in problems. He has broken every rule, bent every policy, deviated from guidelines,
and has been less than truthful. Jackie knew Brad had never done anything illegal,
but she was worried that something serious could happen. Brad also does not prepare
call reports on time, fails to show up at trade shows, and doesn’t attend sales training
programs.
How should Jackie handle this problem? How does a sales manager manage a
maverick sales rep? Specifically, how can the performance evaluation process help
Jackie deal with Brad?
Jackie should use the performance evaluation process to help her deal with Brad the maverick.
First and foremost, Jackie needs to have a meaningful dialogue with Brad to help him understand
and correct his deficiencies—and why. A performance evaluation provides the framework for
Therefore, Jackie’s performance evaluation should be based on subjective (qualitative) measures
as well as objective (quantitative) measures. A BARS (behaviorally anchored rating scale)
system like the one in Exhibit 13.6 would be ideal because it will be perceived as more fair in
which will facilitate a constructive dialogue between Jackie and Brad to help Brad understand his
strengths and weaknesses and to develop approaches to improve performance.
Furthermore, the evaluation should include 360-degree feedback from external customers;
internal customers (organization members who are resources in serving external customers);
Global Connection – The Perils of Rewarding A While Hoping For B
Answers to Questions
1. What are the most important things a sales manager can do to consistently avoid
subjecting salespeople to “rewarding A while hoping for B”?
The most important things include rewards based on behaviors that do not match organizations
goals (for example, rewarding sales performance while corporate goals focus on customer
performance. Therefore, it is important to align corporate goals and reward systems.
2. Put yourself into the shoes of a salesperson for whom rewards do not match expectations.
In what ways do you believe this disconnect would impact how you perform in your job?
That is, what problems would it create for you?
Salespeople develop role conflict, becoming stressed and demotivated. At some point, this will
Ethical Dilemma #1 – Teaching Notes
Teaching Notes
As noted in the chapter, creating and managing an effective compensation and reward system
represents one of the biggest challenges for sales managers. There are so many ways for a
compensation plan to go wrong; errors in judgment, mistakes in implementation, poor decisions
Incorporating the chapter material can effectively set the framework for New World’s handling
of the situation in the dilemma.
Has Lupe earned the bonus? Yes, following the established guidelines used in the past. Can the
company give it to her without destroying morale among the rest of the sales force? Difficult to
complicated problem of sales force morale. If Jack does give Lupe 90 percent of the bonus, he
will likely generate a negative reaction from the sales force. Some students will take the
“company” perspective and suggest Lupe should not receive the maximum bonus for a number
of reasons.
Answers to Questions
1. What should Jack do to resolve this situation? How should he explain it to Lupe, the rest
of the sales force, and his superiors?
Jack should carefully examine the policy the company uses to calculate bonuses and determine if
it is still appropriate after all these years. As New World has grown, the bonus system may or
may not have kept pace with that change. Another managerial issue may be the size of the bonus
On a more immediate and personal level, he must make it clear to Lupe that everyone
appreciates her hard work. Her results are unique in the history of the company. While she
deserves credit (and probably salesperson of the year honors), the system was designed to reward
everyone based on a fixed and announced pool of money. She knew the size of the bonus and
had worked under those rules for several years.
2. If you were Lupe, how would you react if you did not receive the full amount?
While Lupe will probably feel a little disappointed if she does not receive the full amount, it
Ethical Dilemma #2 – Teaching Notes
Teaching Notes
The dilemma highlights that using subjective measures of evaluation such as customer
satisfaction scores can have positive as well as negative outcomes. In this case, Jason has dealt
with unethical behavior from his client by letting his manager, Terri, know of the problem. He
Several valuable dialogues can be generated from this dilemma. First, you can engage in a
discussion of advantages and disadvantages in objective versus subjective measurement in
evaluations systems. Use the chapter content as a useful framework for this discussion. Some
students will certainly suggest that subjective measures should be part of the evaluation system
and, indeed, many companies feel the same way. However, you run the risk, as shown in this
dilemma, that subjective measures (particularly ones controlled by outside parties such as
Answers to Questions
1. What should Terri Jensen tell the executive vice president of sales?
Terri needs to make it clear to the EVP that Jason has done a good job and that these low
customer satisfaction scores are more than likely caused by an ethical conflict between the buyer
in Nashville and Jason. It is important to note that Terri needs to verify that this is indeed true.
