How to Manage Salesforce Performance Measures? An Optimal Choice Between Behavior Versus Outcome Approaches

CBR_42_1_72ppiRGB_powerpoint[We’re pleased to welcome Pankaj M. Madhani of ICFAI Business School (IBS) in India. Dr. Madhani is the author of “Managing Salesforce Performance: Behavior Versus Outcome Measures” which appeared in the most recent issue of Compensation and Benefits Review.]

As selling is an unique and independent occupation, effective management of salespeople plays a critical role in realizing their full potential and hence contributes immensely to the success of sales organization. Sales organizations have two main approaches for managing the behavior of their salesforce, namely, behavior-based (monitoring) and outcome-based (incentives). A behavior system evaluates the salesforce in light of the selling process, while an outcome system evaluates the salesforce in light of results. This research identifies key characteristics of behavior- and outcome-based systems along with its benefits and drawbacks and suggests selection criteria for appropriate choice of behavior versus outcome measures.

Behavior measures attempt to control the process of selling as opposed to just the outcomes while outcome measures focus on getting the results and are essentially indifferent to how those results are obtained. The study explains this behavior with the help of agency theory and highlights the underlying logic of short-term behavior of salespeople when compensated with incentives. Research also provides performance matrices for measurement and evaluation of financial impact of behavior and outcome control. The behavior-based and outcome-based control systems are at the extremes, and many sales organizations function in the middle, balancing the two. Finally, the study provides a numerical illustration to design an optimal performance measurement scenario based on behavior- and outcome-based measures.

You can read “Managing Salesforce Performance: Behavior Versus Outcome Measures” for free by clicking here. Want to know about all the latest research from Compensation and Benefits Review? Click here to sign up for e-alerts!


857da02a30227a2416653fe028aa8c16Pankaj M. Madhani earned bachelor’s degrees in chemical engineering and law, a master’s degree in business administration from Northern Illinois University, a master’s degree in computer science from Illinois Institute of Technology in Chicago, and a PhD in strategic management from CEPT University. He has more than 28 years of corporate and academic experience in India and the United States. During his tenure in the corporate sector, he was recognized with the Outstanding Young Managers Award. He is now working as professor at ICFAI Business School (IBS) where he received the Best Teacher Award from the IBS Alumni Federation. He is also the recipient of the Best Mentor Award. He has published various management books and more than 240 book chapters and research articles in several refereed academic and practitioner journals such as World at Work Journal and The European Business Review. He is a frequent contributor to Compensation & Benefits Review and has published 15 articles on sales compensation. His main research interests include salesforce compensation, corporate governance, and business strategy.

What Really Determines an Individual’s Intent for Entrepreneurship?

business-graphics-1428662-mSetting up a business is the outcome of a long series of intricate choices. It is the process rather than the result of a distinct choice, and the entrepreneurial elements are not necessarily equal across the process’s different engagement levels. A recent article in the Journal of Entrepreneurship and Innovation in Emerging Economies discusses the factors that influence entrepreneurial intent as well as the relationship between an individual’s preliminary entrepreneurial intention of starting a business and the factors driving the same. Distinctions between several stages and engagement levels of the process have been recognized.

Article author Noel Saraf argues that before institutional factors such as financial markets, laws and regulations, and incentive schemes play a role in affecting an F1.mediumindividual’s decision to start a business, the decision is influenced by some intrinsic characteristics of the individual. This can appear in the form of gender, age, location, education, work experience or subjective perceptions. A striking outcome in India is seen in the case of gender, which shows no significant impact on the probability of business start-up, suggesting that both males and females are equally likely to have entrepreneurial intentions. It disproves the previously held notion among the common masses that the women entrepreneurship rate is low because they do not intend to expand beyond household barriers. This implies that greater attention should be paid to female nascent entrepreneurs during the start-up stage to help move their business to the next level.

The abstract:

The article analyses factors influencing entrepreneurial intent and studies the relationship between an individual’s preliminary entrepreneurial intention of starting a business and the factors driving the same, in India. Using a large sample of individuals, we investigate what variables are significantly correlated with the initial decision to start a business. We use a binomial logit model to test how individual characteristics, subjective perceptions, demographic and economic characteristics are correlated to the decision to start a new business. Our results suggest that part-time work experience and social network effects are the strongest in shaping entrepreneurial intentions. A striking outcome in India is seen in the case of gender, which shows no significant impact on the probability of business start-up, suggesting that both males and females are equally likely to have entrepreneurial intentions.

