative method to further consider the above is-sues. Nineteen different sales managers from a variety of industries were interviewed.1 Table 1 presents a
descrip-tion of the industries included, the number of salespeople managed by the subject, subject’s title, and the gender of the subject. Subjects represent a convenience sample.
Method
Undergraduate students received extra course credit for conducting the interviews. There is some precedent for using students in this type of data collection [38]. The researchers gave very specific instructions, as well as training in the interview process to the students. Student interviewers had to ask a series of scripted questions (lo-cated in the appendix). The questions explored the issues raised in the literature review. Specifically, they tapped issues about current compensation plan’s effect on intrin-sic motivation, and the role of the compensation plan in relationship development strategy.
Students cleared the interview appointments before conducting interviews and were required to turn in a business card when the interview was complete. The re-searcher made students aware that sales managers would be contacted to assure accuracy and completeness. Ran-dom follow up with subjects helped to assure reliability of the student collected data.
Analysis
The interviewers then summarized the findings of each individual interview. Responses to each question were summarized and representative transcription was included.2
The interviews were analyzed by the various questions to identify themes that emerged related to compensation
systems, long-term relationship development strategy, and intrinsic motivation. Five general themes emerged: 1. Customers and long-term relationships are a strategic
priority.
2. There is a move from commission to more salary. 3. Quota adds information value to commission.
4. Other intrinsic rewards supplement the compensation system.
5. There is a trend toward restructuring compensation systems to deal with long-term relationship priorities. Specific discussion of each follows in Results.
RESULTS
The first finding that emerged from the interviews was that customers and long-term relationships are a priority. All but three of the sales managers interviewed included customer orientation, meeting business customer needs, or some similar requirement in the salesperson job de-scription. For example:
The ideal situation is to develop a lifetime relation-ship with one’s clients (brokerage).
The salesperson at (company name omitted) is trained to get to the bottom of the customer’s con-cerns and frustrations (engineering).
The salesperson’s job is to . . . comply with the cus-tomer’s needs (cellular).
In addition, when asked if long-term relationships with customers were a priority, every manager said yes and most of the managers indicated that long-term relation-ships were “the highest,” “top,” or “number one” prior-ity. Only two managers reported any deviation from this; both the cellular and the business cleaning managers said that long-term relationships were primarily important for referrals.
The second finding that emerged from the interviews was the reasons for structuring compensation systems. If one looks at the nature of the compensation systems in Table 1, companies use either a salary orientation, a com-mission orientation, or a mix of the two. Most also use bonus incentives. Not unexpectedly, the all commission/ no salary managers reported that they used this system to get salespeople to “sell more” (brokerage), “for volume” (recruiter), or “move product” (business cleaning).
The objective of our compensation system is to get the reps to sell the most phones possible (cellular).
1Nineteen interviews were deemed adequate for the exploratory purposes
here. We were not attempting to ascertain causality but to explore theoretical insights in the salesperson domain before fleshing out propositions.
2To assure accuracy and representativeness, the researcher met with students
However, the companies that used pure salary without commission, tended to do so for nonstrategy-related rea-sons, like avoiding legal problems (heavy truck compo-nents) or reducing turnover (giftware).
Companies that used a mix of salary and commission were concerned with meeting current company goals (ce-ment and commercial equip(ce-ment components) or with customer orientation.
Making the sale is important, but not as important as keeping it (meat wholesaler).
It is possible that it takes a more gradual move from com-mission to salary to promote relationships. Firms may only “jump” to full salary without commission when other reasons intervene.
The third theme identified related to the reasons for us-ing quota. Every subject who commented on quota high-lighted the informational value of quota.
Quota is also a way for the salesperson to see how they may fare to the average sales (meat wholesaler).
The fourth finding explored the degree to which com-pensation affects overall motivation. Most sales manag-ers believed that the compensation system accounts for less than half of their salespeople’s motivation. Most of the other motivation comes from intrinsic rewards. There were a few exceptions to this belief (brokerage, market research, insurance, furniture, and cellular), all of whom had strong commission (or all commission) components in their compensation system. Remember that according to the empirical work on intrinsic and extrinsic rewards, contingent rewards may decrease intrinsic motivation.
The fifth and final theme to emerge from the data re-lated to recent trends in compensation systems or needed changes in compensation systems. Two sales managers reported recent changes to different standards for com-mission (e.g., a profitability component). However, all other changes reported were away from commission and to salary. For example, the engineering firm went to all salary and bonus from a mixed system. The wholesale meat manager reported a move from straight commission to a mix of commission and salary.
This determined the salespeople to be more focused and energized (wholesale meat).
The weight of the salary versus bonus allows the salesper-son to spend more time with the customer to develop rela-tionships (market research).
Other firms indicated a desire to move in this direction.
For example, the food broker manager believed that a higher proportion of salary and possibly some long-term incentives were necessary.
An interesting exception emerged here too. Several of the pure commission firms said that the salesperson should just know that it is in his or her best interest to fo-cus on the long-term relationship, even if the incentives were tied to short-term goals. One firm was satisfied as long as the compensation system didn’t discourage long-term relationships.
