“Mere monetary benefits can no longer motivate salesforce.” Do you agree ?

It can be in beginning but as sustainable point of view no. for a true sales person. The more you engage them push more and provide resources to be productive the motivation will increase.

Thanks for invitation

I amagreeing, because new sales man thinking about which company gives him more option to work with, this also increase his loyalty to do best 

Effective human resource practices are the cardinal and substantial for survival of any business entity. Human involvement and motivation in related work mostly depend on human resource practices validness and accuracy. On the other hand, the sales force is the reason to generate revenue for running the business activities. In this study, the importance of factors of non monetary benefits like security, social NMI, job related NMI, tangible NMI, relation with peers examine and measure their effect on motivation of sale force of soft drink industry. The findings suggested that, most preferred NMI (ranking wise) for sale force employee is security, then, relation with peers, job related NMI, social NMI and least favorite is tangible NMI. Soft drink distribution companies can spend more on job and societal security and can multiply their investment on particular factor by motivating them. One interesting finding of the study is, sale force employees prefer the monetary benefits on non monetary benefits.

Agree with all =====================================

In management theory, Mere monetary benefit or Performance-related pay (PRP) schemes are intended to reward good performance with extra pay, with a view to encouraging good performance at all levels in an organization. Monetary benefits  is introduced in most organizations for one main reason: to get people to work harder. This may be expressed in various ways: ‘to align the individual’s efforts with those of the organization’, ‘to change the culture by rewarding appropriate behaviour’, ‘to secure a more delegated and performance-related culture’, and so on. The problem is that, though this may encourage people to work harder at the goals they have been set, these goals often turn out not to be the most useful ones. They may be efficient (‘doing the job right’) but not effective (‘doing the right job’).

There is significant evidence that the effect of PRP on motivation and performance is, at best, neutral and, at worst, adverse. Yet PRP is seen as an important means of motivating better performance. This seems to be the nub of the problem .

Why Mere Monterey reward or performance-related pay does not work?

When researchers ask people what motivates them to perform well in their organization they typically get responses that place enjoyment of the job, a sense of achievement, and recognition at the top of the list. Money only appears in sixth or seventh place. This seems to be true at all levels within organizations and has been shown repeatedly over several decades. The evidence also shows that there is no typical pattern of motivation. People vary enormously between themselves and at different times in their lives. There are all sorts of ways of thinking about motivation but the most useful in this context are two classes of motivators identified by psychologists. Intrinsic motivators come from within a person. They include things like the feeling of doing something worthwhile, the sense of achievement and the excitement of challenge. Other rewards and motivations come from outside: money, status, praise and recognition. These are called extrinsic motivators. Performance related pay (PRP) is clearly an extrinsic motivator. It turns out that when it comes to lasting change in attitudes and behaviour extrinsic motivators are strikingly ineffective. They succeed in producing temporary compliance but not long-term changes in motivation and commitment. ... Intrinsic motivation, by contrast, is much more effective for achieving long-term commitment and high performance.

There are six reasons why PRP schemes are bound to fail.

First :  ‘Pay is not a motivator’. Too little pay is demotivating and if sales people are poorly paid they will not be motivated to perform well and to identify with the organization. They see poor pay as a sign that they are not valued by the organization which they value more. But there is no evidence to suggest that increasing someone’s pay will bring a corresponding improvement in motivation and performance.

Second:Rewards are a covert form of punishment. Most managers will recognize that fear and coercion are demotivating, producing a poor working environment and poor performance. The trouble with PRP is that not receiving a reward is indistinguishable from being punished and produces bitter resentment when it had been worked for or was expected. The effect on morale is exactly the same as that of fear and coercion.

Third: Rewards disrupt teamwork. ‘Everyone is pressuring the system for individual gain. No one is improving the system for collective gain. Eventually the system will crash.’ Organizational life depends so much on cooperation and teamwork that the competition for reward can be disastrous as each person tries to outdo colleagues for rankings. The award of bonus payments produces jealousy and resentment which is a very effective way of destroying working relationships. Employees may be tempted to conceal problems and to present themselves as competent to their supervisors. Other things affect performance. It may be that other issues prevent employees from performing well. This may be lack of resources, poor facilities or over load. Relying on PRP simply obscures these difficulties.  It impedes the ability of managers to manage and will not have the desired effect.

fourth: PRP discourages risk-taking. As soon as you set criteria for performance people will work towards maximizing on those criteria. They will be much less inclined to explore new ways of doing things. Instead, people work towards the goals that will yield the rewards. It motivates people to get rewards not to improve the performance of the organization as a whole.

Fifth : Rewards undermine interest.

