Determinants of Pay Levels and Structures in Sales Organizations

Journal of Marketing, Vol. 73 (November 2009), 92-104

14 Pages Posted: 19 Nov 2015 Last revised: 19 Feb 2016

Date Written: 2009

Abstract

Two key issues in business-to-business (B2B) sales force management are (1) how much a given sales job should be compensated (pay level) and (2) how much of the compensation should be fixed versus variable (pay structure). The authors examine the paychecks drawn by people in more than 14,000 selling jobs and more than 4000 sales management jobs in five B2B industry sectors in five European countries. They show that pay levels and structures reflect an apparent balancing of two conflicting pressures: the economic imperative (to reward better performers by heightening pay dispersion) and the compensation differential compression resulting from high tax regimes. In particular, B2B firms appear to use variable pay as a way to lessen the salary differential compression impact of high tax regimes on salesperson motivation. Furthermore, similar to chief executive officers, sales managers can have an important multiplier effect that justifies paying them at increasing rates as job challenge rises.

Keywords: compensation, motivation, agency theory, pay disparity, sales management

Suggested Citation

Rouzies, Dominique and Coughlan, Anne T. and Anderson, Erin and Iacobucci, Dawn, Determinants of Pay Levels and Structures in Sales Organizations (2009). Journal of Marketing, Vol. 73 (November 2009), 92-104, Available at SSRN: https://ssrn.com/abstract=2691674 or http://dx.doi.org/10.2139/ssrn.2691674

Dominique Rouzies (Contact Author)

HEC Paris - Marketing ( email )

Paris
France
+33 1 3967 7207 (Phone)
+33 1 3967 7087 (Fax)

Anne T. Coughlan

Kellogg School, Northwestern University ( email )

2211 Campus Drive
Evanston, IL 60208
United States
847-491-3522 (Phone)

HOME PAGE: http://www.kellogg.nwu.edu/faculty/bio/Coughlan.htm

Erin Anderson

INSEAD - Marketing ( email )

Boulevard de Constance
Fontainebleau, 77305
France
+33 1 6072 4000 (Phone)
+33 1 6074 5500/01 (Fax)

Dawn Iacobucci

Vanderbilt University - Marketing ( email )

Nashville, TN 37203
United States

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