• Look at Exhibit 7.3 p228. Explain the importance of this model as it pertains to Jason Benjamin in the Leadership Challenge on p250-251. Using the model, what could be the problem? Explain based on Ch 7.

228 IMPLEMENTATION OF THE SALES PROGRAM EXHIBIT 7.3 Factors influencing Level of effort expended the motivation Personal and process organizational variables Job activity Expectancy or task Perceived effort/ Role perceptions performance probability Level of performance Salesperson's Valence on performance for Performance Motivation dimension nstrumentality multiplied Company's by valences for rewards compensation plan Instrumentality Perceived performance/ Role perceptions reward probability Personal and organizational variables Increase in attainment of reward(s) Salesperson's Valence Internally mediated for Reward(s) Externally mediated Salesperson's job satisfaction Intrinsic Extrinsic As Exhibit 7.3 indicates, personal and organizational characteristics affect the magnitude and accuracy of salespeople's expectancy perceptions. Managers must consider these factors when deciding on supervisory policies, compensation, and incentive plans so their subordinates' expectancies will be as accurate as possible. The factors that affect salespeople's expectancy estimates, along with their mana- gerial implications, are discussed later in this chapter. Instrumentalities-Perceived Links between Performance and Rewards Like expectancies, instrumentalities are probability estimates made by the salesper- son. They are the individual's perceptions of the link between job performance and various rewards. Specifically, an instrumentality is a salesperson's estimate of the probability that an improvement in performance on some dimension will lead to a specific increase in a particular reward. The reward may be more pay, winning a sales contest, or promotion. As with expectancies, sales managers should be concerned with both the magnitude and the accuracy of their subordinates' instrumentalities. Accuracy of Instrumentalities The accuracy of instrumentality estimates refers to the true linkages between per- formance on various dimensions and the attainment of rewards as determined by management practices and policies on sales performance evaluation and rewards for levels of performance.' Exhibit 7.4 identifies some important questions for sales SALESPERSON PERFORMANCE: MOTIVATING THE SALES FORCE 229 management regarding a salesperson's instrumentality estimates and their impli- cations. These policies and practices may be misperceived by the salesperson lead- ing the individual to concentrate on improving performance in areas that are less important to management and ultimately become disillusioned with his or her ability to attain rewards. Thus, it is important to compare salespeople's instrumentality perceptions with stated company policies and management perceptions of the true or desired link- ages between performance and rewards. If salespeople do not accurately perceive how performance is rewarded in the firm, management must improve the accuracy of those perceptions. This is done through closer supervision and more direct feed- back about evaluation and the determination of rewards.LEADERSHIP CHALLENGE: WHAT HAVE YOU DONE FOR ME LATELY? Terri Ann Masters, Vice President of Sales for Startech Corporation, was wrestling with a critical issue related to one of her longtime and, until recently, most talented salespeople, Jason Benjamin. Startech was a French high-tech manufacturer with its corporate offices in Paris and manufacturing operation in France and China. Jason, whose territory included Silicon Valley in California, had been one of Startech's top salespeople for 11 of his 15 years with the company. At first, Terri Ann thought it was just "bad luck" and Jason would be able to turn it around. Now, however, after four years of seeing Jason miss sales targets and hearing increasing complaints from customers, Terri Ann knew something was wrong. This was especially critical for Startech because Jason called on some of the compa- ny's biggest clients. Jason had worked his way up in the company and been given these accounts seven years ago. During his first three years with the accounts, Jason generated substantial new business from his clients. Management with the customers had actually gone to the trouble of calling Terri Ann and complimenting Startech on the relationship Jason had established. The end result was that Jason frequently exceeded his sales quotas and received healthy bonuses. In the last few years, however, there was very little new business coming from Jason's accounts. At the same time, Terri Ann knew these companies were growing and were tak- ing business to other competitors. It was not that Jason had lost the accounts; they were still doing a reasonable business with Startech. Rather, Terri Ann recognized there was additional business the company was not getting for some reason. SALESPERSON PERFORMANCE: MOTIVATING THE SALES FORCE 251 Of even greater concern was the number of complaints about Jason that had been com- ing in to Terri Ann. Jason certainly did not have the greatest