Week-5

Hiring and Promotion Policies in Sales Force Management: Some Antecedents and

Consequences Shankar Ganesan, Barton A. Weitz and George John

The conceptual framework developed in this paper suggests that firms hire salespeople at the entry level and promote salespeople from within the organi- zation to sales management positions, when their sales tasks involve transaction specific skills and they have difficulty hiring salespeople. Hiring at entry level and promotion from within increase salespeople's trust in the organization, and reduce sales force turnover and opportunistic behavior. A test ofthe framework using survey data collected from 161 firms indicates that firms tend to promote from within when salespeople possess transaction specific skills. Hiring sales- people at the entry level results in greater level of mutual trust between the sales force and the firm and less opportunistic behavior by the salespeople.

Introduction

A variety of control mechanisms are used to im- prove sales force productivity by increasing the ef- fort expended and directing sales effort to'wards specific activities (Jaworski 1988). In the context of sales management, three types of control mecha- nisms have been examined. As identified by Ouchi

S h a n k a r G a n e s a n i s an Assistant Professor of Marketing in the School of Business at the State University of New York at Albany, He received an MBA from the Indian Institute of Management, Bangalore, India, and a Ph,D, in Marketing from the University of Florida. His research interests are in the areas of sales force management, retailing relationship management and channels of distribution.

Barton A. Weitz is the J.C. Penney Eminent Scholar Chair and Professor of Marketing in the College of Business Administration at the University of Florida, Professor Weitz's research on per- sonal selling effectiveness and sales force management issues has heen puhhshedinthe Journal of Marketing. Journal of Marketing Research, and Journal of Persona! Selling and Sales Manage- ment. He has been involved in executive education programs on sales force management at the Wharton School, Northwestern University, UCLA, General Electric and co-authored two text- books, Selling: Building Partnerships and Retailing Manage- ment.

George John is a Professor of Marketing in the Carlson School of Management, University of Minnesota. His research interests center on Issues in industrial marketing and distribution chan- nels. His recent work includes studies of sales compensation practices, bundling of industrial systems, and alliances between suppliers and industrial buyers. His work has been published in several journals, including the Journal of Marketing Research. Journal of Marketing, and Journal of Law, Economics and Organization.

(1979), these are the market, bureaucratic, and so- cial mechanisms of control. The market mechanism involves the use of incentives (John and Weitz 1989; Basu et al. 1985), the bureaucratic mechanism in- volves the use of supervision (Kohli 1985), and the social mechanism involves the development of or- ganizational norms and culture (Tyagi 1982). In addition, sales management research has exam- ined control mechanisms such as feedback (Teas and Horell 1981) and performance measurement (Anderson and Oliver 1987).

Even though sales management research has in- vestigated various control issues, limited research has been directed toward staffing policies in sales organizations: an element of social mechanism of control. Many firms have staffing policies related to the hiring of entry level (no experience) salespeople rather than senior level (experienced) salespeople and the promotion of sales managers from within the organization versus hiring sales managers from outside the organization. No research study, how- ever, has addressed empirically these issues in the context of sales management.

This study focuses on two aspects of the staffing policy: hiring of salespeople at the entry level with- out any experience (versus hiring of salespeople at senior levels with varying levels of experience) and selection of sales managers from within the organi-

Journal of Personal Selling & Saies Management, Volume XIII, Number 2 (Spring 1993).

16 Journal of Personal Selling & Sales Management

zation through promotions (versus selection of sales managers from outside sources). The objective of this study is to examine the conditions in the sales environment that motivate sales organizations to use these staffing policies and the implication of these policies on sales force performance. In the next section, a conceptual framework is presented which links the nature of the sales environment to the use of the two staffing policies, and the conse- quences of such policies. The hypotheses developed from the conceptual framework are tested using survey data gathered from 161 sales forces. The paper concludes with a discussion of the results and their managerial implications.

