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New research on salesforce management from Harvard Business School faculty on issues including why it matters that your CEO doesn't know much about sales, and whether incentive plans for exemplary employees are counterproductive.
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Cut Salaries or Cut People? The Best Way to Survive a Downturn

by Rachel Layne

When times are tight, companies usually respond with employee layoffs. But what if they held on to workers and cut their salaries instead? New research by Christopher Stanton and colleagues has the answer. Open for comment; Comment(s) posted.

Analyzing the Aftermath of a Compensation Reduction

by Jason Sandvik, Richard Saouma, Nathan Seegert, and Christopher Stanton

This study of the effects of compensation cuts in a large sales organization provides a unique lens for analyzing the link between compensation schemes, worker performance, and turnover.

Do All Your Detailing Efforts Pay Off? Dynamic Panel Data Methods Revisited

by Doug J. Chung, Byungyeon Kim, and Byoung Park

Personal selling in the form of detailing to physicians is the main go-to-market practice in the pharmaceutical industry. This paper provides a practical framework to analyze the effectiveness of detailing efforts. The method and empirical insights can help firms allocate sales-force resources more efficiently and devise optimal routes and call-pattern designs.

What's the Ideal Frequency for a Sales Quota?

by Carmen Nobel

Sales reps feed on two forms of compensation: salary, and a bonus tied to achieving a periodic quota. Would a more frequent quota incentivize better numbers? Doug Chung and Das Narayandas offer some answers. Open for comment; Comment(s) posted.

The Effects of Quota Frequency on Sales Force Performance: Evidence from a Field Experiment

by Doug J. Chung and Das Narayandas

This study of different sales quotas and their effect on sales performance at a major retail chain in Sweden finds that changing from a monthly to a daily quota plan increases performance mainly for low-performing salespeople.

It Matters That Your CEO Doesn't Know Much About Sales

by Michael Blanding

Sales appears to be getting short-changed in the C-suite, says Frank Cespedes. What’s needed are more links between top executives and the customer-facing side of the business. Open for comment; Comment(s) posted.

Do Incentive Plans for Exemplary Employees Lead to Productive or Counterproductive Outcomes?

by Carolyn Deller and Tatiana Sandino

This study of a mobile phone retail company shows that incentive contracts that selectively incentivize exemplary employees (that is, preferential incentive plans) may be helpful when companies want to motivate employees to pursue objectively measured goals in addition to relevant tasks not explicitly written into their contracts. However, preferential incentive plans may lead to unintended consequences if they trigger perceptions of inequity.

First Minutes are Critical in New-Employee Orientation

by Carmen Nobel

Employee orientation programs ought to be less about the company and more about the employee, according to new research by Daniel M. Cable, Francesca Gino, and Bradley R. Staats. Closed for comment; 16 Comment(s) posted.

The Most Powerful Workplace Motivator

by Carmen Nobel

When evaluating compensation issues, economists often assume that both an employer and an employee make rational, albeit self-interested choices while working toward a goal. The problem, says Assistant Professor Ian Larkin, is that the most powerful workplace motivator is our natural tendency to measure our own performance against the performance of others. Open for comment; 33 Comment(s) posted.

Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans

by Doug J. Chung, Thomas Steenburgh & K. Sudhir

Companies generally pay their sales staff with some combination of salary, commissions, and bonuses for meeting quotas-with sales force costs averaging about 10 percent of sales revenue in the United States. This paper aims to gain insight into the most effective way to design a compensation plan, concentrating on whether bonuses boost sales productivity and whether they should be awarded quarterly or annually. Research, focusing on the sales force of a large office supply company, was conducted by Harvard Business School professor Thomas Steenburgh and Doug J. Chung and K. Sudhir of the Yale School of Management. Key concepts include: Bonuses do increase productivity. Quarterly bonuses increase sales force productivity more than annual bonuses. Sales people tend to give up when far away from reaching a quota, but they don't slow down once a quota is reached-especially if a firm offers commissions for overachievement. Closed for comment; 0 Comment(s) posted.

Is Performance-Based Pricing the Right Price for You?

by Benson Shapiro

Not every industry or company can benefit from performance-based pricing. But where there is a fit, PBP can be a powerful tool that merges the interests of buyers and sellers, says Harvard Business School professor Benson Shapiro. Closed for comment; 0 Comment(s) posted.

John H. Patterson and the Sales Strategy of the National Cash Register Company, 1884 to 1922

by Walter A. Friedman

John H. Patterson's sales management techniques built National Cash Register into the dominant force in its industry and had a major impact on the development of modern selling. This excerpt from Business History Review looks at one aspect of the Patterson method. Closed for comment; 0 Comment(s) posted.