Advanced Search
MyIDEAS: Login to save this article or follow this journal

Allocating Sales Force Effort with Commissions and Quotas


Author Info

  • Otto A. Davis

    (Carnegie-Mellon University)

  • John U. Farley

    (London Graduate School of Business Studies)

Registered author(s):


    Quotas, commissions and mixtures of the two are widely used to control salesmen's activities both in terms of overall motivation and as decentralized means to direct allocation of effort over various products in the firm's line. Sales commission plans as allocation devices for a commission-maximizing sales force and a profit-maximizing central management generally turn out to be inadequate decentralized allocation devices in themselves, regardless of whether commissions are based on sales or on profit margins. A plan based on sales fails to reconcile the interests of salesmen and management, while a plan based on profit margins generally makes each salesman's income depend not only on his performance but on the performance of all other members of the sales force simultaneously. Further, information requirements about individual salesmen and markets appear so great that setting optimal quotas centrally is impossible for practical purposes. However, an interative quota generating procedure may be used to reconcile interests of salesmen and management, and yet maintain the desirable features of decentralised allocation consistent with the independent operation of the individual salesman.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 18 (1971)
    Issue (Month): 4-Part-II (December)
    Pages: P55-P63

    as in new window
    Handle: RePEc:inm:ormnsc:v:18:y:1971:i:4-part-ii:p:p55-p63

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page:
    More information through EDIRC

    Related research



    No references listed on IDEAS
    You can help add them by filling out this form.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Albers, Sonke, 1996. "Optimization models for salesforce compensation," European Journal of Operational Research, Elsevier, vol. 89(1), pages 1-17, February.


    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:18:y:1971:i:4-part-ii:p:p55-p63. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.