May 1988 . 55 Selling & Sales Management in Action: A COMPARATIVE STUDY OF INCENTIVES IN A SALES FORCE CONTEST by Marjorie J. Caballero Baylor University Questions pertaining to the issue of various incen- tives as motivators for the sales force have been raised periodically for many years. For example, an early study by Haring and Myers (1953) concluded that "basic compensation is the primary motivator of salesmen" [sic], although the findings from this study have subsequently been questioned on a methodological basis (Oliver 1974). Nevertheless, Farley's (1964) model for setting commission rates is based on the assumption that "salesmen strive to maximize their financial gains," and many incentive and commission plans used by managers for com- pensating the sales force rely on similar assumptions (Smyth 1968; Marks 1985; Johnson, Kurtz, Sheuing 1986). However, these assumptions are being called into question more and more. A recent study conducted jointly by the American Productivity Center and the American Compensation Association found that there is a revolution going on in almost every indus- try (O'Dell 1987). Organizations are implementing various incentive plans—more particularly, pay-for- performance systems—in addition to their existing compensation plans. In fact, 67 percent of the 1,600 organizations that responded to the APC study have some form of reward system in addition to their compensation plans. Further, there is evidence that the use of incentives is steadily increasing. Even during the last recession, a survey taken by Sales S- Marketing Management (Urbanski 1982) showed that 54 percent of respondents planned to lavish even bigger budgets on their incentive programs during the coming year. And by 1985, a Business Marketing survey was able to report that an 83 percent premium/incentive usage rate existed among respondents (Couretas 1985). Why Use Incentive Programs? 1. To keep morale up. Sales managers found that even during the recession contests could be cost-effective and keep up the sales force's mo- rale regardless of the current state of the econ- omy. As one manager put it, "Even in these bad times, you have to take care of your people. You can't be all bottom line" (Urbanski 1982). 2. To boost dollar sales per salesperson or to in- crease units sold per salesperson. Cost effec- tiveness is an important tie-in; the increased level of sales generated by an incentive plan should make the plan, at a minimum, self- liquidating. 3. To increase the number of new accounts. As one account manager said of finding new ac- counts. "It's very important. That's the only way we're going to grow" (Couretas 1985). 4. To launch new products. Frequently salespeo- ple are reluctant to spend time on a product that has not yet been proven in the market- place. The risk of customer disappointment is high, and the time required to stimulate inter- est may be considerably more than would be required for selling proven products. The in- centive plans provide a reason to spend extra time and take extra risk. Types of Incentives Salary and a commission based on some perform- ance measurement are the usual forms of compen- sation. However, the purpose of this article is to address rewards that are not part of the usual com- pensation plan. These may be defined as follows (McAdams 1987): 1. Special Casb Incentives. These are cash awards that are not part of the usual compensation plan. Editor: David L. Kurtz Seattle University Journal of Personal Selling &• Sales Management, Vol. Vm {May 1988), pp. 55-58.