Dimensions and contingent effects of variable compensation system changes

• Published in: Journal of business research Vol. 69; no. 8; pp. 2923 - 2930
• Main Authors: Johnson, Jeff S., Friend, Scott B., Agrawal, Arvind
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01-08-2016; Elsevier Sequoia S.A
• Subjects: Compensation; Incentives; Job satisfaction; Performance management; Sales force management; Salespeople; Salesperson performance; Studies; Survey; Variable compensation system changes; Survey; Variable compensation system changes; Job satisfaction; Sales force management; Salesperson performance
• ISSN: 0148-2963; 1873-7978
• DOI: 10.1016/j.jbusres.2015.12.061

Compensation systems are regarded as one of the best incentives to motivate salespeople. Organizations aim to align compensation incentives with organizational strategies in order to integrate top-level initiatives with ground-floor implementation, often requiring periodic adjustments to reflect fluctuating market conditions. What is not known, however, is to what extent variable compensation system changes (VCSCs) impact the attitudinal and performance outcomes of salespeople. Using a sample of 306 business-to-business salespeople, the authors study the conditional effects of VCSC. Specifically, the authors conceptualize a multi-dimensional assessment of VCSC – frequency, magnitude, and implementation speed – and investigate each dimension's effect on salesperson job satisfaction and performance, contingent upon two environmental conditions—technological turbulence and competitive intensity. Findings show a mixture of accentuating and attenuating effects on both outcomes, allowing future researchers to gain a better understanding of under which conditions VCSCs impact salesperson attitudes and performance.
•We examine the impact of variable compensation system change (VCSC) on salespeople.•VCSCs are comprised of change frequency, magnitude, and implementation speed.•VCSC dimensions have contingent impacts on salesperson satisfaction and performance.•Technological turbulence and competitive intensity moderate several VCSC effects.