Click here to read “What determines Entrepreneurial intent in India?” for free from Journal of Entrepreneurship and Innovation in Emerging Economies! Make sure to sign up for e-alerts and be notified of all the latest research from Journal of Entrepreneurship and Innovation in Emerging Economies!

Gerstner, König, Enders, and Hambrick (2013). CEO Narcissism, Audience Engagement, and Organizational Adoption of Technological Discontinuities

[We’re pleased to welcome Johnathan Cromwell and Michael Lee, both of Harvard Business School. Jonathan and Michael recently had the opportunity to interview the authors of “CEO Narcissism, Audience Engagement, and Organizational Adoption of Technological Discontinuities” from Administrative Science Quarterly.]

Republished with permission. The original post was published on the ASQ Blog.

Authors:
Wolf-Christian Gerstner – University of Erlangen-Nuremberg
Andreas König – University of Passau
Albrecht Enders – IMD International
Donald C. Hambrick – The Pennsylvania State University

Interviewers:
Johnathan Cromwell – Harvard Business School
Michael Lee – Harvard Business School

Question 1. One of the aspects about this paper that we found so fascinating was that it integrated two sets of literatures in a way ASQ_v60n2_Jun2014_cover.inddthat hadn’t been done before. We can imagine that while this leads to highly novel and interesting research, it can also add additional challenges during the review process. Were there any specific challenges that you had to overcome during the review process in communicating your research to these different audiences?

This is, in fact, a very good question, and something that one should always be aware of when integrating two streams of research. In a way, doing so is in and of itself a discontinuous change because it means applying a new theoretical lens to an already studied phenomenon, with potentially challenging epistemological and theoretical contradictions. However, in our case, we were lucky because, although the upper echelons literature and the literature on discontinuous change have not yet been integrated to a great extent by previous studies, the theoretical assumptions underlying these two fields and the foci of their analyses are highly compatible and complementary. In particular, the discontinuous change literature has always had a top executive view on strategic decision making, which stems from the fact that decisions in turbulent times are typically top management decisions. As such, it was somewhat intuitive to envision that CEO narcissism has a stake in decisions about technology adoption in large companies.

Question 2. We were struck by the amount of work that was put into constructing the main independent variable on CEO narcissism. If students were interested in testing a different cognitive attribute or personality characteristic to explain organizational decisions, how would you recommend trying to measure them? What might be a common mistake that we should try to avoid?

Of course, gathering the data on CEO narcissism involved a lot of meticulous work, in particular because we had to collect data from years back, even before 1980. To get access to these sources, which can’t just be downloaded from an online database, we ended up having to visit places like the Chicago Public Library and order microfiche copies. However, we benefited greatly from the fact that the measure itself had already been developed by Chatterjee and Hambrick (2007).

As for measuring other CEO attributes, we see numerous new opportunities for further research. In particular, new ways of using language, voice, and body language are emerging, which might just allow us to gauge numerous facets of personality, both stable traits and more transient states. For instance, at the Academy of Management last year in Philadelphia, we organized a symposium on the use of content analysis to further advance this area of upper echelons research. The diverse approaches presented there included aspects such as perceptions of time and cognitive structures as reflected in conceptual metaphors. Moving forward, we believe it is pivotal to focus on aspects of executive personality that are influential, but whose influence, at the same time, is not unilateral but rather dependent on context. This is surely one of the features that make narcissism so interesting to study (apart from the fact that almost everyone who has worked in an organization has experienced working with a narcissist, with all its upsides and downsides).

Question 3. We usually think of the discussion section as a place to interpret results, discuss strengths and weaknesses of analysis, or discuss broader implications of the research. We found the discussion section in this paper to be interesting, because it also introduced new quantitative analyses to help support the main findings of the paper. Why were these included in the discussion instead of as a robustness check in the results section?

That is an interesting question, particularly because there seem to be different perspectives on such post-hoc analyses. Some colleagues do not think they should be part of a paper; conversely, others, including ourselves, believe that these elaborations illuminate interesting aspects and add to the liveliness and granularity of the research presented. Note also that, in our case, the post-hoc discussion is not a robustness check but rather an exploration of the reasons why we did not find significant results for our last hypothesis.

Question 4. Given your interesting findings, what do you feel are the most important implications for managerial practice from this work?

