compensation

Managers: Does Your Sales Rep Compensation Package Align with Culture?

Attention sales managers. Have you checked in with your reps about how motivated they’re feeling these days? Are they happier about the prospect of extra cash or would they appreciate recognition in the form of a trip to an exotic destination? The answers to these questions matter, and to some extent, depend on cultural background.

New findings published by researchers Sebastian Hohenberg and Christian Homburg, University of Mannheim, are based on exchanges with over 300 sales reps located in 4 continents. The authors posit that the U.S. is a highly individualistic culture, especially in comparison to places like China and India. As such, employees in the U.S. respond to triggers designed to personally motivate them. The opportunity to earn a bonus is attributed to a 350% higher sales level, especially when reps are hawking innovative products. If you’re in charge of a U.S.-based sales team, make sure you’ve got some kind of quota or bonus system in place.

If you’re working in a multinational company, you might need to establish a different type of system to motivate reps in ‘power-distant’ countries. In China and India, sales reps are likely to be motivated by public recognition, such as at an awards ceremony where senior managers personally interact with them.

The business scene more closely mirrors the cultural scene in smaller countries. South Korea is well known for having a particularly long range economic outlook. South Korean culture also values respect. Sales reps in South Korea prize personal feedback and praise from their bosses.

Another study published by Geert Hofstede on this topic also explored gender emphasis in culture and how it impacted management practices and sales rep compensation. In cultures which lean toward more feminine characteristics, personal relationships and solidarity are important. Compensation systems should factor in a higher salary base, and they should also recognize team efforts.

It’s about time to start tweaking compensation models for the upcoming year. If your reps seem less than excited about the targets you’re setting, help them get amped up by introducing a recognition program that matches their cultural values.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.
Kathy Crosett

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