Sixth : Extrinsic rewards undermine intrinsic motivation. This is especially true of complex and interesting tasks. One theory is that people feel more controlled when offered extrinsic reward for good performance and this reduces their intrinsic motivation. Other theories claim that it sends a message to employees that they read as ‘if they have to bribe me then it must be something I wouldn’t want to do.’ Another psychologist has shown that the larger the incentive, the more negatively the task is perceive.

Farmer, E., Martin J. (), Management within Organizations, The Open University, Routeldge, London

The big difference between earlier research on sales compensation and the research that’s come out in the past decade is that the latter is not based just on theories. Although companies tend to be very secretive about their pay plans, researchers have begun persuading them to share data. And companies have been opening up to academics, partly because of the attention being given to big data; managers hope that allowing researchers to apply high-powered math and estimation techniques to their numbers will help them develop better tools to motivate their workforce. Indeed, these new empirical studies have revealed some surprises, but they have also confirmed some of what we already believed about the best ways to pay.

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Tom Steenburgh, a professor at the University of Virginia’s Darden School of Business, published one of the first of these papers, in 2008. He persuaded a B2B firm selling office equipment to give him several years of sales and compensation information. This unique data set allowed Steenburgh to look at sales and pay data for individual salespeople and use it to make assumptions about how pay influences behavior. The company had a complex compensation plan: Reps earned a salary, commissions, quarterly bonuses based on hitting quotas, an additional yearly bonus, and an “overachievement” commission that kicked in once they passed certain sales goals. He focused on the issue of timing games: Was there evidence that salespeople were pushing or pulling sales from one quarter to another to help them hit their quotas and earn incentive pay? That’s a really important question, because pushing and pulling don’t increase a firm’s revenue, and so paying salespeople extra for doing that is a waste.

Even though the salespeople in the study could receive (or miss out on) substantial bonuses for hitting (or missing) quotas, Steenburgh found no evidence of timing games. He concluded that the firm’s customers required sales to close according to their own needs (at the end of a quarter or a year, say) and that the firm’s managers were able to keep close enough tabs on the reps to prevent them from influencing the timing of sales in a way that would boost their incentive payments. That finding was significant, because quotas and bonuses are a large part of most sales compensation plans.

In 2011 Sanjog Misra, of UCLA, and Harikesh Nair, of Stanford, published a study that analyzed the sales comp plan of a Fortune 500 optical products company. In contrast with the firm Steenburgh studied, this company had a relatively simple plan: It paid a salary plus a standard commission on sales after achieving quota, and it capped how much a rep could earn in order to prevent windfalls from really big sales. Such caps are relatively common in large companies.

As they analyzed the data, Misra and Nair concluded that the cap was hurting overall sales and that the company would be better off removing it. They also determined that many reps’ motivation was hurt by the firm’s practice of ratcheting. Setting and adjusting quotas is a very sensitive piece of the sales compensation formula, and there’s disagreement over ratcheting: Some feel that if you don’t adjust quotas, you’re making it too easy for reps to earn big commissions and bonuses, while others argue that if you raise a person’s quota after a very strong year, you’re effectively penalizing your top performers.

Misra and Nair estimated that if this firm removed the cap on sales reps’ earnings and eliminated quotas, sales would increase by 8%. The company implemented those recommendations, and the next year companywide revenue rose by 9%.

A third empirical study of sales rep pay, on which I am the lead author, was published in Marketing Science in 2014. Like Steenburgh, we utilized data from a B2B office equipment supplier with a complex compensation plan. We examined how the components of the plan affected various kinds of reps: high performers, low performers, and middle-of-the-road performers.

We found that although the salary and straight commission affected the three groups in similar ways, the other components created different incentives that appealed to certain subsets of the sales force. For instance, overachievement commissions were important for keeping the highest performers motivated and engaged after they’d hit their quotas. Quarterly bonuses were most important for the lower performers: Whereas the high performers could be effectively incentivized by a yearly quota and bonus, more-frequent goals helped keep lower performers on track. Some people compare the way people compensate a sales force to the way teachers motivate students: Top students will do fine in a course in which the entire grade is determined by a final exam, but lower-performing students need frequent quizzes and tests during the semester to motivate them to keep up. Our study showed that the same general rule applies to sales compensation.

Researchers have begun persuading companies to share their data about their pay plans.

Our research also suggested that the firm would benefit if it shifted from quarterly bonuses to cumulative quarterly bonuses. For example, say a salesperson is supposed to sell 300 units in the first quarter and 300 units in the second quarter. Under a regular quarterly plan, a salesperson who misses that number in the first quarter but sells 300 units in the second quarter will still get the second-quarter bonus. Under a cumulative system, the rep needs to have cumulative (year-to-date) sales of 600 units to get the second-quarter bonus, regardless of his first-quarter performance. Cumulative quotas do a better job of keeping reps motivated during periods in which they’re showing poor results, because reps know that even if they’re going to miss their number, any sales they can squeeze out will help them reach their cumulative number for the next period. In fact, even before we made our recommendations to the company in our study, managers there decided to move to cumulative quotas.