number of complaints, but given his history, they were high. In addition, Jason seemed to be less motivated. When Terri Ann would call his office on Friday afternoons, she would find that he had already left for the weekend. The "old" Jason was one of the hardest-working salespeople in the com- pany. In addition, EU and French employment law limited Terri Ann's flexibility in dealing with employment performance issues. The problem was coming to a head. Management had a big push inside the company to increase productivity. Terri Ann also had several younger salespeople who were eager to move into larger, more demanding, and higher potential accounts.r Done Attachment CHAPTER 7 Salesperson Perfonnance: Motivating the Sales Force LEARNING OBJECTIVES Salespeople operate in a highly dynamic, stressful environment outside of the company. As we have already seen in Chapter 6, there are many factors that influence the salesperson's ability to perform. One of the most critical factors is motivation. It is very important that sales managers understand the process of motivation and be able to apply it to each indi- Viduai in the sales force in such a manner as to maximize his or her performance potential. After reading this chapter, you should be able to - Understand the process of motivation. - Discuss the effect of personal characteristics on salesperson motivation. I Understand how an indiVidual's career stage influences motivation. - Discuss the effect of envrronmental factors on motivation. - Discuss the effect of factors inside the company on motivation. Unfortunately, many firms are not successful in developing systems or programs that are appropriate for the marketing challenges they face and the kinds of people they employ. Consequently, their salespeople are either undermotivated or stimulated to expend too much time and effort on the wrong tasks and actiVities. In either case, sales effectiveness and productivity suffer. In View of the complicated nature of motivation and its critical role in sales management, the rest of this chapter as well as Chapter 1 1 (on compensation) are devoted to the subject. This chapter examines what is known about motivation asa psychological process and how a person's motivation to perform a given gob is affected by environmental, organizational, and personal variables. Chapter 11 discusses compensation plans and incentive programs sales managers use to stimulate and direct salespeople's efforts. THE PSYCHOLOGICAL PROCESS OF MOTIVATION Most industrial and organizational psychologists view motivation as an individ- ual's choice to (1) initiate action on a certain task, (2) expend a certain amount of effort on that task, and (3) persist in expending effort over a period of time.' For our purposes, motivation is viewed as the amount of effort the salesperson desires to 224 IMPLEMENTATION OF THE SALES PROGRAM expend on each activity or task associated with the job. This may include calling on potential new accounts, developing sales presentations, and managing technology. The psychological process involved in determining how much effort a salesperson will want to expend and some variables that influence the process are shown in Exhibit 7.1. The conceptual framework outlined in Exhibit 7.1 is based on a View of motiva- tion known as expectancy theory. A number of other theories of motivation exist,2 and many of them are useful for explaining at least a part of the motivation pro- cess. However, expectanqi theory incorporates and ties together, at least implic- itly, important aspects of many of those theories. [t has been the subject of much empirical research in sales management, and it also provides a useful framework for guiding the many decisions managers must make when designing effective moti- vational programs for a sales force. Consequently, the remainder of this discussion focuses primarily on expectancy theory, although several other theories are men- tioned later when we examine how personal characteristics affect the motivation of different individuals. Major Components of the Model The model in Exhibit 7.1 suggests that the level of effort expended by a salesperson on each fob-related task will lead to some level of performance on some performance dimension. These dimensions include, for example, total sales volume, profitability of sales, and new accounts generated. It is assumed the salesperson's performance Level I allot! expended EXHIBIT 7.1 The psychological Level of effort expended determinants of motivation Job activity task (e.g., developing sales presentations, Expectancy calling on potential Perceived linkage between increased new accounts, servicing effort on task and existing customers, etc.) Motivation improved performance on some performance dimension Level of performance on some performance dimension Instrumentality Perceived relationship (e.g., sales volume, between improved new account sales, performance on some profitability of dimension and sales, etc.) attainment of increased Valence for rewards Performance Instrumentality Increased attainment Valence for Reward multiplied of reward(s) Perceived desirability of by valence Intrinsic