Incentive Mechanism for Enterprise Salesperson Based on Psychological Contract

Transcription

1 Incentive Mechanism for Enterprise Salesperson Based on Psychological Contract LI Dalin School of Economics and Management, Henan Polytechnic University, P.R.China, Abstract: This paper studies the problems and causes that lie in incentive mechanism for enterprise sales and proposes the solution to perfect incentive mechanism for enterprise sales based on psychological contract: focusing on individual differences, the psychological contract maintenance in assessing, good salesperson career management, improving corporate human resources training and development, reconstruction of organizational culture. Keywords: salesperson, incentive mechanism, psychological contract 1 Introduction 1.1The definition of psychological Argyris(1960) is the first person who joined the concept of contract with psychological to make a detailed discussion.schein (1980) defined the constract as: There exists a set of expectations with no express provision among every member, different managers and many others in a orgnization at any time. These expectations can be the requirements of the content of the economy, for e xample, wage used to be the return for work. In contrary to economy factors, the psychological contract is the intangible nature of mental content expectations.robinson and Rousseau(1994) proposed a more specific definition of the psychological contract. They believe that the psychological contract has not only the nature of expectations, but also the commitment on the obligation and reciprocity. Rousseau think that perception of obligations is much stronger than expectations. The extrem emotions and reactions generated by these obligations when the obligations are broken are much stronger than that when weaker expectations are broken. People will re-evaluation of individuals and organizations through the feelings of disappointment produced by breaking expectations and the mood of angry generated by breaking obligationgs. Most of the psychological contract is informal, and is implicit, rather than the public. Therefore, it is essentially subjective. Psychological contract is extremely important. Breach of contract will have a considerate impact on both individuals and organizations. Levision defined psychological contract as unwritten contract which is the sum of expectations on each other between organization and employees. Psychological contract puts emphasis on a set of expectations that is implied and not expressed between organization and employees. Kotter believes that psychological contract is a kind of implied contract which said pay and reward between orgnization and its employees. Wei Feng, a domestic scholar, thinks that psychological contract is the perception and understanding of exchange relations between both sides' responsibilities and obligations. By the above discussion, we can find that the definition on the psychological contract is not uniform. Scholars only give different aspects of the definition, but these discussions are still a lot in common. In conclusion, psychological contract is a set of contracts which is implicit or unexpressed including agreement on responsibilities and powers, return and pay between organization and employees. 1.2The difference between psychological contract and economy contract Psychological contract and economic contract has a very clear distinction. Economy contracts are formal, explicit and have legal effect which represents the agreement between the organization and employees. Psychological contract is informal,implicit and have no force of law which represents the expectations on each other between the organization and employees, but breach of psychological contract will also bring negative impact on performance. 1031