Conceptual Framework

The conceptual framework outlining the anteced- ents and consequences ofthe two staffing policies is shown in Figxire 1. This framework suggests that firms use the two staffing policies in response to the following aspects of their sales environment: 1) the degree to which salespeople possess transaction spe- cific assets, and 2) the difficulty that firms have hiring salespeople. These aspects of the sales envi- ronment affect the firm's hiring of entry level (no experience) rather than senior level (experienced) salespeople and the promotion of salespeople from within the organization to sales management posi- tions rather than hiring of sales managers from outside sources. Finally, the framework investigates the effect of such staffing policies of the firm on salespeople turnover, trust ofthe firm and opportu- nistic behavior of the salespeople.

Effect of transaction specific assets on promotion and hiring policies

Transaction specific assets are the idiosyncratic skills possessed by the salespeople about the firm's policies, products, and customers (Williamson 1975; John 1984). Turnover of salespeople possessing high transaction specific assets is costly to the firm be- cause it is difficult for a firm to hire salespeople with comparable skills. When salespeople are hired who do not possess these skills, the firm suffers an opportunity loss and a direct cost as salespeople are trained about the unique aspects of the firm. There- fore, a firm has an incentive to retain salespeople possessing firm specific skills and knowledge.

Two of the major approaches used by a firm to retain salespeople possessing idiosyncratic skills are:

1) bind salespeople to long-term employment con- tracts and 2) provide financial incentives for sales- people to remain with the firm. Many researchers have argued that long-term employment contracts are rare because they are considered involuntary servitude by the legal system and society (Becker 1962). Others have suggested that long-term con- tracts are not economically efficient because of the high costs of writing, negotiating, monitoring, and enforcing contingent claim contracts (Williamson, Wachter, and Harris 1975). In either case, it has been suggested that long-term contracts are not an efficient method for retaining salespeople with trans- action specific skills.

The second alternative, providing financial in- centives, may also lead to problems especially when an accurate measure of a salesperson's worth in the external market is not available. Firm specific skills raise the value of salespeople to the firm, but do not raise the wages salespeople will command in exter- nal markets outside the firm. If the relationship between the firm and the salesperson is severed, the firm suffers increased costs in hiring and train- ing a replacement and the salesperson is left with skills that are not valued in the marketplace.

In order to minimize the cost for both the sales- person and the firm, policies that encourage the development of a long-term relationship between the firm and the salesperson need to be devised (Wachter and Williamson 1978). One such policy, promotion of salespeople to sales management po- sitions from within the firm, encourages salespeople to remain in the firm. Salespeople benefit from such a policy, because they know that opportunities for future rewards in the form of promotions will be restricted to salespeople presently employed by the firm. The firm benefits because it is able to realize the efficiencies gained through developing firm spe- cific skills in its salespeople without the costs of continually training replacements. Thus, the use of promotion of salespeople to sales management po- sitions from within the firm, leads to the develop- ment of a long-term relationship with salespeople possessing high transaction specific skills.

Another policy, hiring of salespeople at entry level without any prior experience, also leads to a long- term relationship between the salespeople and the firm. From a firm's viewpoint, as the transaction specific skills associated with a job increase, there will be fewer salespeople in the external market capable of performing the selling functions of the firm. Thus, by restricting the hiring to entry level

Spring 1993 17

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18 Journal of Personal Selling & Sales Management

salespeople who can be trained towards the idio- syncratic requirements of the job, the firm avoids the expensive process of searching for salespeople with the appropriate firm specific skills. From the salesperson's standpoint, hiring at entry level re- duces the competition associated with promotion to senior level positions. This also suggests that se- nior salespeople are likely to impart more firm spe- cific skills to entry level salespeople, thereby reduc- ing the costs associated with training of entry level salespeople by the firm.

HI: The level of transaction specific assets possessed by salespeople increases the likelihood that firms will a) hire pre- dominantly entry level salespeople, and b) engage in the practice of promoting salespeople within the firm to sales management positions.

