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

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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.