IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v18y1971i4-part-iipp55-p63.html
   My bibliography  Save this article

Allocating Sales Force Effort with Commissions and Quotas

Author

Listed:
  • Otto A. Davis

    (Carnegie-Mellon University)

  • John U. Farley

    (London Graduate School of Business Studies)

Abstract

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.

Suggested Citation

  • Otto A. Davis & John U. Farley, 1971. "Allocating Sales Force Effort with Commissions and Quotas," Management Science, INFORMS, vol. 18(4-Part-II), pages 55-63, December.
    • Handle: RePEc:inm:ormnsc:v:18:y:1971:i:4-part-ii:p:p55-p63
    DOI: 10.1287/mnsc.18.4.P55
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.18.4.P55
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.18.4.P55?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

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


    Cited by:

    1. Erin Adamson Gillespie & Stephanie M. Noble & Son K. Lam, 2016. "Extrinsic versus intrinsic approaches to managing a multi-brand salesforce: when and how do they work?," Journal of the Academy of Marketing Science, Springer, vol. 44(6), pages 707-725, November.
    2. Fangruo Chen, 2000. "Sales-Force Incentives and Inventory Management," Manufacturing & Service Operations Management, INFORMS, vol. 2(2), pages 186-202, February.
    3. Albers, Sonke, 1996. "Optimization models for salesforce compensation," European Journal of Operational Research, Elsevier, vol. 89(1), pages 1-17, February.
    4. Donald G. Morrison & Jagmohan S. Raju, 2004. "50th Anniversary Article: The Marketing Department in Management Science: Its History, Contributions, and the Future," Management Science, INFORMS, vol. 50(4), pages 425-428, April.
    5. Mark Ferguson & V. Daniel R. Guide , Jr. & Gilvan C. Souza, 2006. "Supply Chain Coordination for False Failure Returns," Manufacturing & Service Operations Management, INFORMS, vol. 8(4), pages 376-393, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.