Sales management involves great expertise due to its sensitive nature of controlling and motivating salespeople working independently. Salespeople are not supervised directly resulting in an increased ego among them. Enhanced ego drives among salespeople cause difficulty for sales managers for motivating them to perform the tasks they are responsible for. Interaction levels between salespeople and sales managers differ according to various types of sales positions and thus resulting in enhanced complication to motivate them.
Various studies (Alonzo 1999; Marchetti 1998, 1999) emphasize on rewarding compensation in the form of money for motivating the ego-centric salespeople. These studies consider money as an important motivating factor for salespeople. For this matter, large number of sales organizations plan and implement numerous incentive plans for motivation and money is used as the motivating tool in most of them.
On the other hand, several studies (Kohn 1993; Deci & Ryan 2000; Deckop & Cirka 2000) have disqualified the idea of using money as a motivator because for them, money only cannot act as a motivating tool though financial incentives are appreciated by salespeople. Financial incentives not always motivate them; instead they sometimes result in contrasting results by declining the motivation level of salespeople.
The present paper debates that the use of money does not act as a motivator for salespeople though arguments favoring the use of money as a motivator are also presented.
The Higher the Compensation The Higher the Motivation
This section provides arguments in favor of the use of money as a motivating tool for salespeople.
Compensation is an important method to incorporate the efforts of sales managers and salespeople to accomplish organizational goals. Incentive compensation system is an important part of high-performing organizations. Carlon et al. (2006) pointed out that most commonly acquired form of compensation in high performing organizations is financial incentive. Walker, Churchill and Ford (1979) explained that commissions, high pay and other financial incentives are employed in large number of organizations as motivating tools to increase the productivity of employees.
Studies (Summers 2005; Widener 2006) strongly advocate the effectiveness of money as a motivator for salespeople. It is insisted that every hard work needs to be paid well and cash incentive is a very good way to do so because salespeople are humans too and being humans, they also have to fulfill their basic needs that require money. Salespeople can be motivated to increase sales by introducing effective cash incentive plans.
Compensation can be related to performance. For example, cash incentives reserved for salespeople proved to increase the sales can motivate them to work efficiently in future. Bonus programs also prove to be effective in enhancing motivation among employees.
The Higher the Compensation Does Not Always Increase the Motivation
Alfie Kohn (1993) analyzed the negative impacts of cash incentives and reported that money is not the target of people nor they work to receive cash rewards. Instead, the happiness gained by performing well motivates them. Gellerman (1963) emphasized on the motivation factors of workers and found that money is not the only factor they work for; rather they expect intrinsic motivational factors such as performance appraisal, inclusion of employees in decision-making process etc.
He continued that money may be regarded as a driving force to motivate salespeople because money drives them. However, it was found that only ten percent of cases had reported the effectiveness of money as a motivational factor in salespeople and it remains ineffective in the rest of the ninety percent cases to motivate salespeople.
Deci and Ryan (2000) performed an experiment to find out the impact of monetary rewards on motivation to work. They asked a group of college to work on a puzzle. Researchers paid some of the students for this work while some of the students were remained unpaid. The results obtained from the experiments had shown breathe-taking results in which students who were not paid had performed better on the puzzle and spent more time than the paid students.
The results of the experiment encouraged the researchers to perform the same research among employees of an organization. Same results were obtained with the explanation that monetary reward had made employees felt of them as dehumanized and alienated. The researchers suggested that employees’ motivation would decrease if they would ever be rewarded to perform certain tasks. It was also observed that cash rewards ensure employees to be paid every time they would be asked to perform a task.
Cash rewards also found to serve as negative reinforcement because the expectations of employees of receiving cash incentives are strengthened every time and they automatically expect an increase in the amount of the incentive which if not given gives rise to decreased motivation and finally work performance is badly affected.
Deckop and Cirka (2000) conducted a study to observe the impacts of cash incentive programs on the levels of intrinsic motivation in workforce of some non-profit organizations. Cash incentive programs are perceived as a way to increase employees’ performance in non-profit organizations. Several internal benefits seem to compensate the financial benefits among the employees. However, intrinsic motivation outweighs the cash incentive programs.
The study observed the impacted of a freshly executed cash incentive plan in a private college for religious studies in the United States. The intrinsic motivation was kept strong with the help of great emphasis on the religious activities as the pay scale was quite low and insufficient to motivate them. All the employees were paid the same prior the implementation of the new pay scale. The new pay plan involved the salaries of employees solely based on their performance. So, high performing employees were expected to perform even better as a result of the new plan whereas low performing employees would not even receive the basic pay.
The result of the study was quite unexpected because the motivational level of most of the employees had shown decline. Most of the employees were performing very well prior to the implementation of the cash incentive plan because intrinsic motivation had led them perform well.
Cash incentives that serve as extrinsic motivator were found to increase extrinsic motivation among only a few employees but it was also impossible for the college to keep a balance between the provision of intrinsic and extrinsic motivational factors because the college was a non-profit organization. It was not possible for the college to pay cash every time to make their employees work on a task. Extrinsic and intrinsic motivation can show decline if the employees do not perceive the performance appraisal fairly.
The present paper strongly disqualifies the idea of using pay as a motivator to enhance the performance of salespeople. Previously published studies were explored in this paper to find out whether employees perceive intrinsic motivation as more effective to motivate them than extrinsic cash rewards. The pre-existing literature has provided the evidence in support of intrinsic motivation as an important factor in motivating employees.
Extrinsic motivation in the form of cash incentives actually serve to decrease the motivation among employees. Most of the firms utilize the method of cash incentives to motivate their employees because young people looking for a job are mostly attracted by huge cash incentives but the effect of this method is short termed. The attitude of an employee towards work performance is greatly affected by his/her desires to meet his/her needs.
All employees in general and salespeople in particular are quite self-determined and they have complete control on their behavior. Their level of intrinsic motivation decreases when they find their employers to control their behavior and thus taking away their freedom to work by increasing extrinsic motivation in terms of cash incentives.
Salespeople reject the idea of extrinsic motivation through cash incentive because they want to be responsible for their own behavior. They want to work independently to be beneficial for their organizations. They want to have freedom enough to make choices for them. Salespeople should be praised, encouraged and respected to perform their jobs effectively. In the end, money does not motivate salespeople.
Alonzo, Vincent. Motivating Matters. Sales & Marketing Management (June1999): pp 26-28.
Carlon, D.M., Downs, A.A. and Wert-Gray, S. Statistics as fetishes – The case of financial performance measures and executive compensation, Organizational Research Methods 9(4), (2006): 475–490.
Deckop, J. & Cirka, C. The risk and reward of a double-edged sword: Effects of a merit pay program on intrinsic motivation. Nonprofit and Voluntary Sector Quarterly, 29(3) (2000): 400-418.
Deci, E. & Ryan, R. The what and why of goal pursuits: Human needs and the self-determination of behavior. Psychological Inquiry, (4) (2000): 227-269.
Gellerman, Saul. Motivation and productivity. United States of America:VailBallou Press, Inc., 1963.
Kohn, Alfie. 1993. Why incentive plans cannot work. Harvard Business Review, 71(5), 54-61.
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