THE ROLE OF BONUS PAY IN SALESFORCE COMPENSATION PLANS

Recent data suggest growing use of bonus payments in salesforce compen sation plans to improve sales productivity and to achieve a variety of organizational objectives. We report findings from two cross-sectiona l field studies-a firm level survey and a salesperson-level survey-on how bonus payments help attain selected firm objectives and their usef ulness in eliciting higher salesperson performance and reducing salesf orce turnover. Our findings reveal that bonuses may be effective in in ducing higher sales productivity because of their flexibility in tying rewards to performance. Further they may be effective in directing sa lespeople's efforts toward specific organizational objectives such as promoting new product sales or safes to new customer groups, and enhan cing customer satisfaction and retention. (C) 1998 Elsevier Science In c.