receiving more of a Extrinsic particular reward SALESPERSON PERFORMANCE: MOTIVATING THE SALES FORCE 225 on some of these dimensions will be evaluated by superiors and compensated with one or more rewards. These might be externally mediated rewards, like a promotion, or internally mediated rewards, such as feelings of accomplishment or personal growth. A salesperson's motivation to expend effort on a given task is determined by three sets of perceptions: (1) expectancies-the perceived linkages between expending more effort on a particular task and achieving improved performance; (2) instrumentalities-the perceived relationship between improved performance and the attainment of increased rewards; and (3) valence for rewards-the per- ceived attractiveness of the various rewards the salesperson might receive. Expectancies-Perceived Links between Effort and Performance Expectancies are the salesperson's perceptions of the link between job effort and performance. Specifically, expectancy is the person's probability estimate that expending effort on some task will lead to improved performance on a dimension. Sales managers are concerned with two aspects of their subordinates' expectancy perceptions: magnitude and accuracy. The following statement illustrates an expec- tancy perception: "If I increase my calls on potential new accounts by 10 percent [effort], then there is a 50 percent chance [expectancy] that my volume of new account sales will increase by 10 percent during the next six months [performance level]." Key questions that arise from a salesperson's expectancies and their impli- cations for sales managers are identified in Exhibit 7.2. Accuracy of Expectancies The accuracy of expectancy estimates refers to how clearly the salesperson understands the relationship between effort expended on a task and the resulting achievement on some performance dimension. When salespeople's expectancies are inaccurate, they are likely to misallocate job efforts. They spend too much time and energy on activities that have little impact on performance and not enough on activities with a greater impact. Consequently, some authorities refer to attempts to improve the accuracy of expectancy estimates as "trying to get salespeople to work smarter rather than harder."3 Working smarter requires that the salesperson have an accurate understand- ing of what activities are most critical-and therefore should receive the greatest effort-for concluding a sale. Of course, a single activity might be carried out in a number of ways. For instance, a salesperson might employ any of several different sales techniques or strategies when making a sales presentation. Therefore, working smarter also requires an ability to adapt the techniques used to the needs and pref- erences of a given buyer. As a result of the war on terrorism and events in the Middle East, salespeople have learned to adapt to a new selling environment. For example, due to security concerns as well as higher travel costs customers and salespeople are consideringValence: for Rewards Valenccs for rewards are salespeople's perceptions of the desirability of receiving increased rewards from improved performance. One question about valences that has always interested sales managers is whether there are consistent preferences among salespeople for specific kinds of rewards. Are some rewards consistently val- ued more highly than others? Historically, many sales managers assume monetary rewards are the most highly valued and motivating rewards. They believe recognition and other psychological rewards are less valued and spur additional sales effort only under certain circum- stances. Very little research has tested whether salespeople typically desire more pay than other rewards. Thus, the assumption is based largely on the perceptions of sales managers rather than on any evidence obtained from salespeople themselves. There is evidence to suggest that other rewards are at least as important as finan- cial compensation. One vice president of manufacturing for a large British based company puts it this way, \"You can throw money at peoplebonuses, incentives, rewards, additional skills trainingand they're all important parts of what the manager offers. But praise is number one. It goes a long way when you give them that pat on the back.\" Recent research suggests that more and more companies con- sider other factors as or even more important than compensation. According to one SALESPERSDN PERFORMANCE: MOTIVATING THE SALES FORCE 231 One of the challenges for sales managers is to find tools that will motivate the sales force, While money is certainly the primary motivator it is by no means the only one and. in many situations, there are other motivators that work as well or better. Among the many different types of incentives available to managers, research suggests that one of the most effective is technology and more specifically the iPad. While millions of people enjoy u5ing the iPad it remains, years after its introduction. a popular product with consumers and business. Research also confirms that it is a very popular incentive for both consumers and employees. Recently