research@hec - Issue #9 - (Page V)

In B2B industries, sales representatives play a critical role. They are the company’s ambassadors when they visit customers, and the clients’ ambassadors when they return to the office. They must not only respond to customer needs, but also ensure that their companies keep the promises they have made—which is not always easy, given that the number of people involved in the sales process has significantly increased. As the company’s primary means to promote product sales, sales representatives are a highly strategic business issue. How much should they be paid to ensure their commitment and motivation? How can compensation schemes be adapted to specific fiscal contexts? Should sales directors also receive incentivized salaries? The Weight of Net Key Ideas •To ensure that sales force remain motivated, companies should increase the less effective sales people. Sales director compensation must reflect this fact. variable component of sales representatives’ salary for people operating in areas where fiscal policies translate as modest differences in compensation for more and •The performance of sales directors has a major impact on that of the sales force. Sales Force Compensation: M SALES FORCE COMPENSATION IN B2B INDUSTRIES Given the specificities of this group of employees, considerable research has been conducted on how to determine their compensation. The following observations have been made: • There is an information gap between sales representatives and their managers. The first group is, in fact, more knowledgeable than the second when it comes to customers, their potential, and the competition. Further, as sales reps are generally quite independent, it is difficult IMPACT OF TAXATION ON SALES FORCE COMPENSATION Most research has been conducted in North American countries, where low taxation levels mean little difference between what companies pay their sales force and these people’s takehome salaries. Up until now, there have not been any studies that look at the impact of tax imposition levels on sales compensation levels and structures. Dominique Rouziès has considered this matter and found that: 1) Sales people are motivated by net compensation; 2) To for managers to assess the challenges they have to deal with, evaluate their performance, and define suitable, motivating compensation schemes and levels. • Manager/sales rep relationships are subject to the problems of any principal/agent relationship. The manager (the principal) hires a representative (the agent) to generate sales. These sales depend on the amount of effort the rep puts into the job, yet reps strive to maximize the utility of their efforts. In this context, an optimal compensation scheme would involve a variable component of salary that would serve to encourage efforts to make sales, and a fixed component that would provide reps with a degree of security. Dominique Rouziès BIOGRAPHY HEC Paris marketing professor Dominique Rouziès holds a PhD from McGill University (Canada). Her research and teaching are essentially focused on strategic sales force management. In particular, she is interested in the development of sales force compensation schemes, the control of such schemes in the international context, and relationships between sales and marketing teams. Rouziès’ articles have appeared in the following publications: International Journal of Research in Marketing, Journal of the Academy of Marketing Science, Journal of Business Research, Journal of the Operational Research Society, Journal of Personal Selling & Sales Management, European Management Journal, Recherche et Applications en Marketing, Décisions Marketing, Financial Times, and Les Echos. June-July 2009 • research@hec V

Table of Contents for the Digital Edition of research@hec - Issue #9

Cover & Contents
Organization, Business, and Society
Inter-Stock Market Competition and Market Liquidity
Sales Force Compensation: TheWeight of Net
IFRS: The Revolution That NeverWas (at least not yet!)

research@hec - Issue #9