As the transaction specific skills developed in salespeople to perform the sales function increases, the firm will have difficulty in hiring new sales- people to replace existing salespeople. There will be few salespeople in the external market with idio- syncratic skills needed to perform the selling func- tion for the firm.

H2: The level of transaction specific assets possessed by salespeople increases the difficulty of the firm in hiring sales- people.

Effect of difficulty in hiring salespeople on promotion and hiring policies

Another factor that affects the promotion and hir- ing policies is the difficulty that firms have in hir- ing salespeople. When the supply of prospective salespeople is limited, firms are motivated to in- crease the control they have over their salespeople and reduce the possibility of salespeople leaving the firm. The use of promotion from within the firm and the hiring of salespeople at the entry level can reduce turnover and confine training to the acquisi- tion of idiosyncratic skills that are not highly val- ued in labor markets (Pfeffer and Cohen 1984).

When firms confront a tight labor market, incum- bent salespeople know that they cannot be easily replaced. Under these circumstances, salespeople can engage in opportunistic behavior with minimal fear of reprisals. They can demand higher wages or reduce their ievel of sales activity. One method of curbing such opportunistic behavior is to restrict

promotions to sales management positions to sales- people from within the organization. Such restric- tions to promotions to sales management positions, even when the sales management positions could be filled from outside where no firm specific skills are needed, provide salespeople with an incentive to perform the selling functions required by the firm (Pfeffer and Salancik 1978).

Further, as the labor market gets more difficult, the costs of hiring a salesperson increase compared to the costs associated with recruiting salespeople at entry level positions and providing them with firm specific training. Thus, sales organizations are likely to restrict the hiring to entry level positions as the difficulty with hiring salespeople increases.

H3: The difficulty in hiring salespeople in- creases the likelihood that firms will a) hire entry level salespeople and b) en- gage in the practice of promoting sales- people from within the firm to sales management positions.

The effect of hiring at entry level on promotion of salespeople to sales management positions

When firms hire a large percentage of salespeople at the entry level, they have a large pool of human resources that are likely to be trained in the needs ofthe firm. In other words, the firm is likely to have a large pool of salespeople who are adequately trained and possess firm specific skills.

H4: The likelihood that salespeople within the firm will be promoted to sales man- agement positions is positively related to the degree to which firms hire sales- people at the entry level positions.

Effect of promotion from within and hiring at entry level on trust and turnover

The framework in Figure 1 indicates that the major consequences of these staffing policies are the development of trusting relationship between the firm and salesperson and the reduction of turn- over in sales force. In this study, trust refers to the attitudinal orientation of the parties in a relation- ship {John 1984), This conceptualization empha- sizes the credibility ofthe parties, the maintenance of norms (Bonoma 1976), and the climate associ-

S p r i n g 1993 19

ated with the relationship between the firm and its salespeople.

In the sales management textbooks, sales force turnover has been defined as the rate at which salespeople leave the sales force because of promo- tions, resignations, retirements, or dismissals (Dalrymple and Cron 1992). However, in the sales force research literature, sales force turnover is lim- ited to salesperson's voluntary leaving and firings (Lucas et al. 1987) or as a propensity to leave (Futrell and Parasuraman 1984; Jolson, Dubinsky, and Anderson 1987).

The use of staffing policies such as promotion of salespeople to sales management positions within the organization, and the hiring of salespeople at the entry level, fosters an atmosphere of trust. Or- ganizational theorists (Ouchi 1981) suggest that the culture of an organization affects the perfor- mance and productivity of its employees. Organiza- tions with strong cultures (informal social systems that influence the attitude and behavior of employ- ees) typically devote considerable resources over a long period of time to socialize employees to organi- zational norms. Thus, firms hiring a large percent- age of salespeople at the entry level position have a greater opportunity to impart the value training needed to inculcate the strong organizational cul- ture. This value training facilitates the develop- ment of close and trusting relationships between the salespeople and other employees of the firm. Salespeople learn that promotions will be restricted to present employees and the success of the firm is closely Hnked with their personal success.

