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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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
Motivation % +irection
he extent to which an individ#al determines
and chooses efforts foc#sed on a partic#lar
!oal.
Intensity !ersistence+irection
MotivationMotivation
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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
Motivation % !ersistence
he extent to which the !oal-directed effort is
p#t forth over time.
Intensity !ersistence+irection
MotivationMotivation
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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
$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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
(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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
$ypes o" Sales Force Rewards
ntrinsic Extrinsicotivation
/ay
/romotion
0ense of7ccomplishment
/ersonal 8rowth
9pport#nitieseco!nition
:ob
sec#rity
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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
Financial -ompensation#
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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Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
Financial -ompensation#
!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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
Financial -ompensation#
-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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams
!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams!ro"essional Selling#
A $rust%&ased Approach
Module '#
Motivation and Reward System Management
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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Schwepker Jr. illiams!ro"essional Selling#
A $rust%&ased ApproachModule '#
Motivation and Reward System Management
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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Ingram LaForge Avila
Schwepker Jr. illiams!ro"essional Selling#
A $rust%&ased ApproachModule '#
Motivation and Reward System Management
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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!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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!ro"essional Selling#A $rust%&ased Approach
Module '#Motivation and Reward System Management
+(03$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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Ingram LaForge AvilaSchwepker Jr. illiams
!ro"essional Selling#A $rust%&ased Approach
Module '#Motivation and Reward System Management
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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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.