Nobel Ilac

“The Comprehensive Effects of Sales Force Management: A Dynamic Structural Analysis of Compensation, Training, and Selection” by Doug J. Chung (Harvard University), Byngyeon Kim (Harvard University), and Young G. Park (SUNY Albany).

This study provides a comprehensive model of an agent’s behavior in response to multiple sales management instruments, including compensation, recruiting/termination, and training. The model takes into account many of the key elements that constitute a realistic sales force setting—allocation of effort; forward-looking behavior; present bias; training effectiveness; and employee selection and attrition. By understanding how these elements jointly influence agents’ behavior, the study provides guidance on the optimal design of sales management policies. A field validation, by comparing counterfactual and actual outcomes under a new policy, attests to the accuracy of the model. The results demonstrate a trade-off between adjusting fixed and variable pay; how sales training serves as an alternative to compensation; a potential drawback of hiring high-performing, experienced salespeople; and how utilizing a leave package leads to sales force restructuring.