H5: The level of trust between the sales- people and the firm is positively affected by a) the degree to which firm hires salespeople at entry level sales positions and b) the degree to which salespeople are promoted from within the firm to the positions of a sales manager.

As indicated above, firms hiring a large percent- age of salespeople at the entry level positions, have a greater opportunity to impart organizational val- ues and inculcate strong organizational culture. Such value training leads to compatibility of goals and mutual trust, and results in lower turnover of the salespeople within the firm.

Previous research in salesforce turnover litera- ture has indicated that salesperson satisfaction with promotion is an important factor affecting turnover (Lucas et al. 1987). Landau and Hammer (1986) have found that respondents who perceived that

their organizations filled managerial positions ex- ternally (outside the organization) were less com- mitted to their organizations, and were more likely to quit the organization. Anderson, Hair, and Bush (1988) point out that promoting good sales perform- ers to managerial positions has definite motivating consequences for the salesforce. Promoting sales- people from within the organization not only allows the organization to retain the best salespeople but also increases the level of morale ofthe entire sales- force.

H6: The level of turnover in a sales force is negatively affected by a) the degree to which firm hires salespeople for entry level sales positions and b) the degree to which salespeople are promoted from within the firm to the position of a sales manager.

Effect of trust and turnover on opportunistic behavior

Opportunistic behavior within the transaction cost analysis framework is defined as "self-seeking with guile" (Williamson 1975). Examples of oppor- tunistic behavior in a sales context are withholding information about the market, shirking on calls, failing to fulfill promises or obligations to the firm.

Salespeople engage in less opportunistic behav- ior when they feel that they have a trusting rela- tionship with the firm. Under these circumstances, salespeople recognize that their rewards are linked to firm's performance. By engaging in opportunistic behavior, they are reducing both the perfonnance ofthe firm and their opportunity to receive rewards.

Higher rates of turnover in organizations result in disruption of communication patterns within the organization and lower levels of bonding and com- mitment to the organization (Mueller and Price 1989). As a result, salespeople are likely to be less confident of receiving rewards due to them, and therefore are more likely to indulge in opportunis- tic behavior.

H7: The degree to which salespeople en- gage in opportunistic behavior is a) posi- tively affected by the turnover in the sales force and b) negatively affected by the degree to which a trusting relation- ship exists between the sales force and the firm.

20 Journal of Personal Selling & Sales Management

Method

Data Collection Procedure The relationships outlined in Figure 1 were tested

by having key informants, senior sales executives, in a broad cross-section of firms complete a ques- tionnaire. The questionnaire assessed the degree to which firms use policies such as promotion from within and hiring at entry level, their perceptions of antecedent factors affecting these staffing poli- cies, and the consequences of such staffing policies. Thus, we test the framework by modelling the deci- sions made by sales managers in using the staffing policies.

A two-stage process was used to contact and oh- tain responses from sales managers and sales vice- presidents of U.S. firms (SIC 20.000 to 40,000) with annual sales exceeding S50 million. A summary of the findings was offered to each participating firm as an incentive. In the first stage, personalized re- quests to participate in the study were mailed to a random sample of sales managers and sales vice- presidents from a national mail list. A total of 266 firms agreed to participate in the study. The re- sponse rate from this initial mailing is difficult to assess because of problems with the sampling frame (incorrect addresses, individuals not working in the firm etc. ). In the second stage, the questionnaire was mailed to the contact person at each firm (sales managers) with instructions requesting that the responses focus on one particular sales force. If the firm had multiple sales force, the respondent was encouraged to complete multiple questionnaires. Three firms that provided questionnaires for mul- tiple sales forces were treated as independent ob- servations in the analysis as the respondents were different for each questionnaire. The procedure re- sulted in 161 completed questionnaires represent- ing a 61% response from firms agreeing to partici- pate in the study. While the sampling procedure did not insure a representative sample of U.S. in- dustrial sales forces, the procedure and character- istic of the sample are similar to other widely refer- enced sales force studies (Peck 1982; Steinbrink and Friedeman 1983). In comparison with our sample, the Steinbrink and Friedman study had less experienced and lower paid salespeople. In con- trast, the respondents to the Pock study had slightly larger salesforces and higher compensation. How- ever, our sample is similar to both these studies and other salesforce studies in terms of annual sales per salesperson ($2.3 million), average age (39

