We study how the composition of a sales team and the contest metrics of a team contest affect salespeople’s effort.
A company’s salesforce may consist of salespeople who have different levels of sales effectiveness or territorial endowments. Thus, it is important to understand how the composition of the team affects the effort levels that salespeople expend in a sales team contest.
We develop a game-theoretic model that investigates the impact of team composition on effort in sales contests and then empirically test the theoretical predictions using laboratory-based economics experiments in which participants interact strategically and make effort decisions that are incentive-aligned.
Findings and Implications
When salespeople are relatively homogeneous, managers need not use only one metric for all contests: changing the metrics periodically can actually make the incentive structure appear “fresh” to salespeople, and managers do not need to worry about drops in effort. When salespeople are heterogeneous, managers need to pay closer attention to how they sort salespeople into teams and which type of contest metrics they employ.
Questions for the Classroom
In a team contest, would team effort increase or decrease as members in sales team become more heterogeneous in sales abilities?
How would the stronger and weaker members of the team adjust their effort as the ability difference within the team changes?
Which type of contest metric motivates the highest effort when team members are heterogeneous in abilities?
Hua Chen and Noah Lim (2017), “How Does Team Composition Affect Effort in Contests? A Theoretical and Experimental Analysis,” Journal of Marketing Research, 54 (1), 44-60.
Hua Chen is Assistant Professor of Marketing, Terry College of Business, University of Georgia (e-mail: firstname.lastname@example.org).
Noah Lim is Professor of Marketing, Wisconsin School of Business, University of Wisconsin–Madison (e-mail: email@example.com).