a health care system was looking to increase employee par- ticipation in workplace surveys. Historically. the company had about 65 percent participation but when they decided to offer an iPad as an incentive participation in the survey was over 80 percent, In selling, a number of companies have used iPads in their incentive programs with positive affects. Sales professionals indicate that new technologies like the iPad generate more interest and raise awareness of the sales programs they are designed to promote. They note that technology provides a tangible incentive for the salesperson that lasts beyond money handed out in a check. Not surprisingly. new technology is particularly effective with younger salespeople who, as a group, are less motivated by money than their older, baby boomer colleagues. sales executive, "Good management equals better performance and better motiva- tion.\" The use of cash as an incentive has actually been declining. Companies are incorporating other forms of incentives such as debitlgift cards and leisure trips,\" An even more extreme view of financial rewards argues that linking pay to per- formance can have a negative effect on employees' motivation over time.\" In this view, when pay is tied to performance, employees become less interested in what they are doing and more interested in simply capturing the reward. Intrinsic moti- vation is eaten away by extrinsic motivators like commissions and incentive con- tests, and employee creativity and quality of work may suffer as a result, In light of these contradictory arguments and research results, is the conven- tional wisdom that salespeople desire money more than other rewards wrong? Or do salespeople simply desire a greater variety of rewards and work-related options than individuals in other kinds of jobs? Several studies focused on business-to-business salespeople generally support the conventional view, Their findings suggest that, on average, salespeople place a higher value on receiving more pay than any other reward, including intrinsic rewards like feelings of accomplishment or opportuni- ties for personal growth. More recently, research in a nonsales setting confirms the importance of financial incentives as the primary reward, although recognition among peers was also found to be a significant motivator.\" Informal surveys affirm that, while there are many different ways to motivate salespeople, compensation is still dominant. Overall, sales executives favor money, but offering other incentives makes sense in some cases. One high ranking sales executive summarized the view of many executives, \"I'll go with cash [as the best incentivel, People can't always get away for trips. Besides, cash gives them a choice'" No universal statements can be made about what kinds of rewards are most desired by salespeople and most effective for motivating them. Salespeople's valences for rewards are likely to be influenced by their satisfaction with the rewards they are currently receiving. Their satisfaction with current rewards, in turn, is influenced by their personal characteristics and by the compensation policies and manage- ment practices of their firm. CAN THE MOTIVATION MODEL PREDICT SALESPERSON EFFORT AND PERFORMANCE? Several studies have tested the ability of motivation models such as the ones out- lined in Exhibits 7.1 and 7.3 to predict the amount of effort workers will expend on various job activities The findings support the validity of such expectancy models of motivation.'2 The salesperson model of performance suggests motivation is only one deter- minant of job performance. Thus. it seems inappropriate to use only motivation to predict differences in iob performance, However, several studies have attempted to do just that, with surprising success reporting that an individual's motivation to expend effort can explain up to 40 percent of the variation in the overall job performance.\" It is nice to know that models like Exhibit 7.1 are valid descriptions of the psy- chological processes that determine a salesperson's motivationr However, there is a question of even greater relevance to sales managers as they struggle to design effective compensation and incentive programs: How are the three determinants of motivationexpectancy perceptions, instrumentality perceptions, and valences for rewardsaffected by (1) differences in the personal characteristics of individ- uals, (2) environmental conditions, and (3) the organization's policies and proce- dures? The impact of each of these variables on the determinants of motivation is now examined in greater detail. THE IMPACT OF A SALESPERSO'I'S PERSONAL CHARACTERISTICS ON MOTIVATIOI: When placed in the same job with the same compensation and incentive programs, different salespeople are likely to be motivated to expend widely differing amounts ofeffort, People with different personal characteristics have divergent perceptions of the links between effort and performance (expectancies) and between performance and rewards (instrumentalities). They are also likely to have different valences for the rewards they might obtain through improved job