years), and type of compensation plans (16% only salary, 8% only commission, and 76% mixed) (see John and Weitz 1989 for more details on the sam- pling plan and characteristics of the sample).

Measures

The scales used to measure the constructs are discussed below. All multiple item measures used to reflect the constructs used in this study are de- scribed in the Appendix. Thus, the items used to measure salesperson's trust (TRUST) and degree to which they engage in opportunistic behavior (OPPORT) and the transaction specific assets pos- sessed hy the salespeople are shown in the Appen- dix.

The first step used in item analysis and assess- ment of unidimensionality was exploratory factor analysis. All items representing salesperson's trust, opportunistic behavior and transaction specific as- sets were subjected to a factor analysis. The results suggested a three factor solution. The factors were then rotated using an orthogonal rotation proce- dure to obtain the best factor pattern. The first factor corresponded to salesperson's trust, the sec- ond to opportunistic behavior and the third factor to transaction specific assets. All items which loaded on the appropriate factor with the theoretically cor- rect sign and whose loadings exceeded 0.4 were selected. Once unidimensionality was established, internal consistency was assessed via Cronbach's alpha.

Transaction specific assets (TSA) was measured using a 7 item scale assessing the uniqueness of the firm's procedures and the time needed by a newly hired salesperson to learn the firm's policies and procedures (John and Weitz 1989). This scale has been been used in prior studies and has high inter- nal consistency (alpha = 0.71)

Difficulty in hiring salespeople (DIFHIRE) was assessed by the response to the following item, "It is difficult for us to hire salespeople," on a seven point scale anchored by strongly disagree and strongly agree. This scale is based on a single item and no reliahility estimates were calculated.

Hiring of salespeople for entry level positions (EN- TRY) was operationalized as the response to the following question, "What percentage of the new salespeople you hire are entry level, junior sales- people (versus experienced, senior level sales- people)?" The responses to this question were skewed toward 0 and 100% with many responses at 0, 10, 90, and 100%. Due to the unusual distribution of

Spring 1993 21

these responses, a dummy variable (1 greater than 75% and 0 less than or equal to 75%) was used in the analysis. Twenty-four percent of the sample reported that more than 75% of their salespeople were hired into entry level positions. Additionally, a third dummy variable for firms that hired less than 25% of their salespeople into entry level posi- tions was created. However, this dummy variable was not significant.

Promotion from within the firm (PROMO) was assessed by the response to the following question: "What percentage of the first line sales managers in this group (sales force) were promoted from field sales positions within your firm?" Since the re- sponses were skewed toward 100% with many re- sponses at 90, 95, and 100%, the measure was op- erationalized as a dummy variable (1 equal to or greater than 90% and 0 less than 90%). Sixiy-fivo percent of the firms in the sample promoted 90% or more of their sales managers from within the orga- nization. Previous studies (Osterman 1984) have shown similar skewed patterns with respect to the measurement of promotion from within the firm.

Trust (TRUST) was measured using a 4 item scale to assess the degree to which a mutually trusting relationship existed between the firm and its sales- people. All the 4 items loaded highly on this factor and exhibited high internal consistency (alpha = 0.78).

Salesforce turnover (TURN) was measured by the response to the following question: "What percent- age ofthe salespeople in your sales force 12 months ago are no longer in your sales force?" This item captures the extent of voluntary leaving and dis- missals within the organization.