The current system helps encourage long-term relation-ships over short-term volume by giving compensation for selling new products to old customers (insurance). It is possible that a person may just be in it for the immediate sale, but that does eventually catch up to them when he loses the account or something like that happens (furniture).
Although all firms said they value developing relationships with customers, some of this seems to be just rhetoric, whereas some firms are actively moving in that direction.
DISCUSSION
Compensation and job characteristics affect intrinsic motivation, and intrinsic motivation leads to certain posi-tive results. Following is the development of a series of propositions related to these constructs. First, I present two general propositions, necessary to provide a situation where intrinsic motivation can occur. Next, propositions 2 to 8 deal with the impact of compensation system com-ponents on intrinsic motivation. Finally, proposition 9 deals with a potential outcome of intrinsic motivation.
For intrinsic motivation to affect any aspects of the sales job, it must first exist. The literature suggests that intrinsic motivation exists for positions that are inher-ently interesting and challenging [10]. Most of the man-agers interviewed reported that much of a salesperson’s motivation comes from factors like a job is interesting and challenging. It makes sense that many people work in a given field because they find that field interesting and/or challenging. However, we do not know that the job itself is intrinsically motivating for most salespeople.
Proposition 1a: Current salespeople will report that their job is inherently interesting.
Proposition 1b: Current salespeople will report that their job provides them with an adequate amount of challenge.
selling job, then we need to consider when we should ex-pect intrinsic motivation to play a role. There is a large volume of research exploring the impact of rewards on intrinsic motivation and the importance of compensation systems in sales management. We need to now consider the impact of the specific types of compensation in sell-ing. The second trend identified in the exploratory study spoke directly to this. When we combine the study data with the psychology theory and findings about the impact of various rewards on motivation, we can propose the se-ries of propositions listed in Table 2.
In addition, factors in compensation, like quota will moderate how compensation impacts intrinsic motiva-tion. Quota emerged as an important trend (number 3). In addition, psychological theory indicates information can counteract the effect of extrinsic rewards on intrinsic mo-tivation. Therefore:
Proposition 8: Quota will provide a form of information about performance and, when added to commission, will positively affect intrinsic motivation.
The final concern of this article has been on the impact of intrinsic motivation on the development of long-term relationships. Although the sales relationship is different from a personal relationship, the same skills in developing and maintaining the relationship may apply. Therefore, in-trinsic motivation also might play a role in buyer-seller re-lationships. Related results of intrinsic motivation (e.g., openness and flexibility) support the notion that intrinsic motivation may improve buyer-seller relationships.
The qualitative study emphasizes this point. Managers who were reporting intrinsic motivation also reported positive experiences with relationship building. Those managers using all commission believed they were nur-turing long-term relationships. However, their answers indicated they may not be.
Proposition 9: Salespeople who are intrinsically moti-vated are more successful at building sales relationships.
Conclusion
This article provides propositions that reflect current trends in sales force compensation, and they represent fruitful areas for future research. The study in this article is exploratory in nature, helping to develop the proposi-tions, but does contain certain limitations. The sample was a convenience one. It was diverse and it was small. And the interviewers were students. Future research needs to address each of these problems. In addition, al-though the study allowed for exploration of all four types of rewards, sales managers predominantly commented on salary (task noncontingent) and commission (perfor-mance contingent) in this open-ended format. Future re-search should spend time on task contingent and compet-itively contingent rewards as well. Finally, because the propositions are based on exploratory work, there is a need for confirmatory investigation on each of the nine propositions developed.
Because of the practical significance of this area, and the interesting findings, hopefully future researchers will continue to research this area. In the meantime, the prop-ositions may provide useful insights to managers and promote additional thought about the purpose for the abundance of compensation system changes occurring.
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TABLE 2 Propositions 2–7
Proposition
Type of Salesperson
Compensation Type of Reward
Expected Impact on Intrinsic Motivation
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4 Commission paid strictly on volume Task Contingent Negative impact
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Performance contingent Positive impact
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APPENDIX
A. What is the nature of your business? Sales organiza-tion? Your job? How many salespeople do you manage?
B. Describe the salesperson’s job.
C. Describe the compensation system for your sales-people. Does it include salary, commission, incentives, and/or bonuses? What is the mix? Does quota play a role? What?
D. Why is your compensation system structured the way it is? What are the objectives of your compensation system/what are you trying to motivate the salespeople to do? How are other parts of their jobs motivated?
E. In what ways do you think this compensation vates your employees? What other aspects of the job
moti-vates them? What percentage of their motivation do you attribute to the compensation system? How many of your salespeople seem to be more motivated by internal reasons (e.g., like their jobs, enjoy helping the customers, see it as a challenge) than external reasons like compensation?
F. What is your company’s position on building long-term relationships with customers? Is this a priority? How do you accomplish it?
G. How does your compensation system reflect your
desire to (not to) build long-term relationships with cus-tomers? Have their been any changes in the compensa-tion system lately to reflect changes in strategy regarding customer relationships?
H. How effective is the current system at encouraging salespeople to consider long-term relationships over short-term volume? If you wanted to encourage long-term relationships, are there any changes that should be made in the compensation system? What?
