Involving Sales Managers in Sales Force Compensation Design

What is it about?

When a firm is designing incentive compensation plans for its salespeople, it can benefit from territory-level information held by sales managers, but those managers might benefit from misrepresenting that information due to their own incentives (e.g., by claiming that a territory is more difficult than it is). This article examines when a firm should involve sales managers in sales force compensation design and proposes an efficient way to ensure that they share their information truthfully.

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Why is it important?

This research is particularly relevant to sales leaders, who can use it to design a reliable and efficient process for sales force compensation design that leverages sales managers’ information about salespeople and their territories.