A salesforce control system is an organization’s set of procedures for monitoring, directing, evaluating, and compensating its employees (Anderson and Oliver, 1987). According to Anderson and Oliver (1987), there are two kinds of salesforce control systems: Behaviour based and Outcome based salesforce control systems.
Characteristics of Behaviour based Salesforce Control System
The characteristics of a behavior based salesforce control system are as follows:
- Considerable monitoring of salespeople by management.
- More managerial direction or effort to direct salespeople.
- Subjective and more complex methods based on the salesperson’s aptitude and product knowledge, number of calls, and their sales strategies are used to evaluate and compensate the salesforce.
- In behavior-based control system, active managers vigorously monitor and direct the operations of the salesforce. Managers know what they want salespeople to do. So they monitor their work in order to ensure that the salesforce behaves accordingly. Under this system, the firm pays salespeople a fixed amount of salary. The firm bears the risk. The rewards and performance evaluation of salespersons is based on complex and subjective measures of what they do rather than what they achieve. In this system, the invisible hand of management is substituted for the invisible hand of the market forces.
- Salespeople in this system are evaluated not on the basis of their achievement but on the number of factors that may result in performance. The number of calls, number of accounts, closing ability, presentation quality and product knowledge are some of the factors that are taken into account while evaluating the salesperson.
Characteristics of Outcome based Salesforce Control System
The characteristics of outcome-based salesforce control system are as follows:
- Less monitoring of salespeople by management.
- Less managerial direction or effort to direct salespeople.
- Objective measures of outcomes are used to evaluate and compensate the salesforce.
- In outcome based control system, salespeople are left alone to achieve results in their own way using their own strategies. Salespeople are held accountable for their results and not how they achieve the results. Under such a system, the invisible hand of the marketplace pressures salespeople to perform and guide their actions. Firms reduce the managerial overhead, and they rely on the direction afforded by market pressures, shifting the risk to the salesperson (Basu et al. 1985) and sharing rewards with the salesperson in direct proportion to his measurable performance. So in this system, a salesperson is responsible for his performance, but he is free to select the method of achievement.
- Historically sales managers have emphasized outcomes rather than behaviors (Churchill et al. 1985). A major reason is the availability of simple measures of sales volume. Other indices which are used are sales unit volume, gross margin, and net margin.
Advantages and Disadvantages of Behaviour-based Salesforce Control System
Advantages of Behavior based Salesforce Control System
As salespeople are guided by management about how to achieve results, it is likely to be good for the organization in the long run. For example, increased customer goodwill and increased company reputation.
Apart from this, managers can ask salespeople to perform certain behaviours which are a part of company strategy. For example low, pressure expertise selling to create a particular image. Behaviour based control helps companies to make salesforce strategies that involve developmental work.
It helps managers to eliminate inequality. In outcome based systems salespeople are paid according to the output they have produced. But this seems unfair as in selling jobs there are factors that are not in salespeople’s control but have a major impact on results.
Disadvantages of Behavior based Salesforce Control System
As in behaviour based systems managers use subjective measures of evaluation, it can result in biasness, halo effect, and ignorance (Behrman and Perreault, 1982; Jackson, Keith, and Schlacter, 1983).
Apart from this, managers have their rules of effective working and salesperson might feel that to be unfair. For example, a salesperson who works for four days a week and makes fewer calls outsells the salesperson who works for six days and makes more calls, and may feel underpaid in this system.
These systems involve a complex evaluation process. So the more comprehensive they become, the more burdensome it is for the management to collect and combine the information.
These extremes are stereotypes. Many salesforce control systems are a mix of both controls, containing elements of both behaviour and outcome based strategies (Churchill et al. 1985).
Advantages and Disadvantages of Outcome based Salesforce Control System
Advantages of Outcome based Salesforce Control System
Salespeople usually spend most of their time away from office, on the road. So this makes supervision very difficult.
Apart from this selling is a very demanding occupation. It is also very difficult to profile successful salespeople. It is also difficult to specify what makes salesperson more effective than another (Weitz 1981). As there are many types of salesperson and they use different methods of working, one method may succeed in one setting and may fail in another. So in such situation letting salespeople choose their own methods is preferred by mangers. Managers do not monitor the type of method salespeople are using rather they monitor the results or outcomes.
The third benefit associated with this system is that it motivates salespeople to work harder. Salespeople know that if they will produce more, they will receive more incentive. If they will not produce, they will receive no compensation. So it is believed that outcome based control is necessary to maintain motivation.
Disadvantages of Outcome based Salesforce Control System
As in this system managers don’t monitor salespeople behavior, this lack of direction for salespeople can harm the organization in the long run. For example salespeople may not pay attention to customer satisfaction. They may try to sell the more profitable and easy-to-sell products. In outcome based system salespeople are concerned with their immediate incentive and don’t care about the long term results. They don’t want to put extra effort in selling new products and penetrating a larger market which are difficult to sell. They sell their established products to smaller and regular accounts (Moynahan, 1983).
For citing this article use:
- Fatima, Z. (2017). Behaviour based and Outcome based Salesforce Control Systems A Study of Pharmaceutical Companies in India.
