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Determinants of Pay Levels and Structures in Sales Organizations

Author

Listed:
  • Dominique Rouzies

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Anne T. Coughlan

    (Kellogg [Northwestern] - Kellogg School of Management [Northwestern University, Evanston] - Northwestern University [Evanston])

  • Erin Anderson

    (INSEAD - Institut Européen d'administration des Affaires)

  • Dawn Iacobucci

    (Owen Graduate School of Management - Vanderbilt University [Nashville])

Abstract

Two key issues in business-to-business (B2B) sales force management are (1) how much a given sales job should be compensated (pay level) and (2) how much of the compensation should be fixed versus variable (pay structure). The authors examine the paychecks drawn by people in more than 14,000 selling jobs and more than 4000 sales management jobs in five B2B industry sectors in five European countries. They show that pay levels and structures reflect an apparent balancing of two conflicting pressures: the economic imperative (to reward better performers by heightening pay dispersion) and the compensation differential compression resulting from high tax regimes. In particular, B2B firms appear to use variable pay as a way to lessen the salary differential compression impact of high tax regimes on salesperson motivation. Furthermore, similar to chief executive officers, sales managers can have an important multiplier effect that justifies paying them at increasing rates as job challenge rises.

Suggested Citation

  • Dominique Rouzies & Anne T. Coughlan & Erin Anderson & Dawn Iacobucci, 2009. "Determinants of Pay Levels and Structures in Sales Organizations," Post-Print hal-00491677, HAL.
    • Handle: RePEc:hal:journl:hal-00491677
    DOI: 10.1509/jmkg.73.6.92
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    Citations

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    Cited by:

    1. Keshavarz, Ali Reza & Gölgeci, Ismail, 2023. "The value of the sales function: A multilevel examination of the effect of strategic marketing ambidexterity and industry contingencies," Journal of Business Research, Elsevier, vol. 156(C).
    2. Agnieszka Barczak & Izabela Dembińska & Tomasz Rostkowski & Katarzyna Szopik-Depczyńska & Dorota Rozmus, 2021. "Structure of Remuneration as Assessed by Employees of the Energy Sector—Multivariate Correspondence Analysis," Energies, MDPI, vol. 14(22), pages 1-16, November.
    3. Lin, Chinho & Chang, Chia-Chi, 2015. "The effect of technological diversification on organizational performance: An empirical study of S&P 500 manufacturing firms," Technological Forecasting and Social Change, Elsevier, vol. 90(PB), pages 575-586.
    4. Maria Rouziou, 2019. "The contingent value of pay inequalities in sales organizations: integrating literatures in economics, management, and psychology," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 184-204, December.
    5. Ning Li & William Murphy, 2012. "A Three-Country Study of Unethical Sales Behaviors," Journal of Business Ethics, Springer, vol. 111(2), pages 219-235, December.
    6. Zheng, Yu Hao & Shi, Guicheng & Zhong, Hao & Liu, Matthew Tingchi & Lin, Zixiao, 2023. "Motivating strategic front-line employees for innovative sales in the digital transformation era: The mediating role of salesperson learning," Technological Forecasting and Social Change, Elsevier, vol. 193(C).
    7. Grabner, Isabella & Martin, Melissa A., 2021. "The effect of horizontal pay dispersion on the effectiveness of performance-based incentives," Accounting, Organizations and Society, Elsevier, vol. 88(C).
    8. Morgan, Todd & Anokhin, Sergey & Wincent, Joakim, 2018. "When the fog dissipates: The choice between value creation and value appropriation in a partner as a function of information asymmetry," Journal of Business Research, Elsevier, vol. 88(C), pages 498-504.

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