The authors measure the effect of an initiative that sales organizations can add to quota-bonus plans to improve the performance of low performers (i.e., laggards). This initiative, termed the “bench program,” involves hiring trainees and telling salespeople that these trainees will replace them at the end of the year if they fail to hit their quota and place last in their district. The bench program is more than a threat to fire last-place, non-quota-attaining salespeople, because its threat of punishment includes the detail that trainees are hired and trained proactively. This detail ensures that trainees will be available to undertake salespeople’s territories in short order if necessary, which is important because replacing salespeople in most companies amounts to a lengthy, reactive process.
The bench program the authors describe has deterrent value because salespeople view it as a credible, vivid threat. Companies face two pertinent challenges with regard to laggards in particular: (1) motivating them with standard sales contests and quota-bonus plans can be difficult and (2) frontline managers often hesitate to fire laggards because of the costs associated with rehiring, training, and leaving territories temporarily vacant. Instituting the bench program can overcome these challenges, and this research suggests that implementing it can increase the performance of chronically underperforming salespeople who might not find standard quota-bonus plans motivating.
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What You Need to Know
- Quota bonus plans are a common way to incentivize low performers, but they don’t always work
- Try this new strategy: Having a “bench”—a group of new hires who have been trained proactively—can provide a credible threat to low performers
- This does two things: (1) it motivates underperforming salespeople where quota plans fail to do so, and (2) it makes it easier to replace laggards because a new trainee is ready to step into place
Sales leaders often use threats of punishment to manage poor performers (i.e., laggards), but little research has examined the effect of these threats. The current research addresses this gap by investigating an intervention termed the “bench program” with a field-based quasi experiment and a randomized lab experiment. In the field, the company under study told salespeople in treatment districts that a trainee would replace them at the end of the year if they failed to hit their quota and placed last in their district. Difference-in-differences analyses of matched treatment and control groups show that the bench program had an immediate and sustained impact on performance. Moreover, laggards improved their performance more than higher performers, and salespeople with larger advice networks improved their performance more than salespeople with smaller advice networks. A lab experiment compares the bench program with a program that had the same threat of firing but did not have replacements in sight. Performance in the bench program exceeded that in the firing condition, indicating that the vividness of a threat can increase its deterrent value.
Jeffrey P. Boichuk, Raghu Bommaraju, Michael Ahearne, Florian Kraus, and Thomas J. Steenburgh, “Managing Laggards: The Importance of a Deep Sales Bench,” Journal of Marketing Research, 56 (August), 652–65.