performance. The personal characteristics that affect motivation include (1) the individual's satisfaction with current rewards, (2) demographic variables, (3) job experience, and (4) psychologi- cal variables, particularly the salesperson's personality traits and attributions about why performance has been good or bad. Let's examine the impact of each of these sets of variables on salespeople's expectancies, instrumentalities, and valences. SALESPERSON PERFORMANCE: MOTIVATING THE SALES FORCE 233 It should also be noted that many of these personal characteristics change and interact with one another as a salesperson moves through various career stages. For instance, when people begin their first sales job, they are likely to be relatively young and have few family responsibilities, little iob experience, and low task-specific self-esteem. Later in their careers, those salespeople will be older and have more family obligations, more experience, and more self-esteem. As a result, their valences for various rewards and their expectancy and instrumen- tality estimates are all likely to change as their careers progress. Consequently, a later section of this chapter examines how salespeople's motivation is likely to change during their careers and addresses some managerial implications of such changes. Satisfaction Is it possible to pay a salesperson too much? After a salesperson reaches a certain satisfactory level of compensation, does he or she lose interest in working to obtain still more money? Does the attainment of nonfinancial rewards similarly affect the salesperson's desire to earn more of those rewards? The basic issues underlying these questions are whether a salesperson's satisfaction with current rewards has any impact on the desire for more of those rewards or on different kinds of rewards. The relationship between satisfaction and the valence for rewards is different for rewards that satisfy lower-order needs (e.g., pay and job security) than for those that satisfy higher-order needs (e_g., promotions, recognition, opportunities for satisfaction Is it possible to pay a salesperson too much? After a salesperson reaches a certain satisfactory level of compensation, does he or she lose interest in working to obtain still more money? Does the attainment of nonfinancial rewards similarly affect the salesperson's desire to earn more of those rewards? The basic issues underlying these questions are whether a salesperson's satisfaction with current rewards has any impact on the desire for more of those rewards or on different kinds of rewards. The relationship between satisfaction and the valence for rewards is different for rewards that satisfy lower-order needs (e.g., pay and job security) than for those that satisfy higher-order needs (e.g., promotions, recognition, opportunities for personal growth, self~fulfiliment). Maslow's theory of needs hierarchy,\" Herzberg's theory of motivation," and Alderfer's existence, relatedness, and growth theory\" all suggest that lower-order rewards are valued most highly by workers currently dissatisfied with their attainment of those rewards. In other words, the more dis- satisfied a salesperson is with current pay, job security, and other rewards related to lower-order needs, the higher the desire to increase those rewards. In contrast, as salespeople become more satisfied with their attainment of lower-order rewards, the value of further increases in those rewards declines. The theories of Maslow, Herzberg, and Alderfer further suggest that high-order rewards are not valued highly by salespeople until they are relatively satisfied with their low-order rewards. The greater the salesperson's satisfaction with low-order rewards, the higher the desire for high-order rewards, Perhaps the most controversial aspect of Maslow's and Alderfer's theories is the proposition that high-order rewards have increasing marginal utility. The more sat- isfied a salesperson is with the high-order rewards received from the job, the higher the value he or she places on further increases in those rewards. Research in industrial psychology provides at least partial support for these suggested relationships between satisfaction and the valence of low-order and high-order rewardsi Some of the evidence is equivocal, though, and some propositionsparticularly the idea that high-order rewards have increasing mar- ginal utilityhave not been tested adequately. 234 IMPLEMENTATION OF THE SALES PROGRAM In general, research suggests that salespeople who are relatively satisfied with their current income (a lower-order reward) have lower valences for more pay than those who are less satisfied. Most of these studies also report salespeople who are relatively satisfied with their current attainment of higher-order rewards, such as recognition and personal growth, tend to have higher valences for more of those rewards than those who are less satisfied. However, the evidence is mixed concern- ing whether salespeople who are relatively satisfied with their lower-order rewards have significantly higher valences for higher-order rewards than those who are less satisfied, as the theories would predict.