PSU research shows rewarding star salespeople may lead to mixed results: Corporate sales awards can be a double-edged sword
Author: C. Fred Miao, Assistant Professor of Marketing, School of Business, Portland State University
Posted: February 16, 2018

Sales professionals gain motivation and perform better when they receive bonuses, awards and kudos from their bosses. But in organizations where politics and favoritism rules, such awards may actually hurt employee morale and negatively hit the company’s bottom line.

These mixed results are outlined in research findings published by Fred Miao, assistant professor of marketing in The School of Business at Portland State University and his co-authors in their paper “Effects of top-performer rewards on fellow salespeople: a double-edged sword,” available online in the Journal of Personal Selling & Sales Management.

It’s long been assumed that rewards to top performing salespeople lifted all boats, in that they not only motivated the employee receiving the award but also identified a peer that others could look up to, emulate and get mentorship from. Recent research has shown that’s not always true. 

Miao and his collaborators identified the positive and negative effects of these sales rewards and in what types of organizations they occur. For example, positive impacts to organizations tend to happen where salespeople feel rewards are being handed out due to an individual’s superior sales and relationship building skills, not because the salesperson has curried favor with leadership.  

Where employees are required to call certain customers or pitch particular products, sales reward programs can backfire. This is especially true in large organizations where there are more levels of bureaucracy and there is less day-to-day contact among salespeople and management, Miao and his colleagues’ results showed.

Miao and his co-authors surveyed salespeople and their managers from financial services organizations in Taiwan, learning how they perceive rewards, leadership and favoritism at work. 

“While sales organizations across all kinds of businesses often reward their top performers with more money and recognition in front of their peers, such praise can be a double edged sword,”  Miao said. “When salespeople feel like leaders are favoring certain employees and prescribing and monitoring each employee’s day-to-day activities, handing out rewards to high performers can actually drag down the organization’s overall performance. I hope sales managers will think carefully about elevating individual high performers as they design sales incentive programs.”