2 Form1. The difference between psychological contract and economy contract Content Process Individual expectaton Economy contract Money Disciplinary Money procedures Psychological Other incentive Right to understanding contract consultation Orgnization expectation Work morality Economic contract and psychological contract constitute perfect contrary relationship between orgnization and employees. Economic contract puts focus on orgnization's expectation to the quantity and quality of the employees' work and employees' expectation to the financial reward of the orgnization.it also makes rules about punishment when contract is broken and certainly has the power of the law.economic contract plays an important role in fulfilling the responsibilities and rights of protection between orgnizaton and employees. Psychological conract consititute the implicit part of the contract and pays more attention to factors other than money.in the agreement of psychological conract,orgnization's expectation is morality and individual employee's expectation is more understanding rewarded by orgnization.psychological conract has no force of law.it mainly depends on agreement between orgnization and employees to solve problems about breach.{see Table2.1} 2 Problems and causes in incentive mechanism for enterprise sales 2.1 Problems in incentive mechanism for enterprise sales Problems in performance management Performance management is a management process which reaches to unified framework about goals, standards and capacity according to agreement and then achieve better results through mature understanding. (1)Lack of strict, uniform, clear standards of performance appraisal. Performance evaluation criteria should be subject to specific, measurable, achievable, time-bound requirements, including quantity, quality, cost and time requirements. (2)The information degree of performance evaluation is low. Performance appraisal needs to record staff s signs data in its process. However, in many enterprises, the phenomenon of information s storage and use is difficult to be optimistic, especially in small enterprises. (3)Method used and main object in performance evaluation are simple. Performance appraisal can use many ways including: a written assessment method, critical incident method,the graph above grade assessment,alternate ordering method,paired comparison, forced distribution method, goal management, inventory method.it is difficult to make a comprehensive understanding of performance evaluation by using only one method. Subjects in the performance appraisal consists of a higher level assessment,peer assessment,self-assessment and under evaluation.these four assessment methods have its drawbacks, the most recent assessment model is 360 degree assessment,which considering the higher assessment, peer assessment, self-assessment and under evaluation together.this can overcome drawbacks of various subjects in performance evaluation to reach a comprehensive, objective assessment. (4)Means of incentive are over-singled. Means of incentive include process incentive and result incentive.process incentive consists of participation,motivation,goals motivation, communication motivation, duty motivation, evaluation of motivation, self motivation and growth motivation.results incentives include salary incentive, power motivation and negative motivation.compared with process incentive, we put more emphasis on result incentive.in result incentive,salary and power motivation play an very important role.process incentive and result incentive should be equally important in incentive mechanism.this is because, compared to result motivation, process motivation is a more positive incentive and plays a positive effect in advance.our enterprises generally lack this Problems in sales career planning People's careers generally include four phases: the growth stage of exploration into the career field, the 1032

3 sustained phase of career development, decline and exit stage. There is a big difference among person s needs,abilities,values and work behavior.reasonable career planning according to each person s character is an effect way for staff s self-growth and development of orgnization s performance.reasonable career planning helps sales person identify their stage in career development and furture direction.corporate sales person s career planning often has great blindness and it bring great difficulties to sales team s enthusiasm Problems in sales staff training and development of human resources Companies often do not work out srategic objectives of training and long-term planning for sales person,resulting in lack of training institutions,lack of teachers and training programs over-singled.lack of training and development, will inevitably affect the business performance improvement Problems in design and management of sales person s reward Reward and pay mechanism has an unique position in sales person s incentive mechanism, because it has three functions.compensation fuction makes up for sales person s mental ability,physical strengthe and energy in working process and it is a necessary requirement for sustainable supply of human resources;excitation function is combined with high salaries.as we know,high salaries are often linked to high rank.high salaries have the function that motivate sales staff,regulation function can play allocation of human resources. Most of the enterprises in our country brings bonus added to basic salary into incentive mechanism, which making sales person s job stability is low.periodic increment is difficult to fully implement according to the level of economic and social development policies. Sales person s periodic increment can not keep pace up with economic development and it is not enough Problems in salesman s welfare and insurance Many enterprises, especially SMEs, lack benefits and insurance for salesman and is difficult to make job stable. 2.2 Problem analysis in Company Sales Incentive mechanism External factors 1)Economic factors.corporate maturity is not enough,especially at the start time of the enterprises,many take extensive management. 2)Social and legal factors. Human relationship spread can cause much influence of inform organization within the organization,thus affecting the normal operation of formal organizations.employee s authority and obligation has not been reflected in the law because the development of law is behind the development of situation Internal factors 1) The competition is too prominent. Companies often put too much emphasis on competition instead of team work.in the over-emphasis on competition, salesman are not given enough help and support, making staff feel stressed and stifling. 2) Organizational inertia and resistance to change. The inertia of organization and operation impeds the change. 3 Construction of the psychological contract based on incentives of enterprise sales 3.1 Focus on individual differences Maintain the psychological contract in selection and recruitment process Each person s talent and character are different and enterprises should pay more attention to the difference about individual physical condition,personality traits,achievement level,intellect,temperament and family situation and other aspects in the process of selection and recruitment of salespeople. Organizations make the initial contact with individuals in selection and recruitment process. Therefore, in the process of selection and recruitment, the organization must take up a variety of effective means to enable individuals to fully understand the nature and meaning of work Companies must provide extensive training. Beginning training may include two aspects: business training s main purpose is to make sure that the 1033

