The Impact of Cultural Dimensions on Sales Force Compensation

Financial compensation has long been held as the primary motivator of salespeople. Motivation however may be achieved differently in various countries, as the large disparities in pay schemes across countries seem to indicate. In this paper, the authors explore the impact of cultural dimensions on sales force compensation structures. Using data collected from financial companies of three European countries, they (1) assess transnational cultural profiles of managers (i.e., market, group-centric and hybrid), (2) confirm discrepancies in terms of managerial preferences for compensation structures and (3) uncover associated rationales such as rejection of incentive compensation due to its perceived immorality. The results indicate that cultural dimensions explain managers choice for (1) the use of incentive pay in the compensation package (i.e., fixed versus variable compensation) as well as (2) the basis for its allocation (i.e., individual versus group). The authors conclude by discussing the implications of their research for designing compensation plans in the global market place.