Optimal conditions for sales force equitable compensation

Past theoretical sales force compensation research has typically applied paradigms from economic theory in order to derive optimal decentralized control schemes. This research stream has generally neglected the important equity aspect of sales force compensation plans which is recognized in the professional literature. This paper shows how equity theory provides a valuable paradigm for analyzing this problem within a centralized sales force control framework. Its purposes are to provide guidelines to sales managers for determining short-term remuneration levels and sales objectives for a heterogeneous sales force through application of equity theory, and to propose a few normative implications for sales force equitable compensation.