It’s indeed interesting to see how executives respond when we present our findings and related findings made by colleagues. What resonates most profoundly with decision makers is the idea that narcissistic leaders have both a dark side and a bright side, and that the bright side might in fact be most salient in times of radical change when tough decisions need to be made. Another aspect they can relate to is our recommendation to be more aware of how external stimuli, including from the media, affect how decision makers and their organizations act. These insights are also – and perhaps most importantly – crucial for board members of companies that “missed the boat” on disruptive innovations (that the board believes will pan out) and need to catch up. In this case, a narcissistic CEO might, ceteris paribus, be an advantage as she or he will drive change on a larger scale than less a narcissistic CEO.

Question 5. Is there anything about this paper that you think is particularly interesting that we didn’t ask about? Please tell us about it.

Thank you for asking! One thing that we think is particularly important is the role of audience engagement in spurring company behavior, especially responses to innovation. While there is increasing debate about how companies’ communication and actions shape the responses of stakeholders such as analysts and journalists, we still know too little about how pressures from these stakeholders affect company behavior. This is especially the case in the context of innovation, which happens in a social environment that surrounds companies and their executives and might influence technological trajectories more than we have previously thought.

Enhancing Student PsyCap in an Online Learning Environment

computer-room-314632-m[We’re pleased to welcome Joshua J. Daspit of Mississippi State University. Dr. Daspit recently published an article in Journal of Management Education with T. C. Mims of Texas Woman’s University and Staci M. Zavattaro of Mississippi State University entitled “The Role of Positive Psychological States in Online Learning: Integrating Psychological Capital Into the Community of Inquiry Framework.”]

The abstract:

  • What inspired you to be interested in this topic?

My colleagues and I found this topic interesting because in addition to conducting research, a large portion of our jobs is dedicated to working with students. Each of us uses online components within our classes or teaches courses that are fully online – as many instructors do today – and the idea started from a simple desire to understand how we can enhance student learning within an online environment.

  • Were there findings that were surprising to you?

To understand how learning occurs within the context of an online environment, we used the Community of Inquiry (CoI) framework to conceptualize how learning occurs. The CoI suggests three presences exist within an online learning environment. First, there is a teaching presence that consists of course development and facilitation by the instructor. Second, a social presence exists when individuals interact with peers within the online context. Last, the CoI suggests that the other two factors influence an individual-level cognitive presence. In other words, the teaching and social presences influence student learning.

In this study, we extend the CoI framework to account for an additional presence. Specifically, we suggest that an additional, individual-level factor drives the student’s learning, and that factor is the individual student’s psychological capital (or PsyCap). PsyCap cJME_72ppiRGB_powerpointonsists of the student’s self-efficacy, hope, optimism, and resilience. Without these, we suggest, the student is likely to have difficulty learning.

After testing the relationships among PsyCap and the components of the CoI framework, we find that instructors are able to positively influence the student’s PsyCap via the teaching presence. Additionally, the student’s PsyCap has a positive influence on the social presence within the online environment, and most notably, PsyCap positively influences the student’s learning (i.e., cognitive presence).

  • How do you see this study influencing future research and/or practice?

In the article, we offer suggestions for specific ways that instructors of online courses can enhance the student’s PsyCap and thereby enhance the student’s learning. For example, instructors may utilize an online PsyCap training session early in the semester as such trainings are shown to positively enhance the PsyCap of individuals.

We look forward to suggestions from other instructors who have found innovative ways to enhance student PsyCap and learning in online courses.

You can read “The Role of Positive Psychological States in Online Learning: Integrating Psychological Capital Into the Community of Inquiry Framework” from Journal of Management Education by clicking here. Want to know about all the latest research from Journal of Management Education? Click here to sign up for e-alerts!


Josh DaspitJoshua J. Daspit, Ph.D., is an Assistant Professor of Management at Mississippi State University. His research interests include examining firm capabilities and innovation with a primary focus on absorptive capacity and family business. His work has appeared in Entrepreneurship Theory & Practice, Academy of Management Learning & Education, Journal of Managerial Issues, and other outlets. Prior to joining academia, he worked as a senior consultant for an international consulting firm and served as Director of Community Affairs for a member of Congress. (Follow him on Twitter: @JoshDaspit.)

TC MimsTina C. Mims, Ph.D., is currently serving as a Visiting Lecturer at Texas Woman’s University. Dr. Mims is a recently vetted PhD in Marketing after practicing marketing as VP & Director roles at Fortune 1000 firms. She is passionate regarding the preparation of both graduate and undergraduate students to have a competency based learning experience transferable to their chosen careers.

Staci ZavattaroStaci M. Zavattaro, Ph.D., is an associate professor of public administration at the University of Central Florida. Her main research interests include place branding and marketing, as well as social media use within the public sector. Her books include Cities for Sale (SUNY Press), Place Branding Through Phases of the Image (Palgrave Macmillan), and Social Media in Government: Theory and Practice (CRC Press). She serves as managing editor of Administrative Theory & Praxis and belongs at the Public Administration Theory Network, the Public Management Research Association, and the American Society for Public Administration.