2. Should Jason get a bonus? If so, how should it be calculated?
Jason followed company procedures and policies and should not be penalized for being ethical.
An important caveat, as noted earlier, is that Terri needs to verify that the negative evaluation has
3. How should Jason, Terri, and Planet Plastics respond to Mercury?
It is important to note that Planet Plastics has not done anything wrong and should therefore not
feel guilty for taking a strong stance against the request of the purchasing director at Mercury. At
Plastics must be careful and respect the confidentiality of the situation. At this point, there is no
way of knowing if this was an isolated incident or part of a pattern. In addition, it is difficult to
judge the reaction of the Nashville buyer.
Mini-Case 13.1 – MedTech Pharmaceuticals
This case allows students to grapple with the issues of compensation and incentives for
salespeople. Answers to the questions can be found in the “Straight Salary, Straight Commission,
Answers to Questions
1. One advantage of a 100-percent commission pay structure is the direct motivation it
provides to sales representatives to sell more so they can earn more. In addition, straight
commission rewards good performers while providing poor performers incentive to become
sales are low, sales force compensation will be low too. Disadvantages to straight commission
include management lack of control over the sales force, too much focus on short-term sales
gains and not enough on long-term relationship development, and little incentive to develop new
accounts. For salespeople, straight commission may be unattractive because there is not enough
2. Harold’s opinion about sales contests is understandable given the straight commission
basis by which his sales force is being paid. When straight commission is the primary means of
sales force compensation, the salespeople are given plenty of incentive to increase their selling
efforts. Nonetheless, given the lackluster performance of MedTech’s sales effort thus far, Harold
3. Student responses to this question will vary depending on the type of sales contest that is
designed. The important aspect of this question is that the sales contest should contain all of the
elements required of successful sales contests. Those elements include having an objective, a
Chapter 13 – Compensating and Evaluating Salespeople
4. Direct expense reimbursement plans allow reimbursement of all allowable and reasonable
expenses. Such a plan provides some discretion to the sales manager as to what is allowable and
reasonable. Using a direct reimbursement plan, companies can encourage participation of various
activities that assist with the selling effort, such as reimbursing for reasonable customer
entertainment expenses. Conversely, limited expense reimbursement plans establish preset limits
Mini-Case 13.2 – American Food Processors
This case allows students to apply many of the evaluation procedures discussed in the chapter.
Information to aid in answering the questions in the case can be found in Exhibit 13.5 and in the
chapter sections on various measures of performance. As mentioned in the chapter, evaluating
Answers to Questions
1. Using (current sales-previous sales)/previous sales to calculate sales growth and (current
sales-current quota)/current quota to calculate sales to quota along with the formulas provided in
Table 1, the performance ratios can be calculated as follows:
Name
Sales
Growth
Sales to
Quota
Sales per
Account
Sales
Expense
Calls per
Day
Orders
per Call
Steve
.21%
-16.35%
$437.27
$.019
5.53
.600
Adam
17.73%
5.75%
551.88
.014
8.07
1.094
Vicki
6.42%
-6.70%
533.04
.012
7.24
.618
Rick
14.36%
.24%
631.11
516.36
.013
7.39
.971
Brenda
12.42%
1.18%
661.54
497.11
.013
7.54
.989
David
13.61%
1.21%
596.43
466.48
.014
7.95
1.023
Marti
-6.94%
418.75
697.92
.016
7.75
.619
Kim
19.36%
5.71%
544.12
484.29
.014
8.22
1.032
Rank ordering all of the sales representatives in each category then summing the rank orders
across for each representative, one can come up with a ranking. For example, Kim ranks first in
As long as AFP continues to use its current method of sales force evaluation, Jamie’s advice to
his bottom group of performers is pretty easy—they need to sell more. In addition, Steve
especially but Vicki too need to make more calls per day. They need to get their average calls per
training on closing skills. Their hit ratio is in the .600 range, whereas everyone else is .97 or
above. David and Rick, who tied for fourth, are both showing that they are solid contributors to
2. One of the limitations is illustrated by what happened in Rick’s territory when one of his
largest customers went bankrupt during the year. Because of this bankruptcy, we can assume that
Rick’s performance was hampered. Also, Steve has been with the company for just a little over
3. Jamie can improve the salesperson evaluation process by including more subjective
performance measures. Incorporating concepts such as a BARS system and 360-degree
performance feedback would aid Jamie in rating employees on more than just their performance