Opportunistic behauior (OPPORT) was assessed using a 4 item scale indicating the degree to which salespeople engage in opportunistic behaviors. The items used in this scale have been used in other studies (John 1984) and have shown high reliabil- ity and validity. The coefficient alpha is 0.72.

Analysis and Results

The means, standard deviations, and the correla- tion matrix for all the measure are shown in Table 1.

The model shown in Figure 1 and outlined in equations 1 to 8 (Table 2) were estimated by using OLS and logit models. The logit models were used to estimate equations 1 and 2 that had dichotomous dependent variables.

The estimation of equations 1 and 2 provided partial support for hypothesis 1. Transaction spe- cific assets possessed by the salespeople are signifi- cantly related to the promotion of sales manager from within the firm (b2l = 0.39, p < 0.05), support- ing Hlb. However, transaction specific assets are not significant related to the hiring of salespeople at entry level positions (bl 1 = -0.03, ns). Thus, H l a ia not supported.

The results from the analysis provide support for H2, which indicates a significant positive relation- ship between the transaction specific assets pos- sessed by the salespeople and the difficulty of the firm in hiring salespeople (b3l = 0.24, p < O.Ol).

The results from the study do not provide any support for H3, which hypothesized a positive re- lationship between difficulty of hiring salespeople and the use of staffing policies. The results suggest that difficulty of hiring does not affect both promo- tion from within the firm and hiring of salespeople at entry level (bl2 = -0.06, ns and b22 = 0.04, ns).

The estimation of equation 2 also indicates a sig- nificant positive relationship between hiring at en- try level and promotion of salespeople from within the organization (b23 = 1.38, p < 0.05), thus sup- porting H4.

The estimation of equation 4 indicates a signifi- cant relationship between hiring of salespeople at the entry level and trust of the salespeople (b41 = 0.17, p < 0.05), while promotion from within the firm is not significantly related to trust (b42 = 0.09, ns). The results partially support H5.

The results from equation 5 do not support H6, which suggested a negative relationship between the staffing policies and sales force turnover (b51 = 0.05, ns and b52 = -0.08, ns).

Finally, results from the study provide support to H7. The degree to which salespeople trust the firm is negatively related to opportunistic behavior (b6l = -0.54, p < 0.001), while the level of sales force txim- over significantly increases the opportunistic be- havior (b62 = 0.26, p < 0.001).

Discussion

The results provide partial support for the model shown in Figure 1. Firms tend to promote their sales managers from within their organizations when their salespeople possess transaction specific assets. Firms that predominantly hire salespeople for entry level positions tend to have a more trust- ing relationship with their salespeople. A trusting

22 Journal of Personal Selling & Salea Management

Table 1 Means, Standard Deviations and Correlations

Variables Mean S. D. OPPORT TRUST PROMO ENTRY DIFHIRE TSA TURN

Opportunistic 2.74 0.96 behavior of the salespeople (OPPORT)

Salespeople's trust 5.81 0.69 -0.55*" in the fjrm (TRUST)

77.34 34.3 0.00Promotion of salespeople from within the f jrm (PROMO)"

Hiring of salespeople 40.58 37.1 -0.11 at entry level (ENTRY)"

0.08

0.16* 0.19*

Difficulty in hiring 2,97 1.66 0.10 -0.09 -0.11* -0.05 salespeople (DIFHIRE)

Transaction specific 3.57 0.95 0.21** 0.10 -0.03 -0.23*' assets possessed by the salespeople (TSA)

Sales force turnover 8.71 0.26*** -0.01 -0.05 0.08 (TURN) 8.91

0.12

0.24*

0.13

" Both PROMO and ENTRY represent raw data for promotion from within the firm and hiring at entry level.

" p < 0.05 * " p < 0.01

relationship between the firm and salespeople re- sults in lesser opportunistic behavior by the sales- people.

Support was not found for other parts ofthe model. The difficulty of hiring salespeople at the entry level did not affect the use of the two staffing policies, and the use of staffing policies did not influence the turnover of salespeople within the firm.