In addition to sharing sales and compensation data with academics, companies in the past several years have been allowing controlled, short-term field experiments in which researchers adjust reps’ pay and measure the effects. Prior to the use of field experiments, most academic experiments regarding sales force compensation took place in labs and involved volunteers (usually undergraduates) rather than real salespeople. Shifting from this artificial setting into actual companies helps make the results of these studies more practical and convincing.

Sales reps work harder for the chance to earn a reward than they do after receiving one.

As an example of one such experiment, consider recent work my colleague Das Narayandas and I did with a South Asian company that has a retail sales force for its consumer durable products. The company uses a simple system of linear commissions—reps earn a fixed percentage of sales, with no quotas, bonuses, or overachievement commissions. Managers were interested in seeing how instituting bonuses would affect the reps’ performance, so over six months we tested various ways to frame and time bonuses—always comparing results against a control group.

For one of our experimental groups, we created a bonus that was payable at the end of the week if a rep sold six units. For another group, we framed the bonus differently, using the well-known concept of loss aversion, which posits that the pain people feel from a loss exceeds the happiness they feel from a gain. Instead of telling reps they would receive a bonus if they sold six units, we told them they would receive a bonus unless they failed to sell at least six units. To test the concept even further, the company’s managers suggested another experiment in which we paid the bonuses at the beginning of the week and then had the reps return the money if they missed the goal.

The results showed that all three types of bonuses exerted similar effects and that in every case the group receiving the bonus generally outsold the control group. Loss aversion didn’t have much effect. We believe that’s partly because we were using cash, which is liquid and interchangeable; in the future we might experiment with noncash rewards, such as physical objects.

We also tried to measure the impact on sales reps’ effort of cash payments that were framed as gifts (as opposed to bonuses). Whereas bonuses are viewed as transactional, research shows that framing something as a gift creates a particular form of goodwill between the giver and recipient. In our study we used cash but told employees it was a gift because there were no strings attached—they didn’t have to meet a quota to receive it. We found that the timing of a gift directly influences how reps respond: If you give the gift at the beginning of a period, they view it as a reward for past performance and tend to slack off. If you tell them they will receive a gift at the end of a period, they work harder. We concluded that if companies want to encourage that kind of reciprocity, they need to pay careful attention to timing.

Other researchers are using field experiments to better understand how salespeople react to changes in payment schemes, but most of this work is so new that it hasn’t been published yet. One paper presented at a conference in 2014 showed that if salespeople receive cash incentives for passing tests about the product they are selling, they will sell more. (This is an example of sales compensation based on effort as opposed to results.) Another recent field experiment found that sales reps valued noncash incentives (such as points that could be used for vacations or for items such as televisions) more than the actual monetary cost of the good the points could purchase. As more researchers and companies embrace the use of field experiments, sales managers will learn even more about the best ways to motivate their teams.

After spending a decade in academia studying sales force compensation, I sometimes wonder what would happen if I were transported back into my job as a management consultant. What would I tell sales force managers to do differently?

Some of my advice would be straightforward: I would urge managers to remove the caps on commissions or, if they have to retain some ceiling for political reasons, to set it as high as possible. The research is clear on this point: Companies sell more when they eliminate thresholds at which salespeople’s marginal incentives are reduced. There might be problems if some reps’ earnings dramatically exceed their bosses’ or even rival a C-suite executive’s compensation, but the evidence shows that firms benefit when these arbitrary caps are removed.

I would tell sales managers to be extremely careful in setting and adjusting quotas. For instance, the research clearly shows that ratcheting quotas is detrimental. It’s tempting to look at a sales rep who blows through her yearly number and conclude that the quota must be too low—and quotas do need to be adjusted from time to time. But in general it’s important to prevent reps from feeling that unfairness or luck plays a part in compensation, and resetting quotas can contribute to that perception. And if something outside the salesperson’s control—such as an economic downturn—made it more difficult to hit a goal, I would consider reducing the quota in the middle of the year. It’s important to keep quotas at the right level to properly motivate people.

On the basis of my own research, I would advocate for a pay system with multiple components—one that’s not overly complicated but has enough elements (such as quarterly performance bonuses and overachievement bonuses) to keep high performers, low performers, and average performers motivated and engaged throughout the year.

Full Agre with mr. Khalid Ghaffar 

thanks for invitation .................agree with all answers

I agree with the rest of the answers

As monetary benefits are still considered on the top of motivation factors, bust there are other factors where employees may care about such work environment, flexibility ..etc

Management should have a variety of options to motivate progresses !

Thank You