\" Demographic Characteristics Demographic characteristics, such as age, family size, and education, also affect a salesperson's valence for rewards. At least part of the reason for this is that peo- ple with different characteristics tend to attain different levels of rewards and are therefore likely to have different levels of satisfaction with their current rewards. Although there is only limited empirical evidence regarding salespeople, some con- clusions can be drawn from studies in other occupations\" These conclusions are summarized in Exhibit 7.5. Generally, older, more experienced salespeople obtain higher levels of low-order rewards (e.g., higher pay, a better territory) than newer members of the sales force. Thus, it could be expected that more experienced salespeople are more satisfied with their [oyster-order rewards. Consequently, they should have lower valences for lowerorder rewards and higher valences for higher-order rewards than younger and less experienced salespeople. A salesperson's satisfaction with their current level of lower-order rewards may also be influenced by the demands and responsibilities he or she must satisfy with those rewards. A salesperson with a large family to support, for instance, is less likely to be satisfied with a given level of financial compensation than a single salesperson. Consequently, the more family members a salesperson must support, the higher the valence for more lower-order rewards. Finally, individuals with more formal education are more likely to desire oppor- tunities for personal growth, career advancement, and self-fulfillment than those with less education. Consequently, highly educated salespeople are likely to have higher valences for higherorder rewards. lob Experience As people gain experience on a job, they are likely to gain a clearer idea of how expending effort on particular tasks affects performance. Experienced salespeople are also more likely to understand how their superiors evaluate performance and how particular types of performance are rewarded in the company than their inex- perienced counterparts. Consequently, a positive relationship is likely between the years a salesperson has spent on the iob and the accuracy of his or her expectancy and instrumentality perceptions. SALESPERSDN PERFORMANCE: MOTIVATING THE SALES FORCE 235 Demographic Variable Valence for Higher-Order Valence for Lower-Order Th e inuence Rewards Rewards of demographic Age + _ characteristics on Family size + valence for rewards Education + + In addition, the magnitude of a salesperson's expectancy perceptions may be affected by experience. As they gain experience, salespeople have opportunities to sharpen their selling skills; and they gain confidence in their ability to perform suc- cessfully. As a result, experienced salespeople are likely to have larger expectancy estimates than inexperienced ones.\" Psychological Traits An individual's motivation also seems to be affected by psychological traits. Vari- ous traits can influence the magnitude and accuracy of a person's expectancy and instrumentality estimates, as well as valences for various rewards, as summarized in Exhibit 7.6. People with strong achievement needs are likely to have higher valences for such higher-order rewards as recognition, personal growth, and feeling of accomplishment. This is particularly true when they see their jobs as being rela- tively difficult to perform successfully?\" The degree to which individuals believe they have internal control over the events in their lives or whether those events are determined by external forces beyond their control also affects their motivation. Specifically, the more salespeo- ple believe they have internal control over events, the more likely they are to think they can improve their performance by expending more effort. They also believe improved performance will be appropriately rewarded. Therefore, salespeople with a high internal locus of'mmml are likely to have relatively high expectancy and instrumentality estimates.21 There is evidence that intelligence is positively related to feelings of internal control.22 Those with higher levels of intelligenceparticularly, verbal intelli- genceare more likely to understand their jobs and their companies' reward poli- cies quickly and accurately. Thus, their instrumentality and expectancy estimates are likely to be more accurate. Finally, a worker's general feeling of self-esteem and perceived competence and ability to perform job activities (taskspecific self-esteem) are both positively related to the magnitude of expectancy estimates.\" Since such people believe they have the talents and abilities to be successful, they are likely to see a strong relationship between effort expended and good performance. Also. people with high levels of self-esteem are especially likely to attach importance to, and receive satisfaction from, good performance. Consequently, such people probably have higher valences for the higher-order, intrinsic rewards attained from successful job 236 IMPLEMENTATION or THE SALES PROGRAM Motivational Variables A; \"NAM'M'M' Expectancies lnstrumentalities Valence