The lack of significant results and the low level of explained variance suggest limitations of the cur- rent modei and offer ideas for future research in this area.

Limitations

The variance explained by the regression models to predict the staffing policies such as promotion from within the firm and hiring at entry level is low, i.e., less than 5%. This low level of variance may arise because we have only examined one of the many control mechanisms used by sales man- agers. Trust, turnover, and opportunistic behavior are certainly affected by the compensation plan, supervisory behavior, and company norms.

The current model investigates the impact of two

Spring 1993 23

Table 2 Estimation of the Model

ENTRY PROMO DIFHIRE TRUST TURN OPPORT = b

10

•'20

^30

•^40

^50

60

+ b,, TSA + b̂ , TSA + bg, TSA + b,, ENTRY + bg, ENTRY + bĝ TRUST

DIFHIRE DIFHIRE

PROMO PROMO

ENTRY (1) (2) (3) (4) (5) (6)

^) Dependent Variable: ENTRY

Independent Variables TSA (b,,) DIFHIRE (b,,)

2) Dependent Variable: PROMO

Independent Variables TSA (b,,) DIFHIRE (b,,) ENTRY (b.J

Chj-square(2) = 0.32

Coefficient -0.03 -0.06

Chj-square(3) = 13.96***

Coefficient 0.39** 0.04 1.38**

3) Dependent Variable: DIFHIRE F (1,152) = 9.09***

4)

5)

6)

p<0.10 p < 0.05 p < 0.01

Independent Variables TSA (bj

Dependent Variable: TRUST

Independent Variables ENTRY (b,,) PROMO (b J

Dependent Variable: TURN

Independent Variables ENTRY (b,,) PROMO (b^̂ )

Dependent Variable: OPPORT

Independent Variables TRUST (b,,) TURN (b,,)

Coefficient 0,24***

F (2,151) = 3.39**

Coefficient 0.17** 0.09

F (2,151) = 3.39

Coefficient 0.05

-0.08

F (2,151) = 44.1***

Coefficient - 0.54*** 0.26***

24 Journal of Personal Selling & Sales Management

staffing policies, promotion from within and hiring at entry level. However, social control mechanism involves many more variables (such as grievance procedures, career ladders, etc.) which are not in- cluded in this model. Future research should in- clude other major variables along with the vari- ables related to the staffing policies.

This study relies on the response of senior sales executives to assess the degree to which the firm hires at entry-level and promotes from within the sales organization. The skewed response towards the higher end (75% and above) suggests than many respondents did not consult their records before answering these questions. Thus, the reliability of the measures of the staffing policies may be poor. The low level of turnover, 9%, also suggests a bi- ased response.

Finally, our turnover measure did not distinguish between involuntary and voluntary turnover. Firms that hire predominantly at the entry level may have substantially more involuntary turnover than firms hiring more senior salespeople. Thus, the weak re- lationship between hiring at entry level and sales force turnover may be due to the offsetting impacts on voluntary and involuntary turnover. Although hiring at entry level builds more commitment in the salespeople and, thus, reduces voluntary turn- over, entry level hiring is also more susceptible to selection mistakes leading to an increase in invol- untary turnover. These offsetting effects result in a nonsignificant relationship between hiring at entry level and sales force turnover.

Directions for Future Research

In spite of the problems with the measurement, this study provides an impetus for future research- ers to study the issue of promotion policies and hiring practices within sales organizations. Recent research in organizational theory and economics has addressed several empirical questions intro- duced in this paper. For example, Pfeffer and Cohen (1984) and Baron et al. (1986) have found empirical support for the relationship between transaction specific assets possessed by employees and internal labor markets, which are characterized by hiring at entry level and promotion from within the organi- zation. Other researchers (London 1983; Landau and Hammer 1986) have investigated the behav- ioral and motivational effects of internal labor mar- kets on organizational commitment and intention to quit and have found significant relationships.

