Quota-Based Compensation Plans for Multiterritory Heterogeneous Salesforces

We compare quota-based salesforce compensation plans with the BLSS plan, i.e., the optimal curvilinear agency-theory-based compensation plans proposed in Basu, Lal, Srinivasan and Staelin (1985). A quota plan pays a fixed salary which is supplemented by commission income that is a prespecified fract...

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Bibliographische Detailangaben
Veröffentlicht in:	Management Science. - Institute for Operations Research and the Management Sciences, 1954. - 42(1996), 10, Seite 1454-1462
1. Verfasser:	Raju, Jagmohan S. (VerfasserIn)
Weitere Verfasser:	Srinivasan, V.
Format:	Online-Aufsatz
Sprache:	English
Veröffentlicht:	1996
Zugriff auf das übergeordnete Werk:	Management Science
Schlagworte:	Salesforce Compensation Agency Theory Sales Quotas Salesforce Management Business Mathematics


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100	1		\|a Raju, Jagmohan S. \|e verfasserin \|4 aut
245	1	0	\|a Quota-Based Compensation Plans for Multiterritory Heterogeneous Salesforces
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520			\|a We compare quota-based salesforce compensation plans with the BLSS plan, i.e., the optimal curvilinear agency-theory-based compensation plans proposed in Basu, Lal, Srinivasan and Staelin (1985). A quota plan pays a fixed salary which is supplemented by commission income that is a prespecified fraction of the dollar sales that exceed the quota. For a salesforce comprised of multiple salespersons/territories, we consider a basic quota plan where the commission rate and salary remain the same across salespersons; however, quotas vary across salespersons/territories. Compared to the BLSS plan that is individually tailored to each salesperson/territory, the basic quota plan's total nonoptimality in profit has two components: (i) a shape-induced nonoptimality arising from the fact that the quota-based plan does not have the same optimal shape as the curvilinear BLSS plan, and (ii) a heterogeneity-induced nonoptimality arising from the fact that the salary and commission rate in the basic quota plan are constrained to be the same across the salesforce. Our numerical experiments indicate that the total nonoptimality is merely about 1% for the parametric scenarios studied. The basic quota plan is simpler to implement than the BLSS plan. Furthermore, changes in business conditions in a territory, or the transfer of a salesperson from one territory to another, can be accommodated by changing only the quota, without having to change the salary and the commission rate structure. Such advantages, together with our result that the nonoptimality is slight, suggest that quota-based plans offer considerable potential as a salesforce compensation scheme.
540			\|a Copyright 1996 Institute for Operations Research and the Management Sciences
650		4	\|a Salesforce Compensation
650		4	\|a Agency Theory
650		4	\|a Sales Quotas
650		4	\|a Salesforce Management
650		4	\|a Business \|x Business administration \|x Business management \|x Sales management \|x Sales quotas
650		4	\|a Business \|x Business administration \|x Business management \|x Capital management \|x Profit planning
650		4	\|a Business \|x Business administration \|x Corporate communications \|x External corporate communications \|x Marketing
650		4	\|a Mathematics \|x Applied mathematics \|x Statistics \|x Applied statistics \|x Descriptive statistics \|x Statistical distributions \|x Normal distribution curve \|x Standard deviation
650		4	\|a Business \|x Business information \|x Business forecasting \|x Sales forecasting
650		4	\|a Business \|x Business economics \|x Commercial production \|x Production factors \|x Production output \|x Product lines
650		4	\|a Business \|x Business administration \|x Business management \|x Sales management \|x Sales territory
650		4	\|a Business \|x Business administration \|x Human resources \|x Employee compensation \|x Sales commissions
650		4	\|a Mathematics \|x Pure mathematics \|x Geometry \|x Geometric properties \|x Convexity
650		4	\|a Business \|x Business administration \|x Business management \|x Sales management \|x Sales distribution
655		4	\|a research-article
700	1		\|a Srinivasan, V. \|e verfasserin \|4 aut
773	0	8	\|i Enthalten in \|t Management Science \|d Institute for Operations Research and the Management Sciences, 1954 \|g 42(1996), 10, Seite 1454-1462 \|w (DE-627)320623602 \|w (DE-600)2023019-9 \|x 15265501 \|7 nnns
773	1	8	\|g volume:42 \|g year:1996 \|g number:10 \|g pages:1454-1462
856	4	0	\|u https://www.jstor.org/stable/2634377 \|3 Volltext
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952			\|d 42 \|j 1996 \|e 10 \|h 1454-1462