Motivating and Compensating Salespeople

Employees are best motivated through effective job design, equitable compensation, and treatment as stakeholders in the company.

Employees as Stakeholders

The concept of employees as stakeholders refers to the interest employees have in the success of the company and the fact that actions taken by the organization directly affect the employees. Employees' stakes in the company are economical in that their livelihood comes from the firm, psychological in that they derive pride from their work, and political in terms of their rights as employees and citizens. To motivate employees and improve firm performance, companies should strive for employee participation and influence.

Voice and influence mechanisms allow employees to give input and contribute their expertise to the business's success. These mechanisms allow firms to get the most benefit from the skills of their human capital. Thus, firms with employee influence mechanisms get a higher financial return from their employee assets.

Effective Job Design

Job design, or allocating specific work tasks to individuals and groups, is critical for any organization. Allocating jobs and tasks means specifying the contents, methods, and relationships of jobs to satisfy technological and organizational requirements as well as the personal needs of jobholders. If a successful job design is not implemented, the company's general strategy and direction will be strongly diverted. Employees, in turn, will be demotivated. Meaningful jobs must exemplify the company's goals and culture.

Paradigm of Diversity

Paradigm	Focus	Key Success Factors
Discrimination and Fairness	Equal opportunity, fair treatment, and compliance with U.S. federal Equal Opportunity requirements. Leaders work toward restructuring the organization's makeup to reflect society more closely.	Effectiveness in its recruitment and retention goals rather than by the degree to which companies allow employees to draw on their personal assets and perspectives to do their work more efficiently.
Access and Legitimacy	Need for a more diverse workforce to help companies access differentiated segments. Matches the organization's demographics to those of critical consumer or constituent groups.	The degree to which leaders in organizations understand niche capabilities and incorporate them into differentiated categories aligned with their business strategy.
Learning and Effectiveness	Incorporates employer’s perspectives into the main work of the organization. Enhances work by rethinking primary tasks and redefining markets, products, strategies, missions, business practices, and cultures.	Promoting social equal opportunity and acknowledgment of cultural differences. Organizational learning and growth are fostered by internalizing differences among employees.
End goal: Leaders should strive to shift to the learning and effectiveness paradigm to approach diversity as a means to higher knowledge and productivity

Paradigm of diversity: Following the above paradigms can lead to a more motivated and more successful sales team (and workforce in general).

Individuals, including salespeople, need to be compelled and excited to do their work. It is thus essential to design their jobs with the goal of motivating them. Motivation describes the forces within the individual that account for the level, direction, and persistence of effort expended at work. Appropriate resource allocation allows large organizations to foster and develop innovation in their workforce. Reward systems include compensation, bonuses, raises, job security, and benefits. Job design is the base element for producing effective work organizations, so without meaningful job design, an organization will never operate to its potential.

Compensation: Internal Equity

The first consideration for designing a compensation system is that the base pay system needs to be internally equitable. In other words, the pay differentials between jobs need to be appropriate. The amount of base pay assigned to jobs needs to reflect the relative contribution of each job to the company's business objectives.

Compensation: External Equity

The second consideration in creating a base pay system is external equity. This refers to the relationship between one company's pay levels and the pay levels of competitors. Setting pay levels higher than the competition, in the hope of attracting the best applicants, is called "leading the market." The risk is that a company's costs will generally be higher than the costs of its competitors. Other employers can set their pay levels lower than their competition, hoping to save labor costs. This is called "lagging the market." The risk is that the company will be unable to attract the best applicants. Most employers set their pay levels the same as their competition. This strategy is called "matching the market" and maximizes the quality of talent while minimizing labor costs.

Types of Compensation

Cash is one way to compensate employees, but cash alone is rarely enough payment. Benefits and other forms of non-monetary compensation are becoming more appropriate forms of compensation for employees in today's workplace. In order to attract, retain, and motivate the best employees, benefits and other sources of non-monetary compensation should be considered. If the company has an understanding of what they can offer to employees, benefits can increase a company's workforce quality and the general morale of employees.

Companies can offer different types of benefits in order to create a positive culture for their employees. These benefits have the ability to promote social interaction among employees, make life easier for working parents, or improve their quality of life. Depending on the industry and job type, benefits may be more attractive than salary figures. This fact could allow companies to pay lower wages, thus reducing the total amount spent on payroll.

Pay for Performance

It is important to design reward systems carefully, taking into consideration base salary and other incentives. This notion applies especially to salespeople. Most compensation systems include "variable pay." Depending on work performance, many companies reward their employees without affecting the base salary. To reward employees for achieving a set goal, many companies use bonuses. To this point, companies such as GE, HP, and Sun Microsystems use software that directly evaluates the behavior of employees with respect to customer service. Long-term incentives are also a part of reward systems. Stock options and profit-sharing plans are representative of long-term reward systems.

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Source: Boundless, https://www.coursehero.com/study-guides/boundless-marketing/managing-the-sales-force/
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