Managing Sales Force Compensation: A Life Cycle Perspective

Compensation & Benefits Review, Vol. 44, No. 6, pp. 315-326, 2012

22 Pages Posted: 16 Mar 2013 Last revised: 11 Feb 2014

See all articles by Pankaj M. Madhani

Pankaj M. Madhani

Former Dean (Academics) & Professor

Abstract

Sales force compensation is influenced by various factors of development and change occurring at the individual, product, organizational and environmental levels. Companies that adapt to changing circumstances are likely to be more successful. The sales compensation strategy should be realigned according to changes in those factors. When they are viewed from the life cycle perspective, it gives rise to career life cycle of sales employees, product life cycle, organizational life cycle and business life cycle. Compensation practices are being increasingly planned and managed in response to changing circumstances. Whereas in the past researchers focused almost exclusively on how changes in compensation practices affect employee performance or satisfaction, researchers are now beginnings to ask how organizational as well as environmental conditions shape compensation practices. This article discusses several factors affecting the design of sales compensation systems and proposes a life cycle and a business value–added framework for strategic compensation planning.

Keywords: sales compensation, life cycle, fix pay, variable pay, business value-added, strategic compensation plan

Suggested Citation

Madhani, Pankaj M., Managing Sales Force Compensation: A Life Cycle Perspective. Compensation & Benefits Review, Vol. 44, No. 6, pp. 315-326, 2012, Available at SSRN: https://ssrn.com/abstract=2233351

Pankaj M. Madhani (Contact Author)

Former Dean (Academics) & Professor ( email )

India

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