Will Airline Customers Buy Carbon Offsets?

cost-of-flying-1031410-m In an effort to help combat climate change, a number of corporations have turned to using carbon offsets to help rectify any damage done by their business to the environment. Companies such as United Airlines have even begun offering their customers the chance to purchase carbon offsets to counteract their flight. But how likely is it that customers will choose to purchase these carbon offsets? Authors Andy S. Choi, Brent W. Ritchie, and Kelly S. Fielding explored this topic in their article published in Journal of Travel Research entitled “A Mediation Model of Air Travelers’ Voluntary Climate Action.”

The abstract:

This study developed a behavioral model of intentions to purchase aviation carbon offsets, and tested the model through JTR_72ppiRGB_powerpointstructural equation models. The model draws on the established hierarchical models of human behavior to hypothesize relationships between general and specific attitudes as predictors of offsetting intentions. The New Ecological Paradigm scale, the theory of planned behavior and variables from past literature were employed to measure general environmental attitudes, intermediate beliefs, and behavior-specific attitudes and norms. The current research represents a first attempt to build a theoretical model that helps to understand the relationships between factors that determine whether people will purchase aviation carbon offsets. The results show that a more positive orientation toward the environment could be an important predictor of environmental intentions operating both directly on intentions as well as guiding beliefs that relate to intentions. Policy implications of the findings are discussed, encouraging greater voluntary climate action.

You can read “A Mediation Model of Air Travelers’ Voluntary Climate Action” from Journal of Travel Research for free for the next week by clicking here. Want to know about all the latest research like this from Journal of Travel Research? Click here to sign up for e-alerts!

Finding the Balance Between Greed and Altruism

yin-yang-1024035-mAre greedy managers or altruistic managers more successful? The answer may not be so black and white. According to Katalin Takacs Haynes, Matthew Josefy, and Michael A. Hitt, authors of “Tipping Point: Managers’ Self-Interest, Greed, and Altruism” from Journal of Leadership and Organizational Studies, harmony between the two characteristics is actually the most beneficial to firm performance.

The abstract:

We explore the potential effects of managers’ greed and altruism on their behaviors and firm outcomes. Greed represents extreme self-interest whereas altruism reflects concern for others. We argue that managerial greed leads to a focus on short-term decisions JLOS_72ppiRGB_powerpointand short-term firm performance. Alternatively, managerial altruism normally produces a focus on longer term decisions and long-term firm performance. Managerial greed is also more likely to produce wrongdoing, whereas managerial altruism produces greater corporate citizenship behaviors. Managerial greed is likely to lead to turnover for non-performance–related reasons whereas managerial altruism is more likely to produce managerial turnover for performance reasons. Overall, we conclude that measured self-interest keeps managers focused on the firm’s goals and measured altruism helps the firm to build and maintain strong human and social capital. The extremes of either greed or altruism likely will harm firm performance. Thus, balance between managerial self-interest and managerial altruism leads to the greatest success.

You can read “Tipping Point: Managers’ Self-Interest, Greed, and Altruism” from Journal of Leadership and Organizational Studies for free by clicking here. Want to know about all the latest research like this from Journal of Leadership and Organizational Studies? Click here to sign up for e-alerts!

The June Issue of Administrative Science Quarterly is Now Online!

The June issue of Administrative Science Quarterly is now available and can be read online for free for the next 30 days. This issue offers a range of engaging articles on organizational studies as well as insightful book reviews.

Administrative Science Quarterly Editor-in-Chief Gerald F. Davis opens the issue with his editorial essay entitled “What Is Organizational Research For?” You can read the abstract below:

Organizational research is guided by standards of what journals will publish ASQ_v60n2_Jun2014_cover.inddand what gets rewarded in scholarly careers. This system can promote novelty rather than truth and impact rather than coherence. The advent of big data, combined with our current system of scholarly career incentives, is likely to yield a high volume of novel papers with sophisticated econometrics and no obvious prospect of cumulative knowledge development. Moreover, changes in the world of organizations are not being met with changes in how and for whom organizational research is done. It is time for a dialogue on who and what organizational research is for and how that should shape our practice.

You can access the Table of Contents for this issue of Administrative Science Quarterly by clicking here. You can keep up-to-date on all the latest news and research from Administrative Science Quarterly by clicking here to sign up for e-alerts!