This study examined the issue of compensation for sales personnel within the context of commission pay versus salary plus bonus pay. The problem statement and related material are presented in this chapter.
Sales management within a company does not exist in a vacuum. The sales management function must complement production and other functions within the organization to contribute most effectively to overall firm performance.
The sales management function is similar in most respects in all organizations. The major differences in the function between companies are related to the technical character of the product or service produced (PoKempner, 1985, p. 20).
A major aspect of the sales management function is compensation management for a firm's sales force. The essential concern in this context is the development and implementation of a compensation system for a company's sales representatives that will be the most cost effective from a variety of aspects. The problem is not a matter of simply selecting a compensation system that carries the lowest nominal price tag, although that factor is an important consideration. The selected compensation system must also be one that (1) supports high levels of customer service, (2) leads to the presentation of a company's products in the most favorable way, (3) creates a minimal disruption to the company's operations, (4) causes no deterioration in performance
trends at the company, and (5) enhances the prospects of long term growth at the company in both sales and profits. An important factor that must be considered in the selection of a compensation program that satisfies all of these criteria is sales force preference.
Members of a company's sales force will likely differ in the context of demographic factors. Therefore, it is important for sales managers to know how such factors are likely to affect attitudes toward compensation systems. Attitudes of sales personne...