This p a p e r i n t r o d u c e s t h e notion t h a t a salesperson's trust and commitment to an organi- zation may be affected by factors other than finan- cial incentives, supervisory behavior, and charac- teristics of the job. In fact, organizational policies such as promotion and hiring may play an impor- tant role in a salesperson's decision to remain in a firm. While this research does not provide conclu- sive evidence concerning when entry-level hiring and promotion from within is most appropriate, it does indicate that these staffing decisions are a promising area for future research. In addition to using archival data to reduce measurement error and considering other staffing policies, future re- search needs to examine the impact of these staff- ing policies from the perspective ofthe salesperson. Future research needs to address several issues that emerge from this study. Some of the issues are: do salespeople find it more attractive to work for firms that hire at entry level and promote sales- people from within the organization? Are they more committed to firms that practice such staffing poli- cies? Do firms need to adhere rigidly to these poli- cies to derive the beneficial effects or can firms practice these policies in most cases and still de- velop strong loyalty within their sales force?

This paper modelled the degree to which the staff- ing policies are used by sales managers facing dif- ferent conditions under the assumption that man- agers are on average, making the correct decision. Future research needs to address explicitly the tradeoffs between the costs and benefits ofthe staff- ing policies by assessing the efficiency of sales forces using these policies compared to firms that do not use these staffing policies.

In addition to these staffing policies, future re- search needs to be directed toward the antecedents and consequences of other policies such as dual career ladders and the practice of rotating in-house staff through field sales positions.

References Anderson. Erin and Richard L. Oliver (1987). "Perspectives on

Behavior-Based Versus Outcome-Based Salesforce Control Systems," Journal of Marketing, 51 (October), 76-88.

Anderson, Iiolph E.. Joseph F. Hair and Alan J. Bush (1988), Professional Sales Mananement, New York: McGraw-Hill Book Company.

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Spring 1993 25

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26 Journal of Personal Selling & Sales Management

Appendix 1 Measures Used in the Study

Opportunistic behavior by the salespeople (OPPORT) ^ 1. These salespeople occasionally alter their report

in small ways to make them look better. 2. These salespeople alter their call reports so that

they look better. 3. When dealing with the company, these salespeople

are candid about their intentions. 4. These salespeople do not try to game the system.*

Coefficient Alpha = 0.72

Salespeople's trust in the firm (TRUST) ^ 1. If these salespeople perform well, they know they

will be rewarded. 2. These salespeople generally have a good personal

relationship with their manager. 3. We trust these salespeople to be fair and honest with

us. 4. These salespeople feel that the company has been

fair and honest with them.

Coefficient Alpha = 0.78

Transaction specific assets (TSA) ^ 1. Our company procedures compared to other companies' are

a) simple / complex b) Fast/slow c) Standardized / unstandardized d) Informal / bureaucratic *

2. It is hard for a new salesperson in this company to get something done for an account (i.e., expediting shipment, handling claims, etc.)

3. In our company, it helps tremendously if a salesperson has been with us for a while, to know who to see to get something done.

4. It takes time for a newcomer to our firm to learn all the ins and outs of our company that a salesperson needs to know to be effective.

Coefficient alpha = 0.71

Means

2.75

2,78

2.70

2,71

Std. Dev.

1.36

1.34

1.16

1.32

Item to total correlation (corrected)

0.49

0.49

0.54

0.49

5.86

5.85

5.93

5.61

1.02

0.85

0.86

1.01

0.34

0.54

0.68

0.56

3.1 3.1 3.4 3.3 2.4

1.6 1.7 1.8 1.7 1.5

0.58 0.52 0.23 0.30 0.46

4.4

4.5

1.8

1.6

0.37

0.46

Legends

1 and 2 3 A

7 point Likert Scale anchored by "strongly disagree" and "strongly agree" Items 2, 3, and 4 are 7 point Liken Scale anchored by "strongly disagree" and "strongly agree" 5 point semantic differential scale Reversed item