4 business sales staff completely master the required professional knowledge and skills.the other side is work experience.this requires a new sales person to familiar with the organization s operations in the shortest time to enter the professional role under the guidance of experienced staff.at this time, organizations and individuals will gradually form the expectations of each other. If the organization can not provide adequate training to individuals, then the individual is likely to be difficult to achieve the organization's requirements quickly; if the lack of communication between the individual and the organization or organizations lack adequate understanding of individuals, then the individual is likely to have organized disappointed.these phenomena once occur, organizations and individuals can broke the psychological contract Build good human relations In high collectivist culture, individuals are more influenced by the behavior of other members of the community. This indicates that the harmonious interpersonal relationships is also important in the psychological contract. Sellers want organization to provide a suitable self-development and self-achievement environment. If there exits complex relationships and serious internal friction, it will cause breach of the psychological contract.creating good relationships is an extremely complex issue. For example, foreign scholar Eric Berne (1968) proposed "interaction analysis." The theory takes personality structure and interaction between people into account. The analysis and comparison of pure psychology is kind of trivial. However, the impact on interpersonal factors includes factors such as organizational culture and organizational design. In order to ensure harmonious relationships within the organization, it only creates a good organizational climate. 3.2 The psychological contract maintenance of performance assessment Reasonable working design Enrichment, autonomy and flexibility of job are also important in the psychological contract. Recent management practices already revealed a fact:tedious work will lead to reduction of employee s job satisfaction and work efficiency.the content about core dimensions of Job Characteristics Model(Hackman&Oldham,1980)includes:skill variety-the different skills required for the type;task identity-individuals can complete the whole,rather than doing them partly; the meaning of work job s effect on the lives of others; autonomy - workers should have decision-making freedom on how to complete their work; feedback if the evaluation of workers performance is correct,timely and effective. This suggests that organizations should give salespeople a richer content of the work Select the scientific ways and means of performance assessment. Scientific ways and means of performance assessment include written description, critical incident method, score table method, behavioral targeting score, comparison of many people, group sort, the individual ordering method, paired comparison, goal management method. Each method has its scope of application, advantages and disadvantages. Enterprise s performance appraisal should take different methods according to the specific assessment situation to get the best assessment of the results. Since performance appraisal is related to various forms of return of individuals, organizations must take a very careful and serious attitude to look at performance appraisal. Poor performance evaluation will undermine the psychological contract between individuals and organization Good communication and feedback The best way for good communication and feedback is to institutionaliza and procedure which can ensure the quantity and quality. 3.3 Salesperson s good management of career development Career management refers to an organization strengthen employee s awareness of his own capacity,potential and life-long career planning and strengthen the awareness of the link between organization s goals and personal development through means of advice and guidance according to its own goals and requirements of development,in order to encourage employees to achieve organizational goals while achieving their personal career development goals. At the same time, the organization resolves the multiple problems faced in the process and provides staff with the necessary professional development opportunity and means through a planned training, job design, selection and promotion, 1034

5 policies and activities of the exchange and the right man for job placement to motivate employees to personal advantage, strengths, to display their full potential. 3.4 Improve training and development of the human resource Make clear salesperson s working in sales and knowledge. Construct multi-level training system of novice training, promotion training and daily training. Rapid economic development results in business facing many challenges in contemporary society. This requires improving the quality, thinking, innovation and technical capabilities of the salesperson. The training is necessary requirement for enhancing the ability of sales staff. Put emphasis on values education. The main point of values is to let salesperson identify with organization s value and establish service and teamwork. Values play the role of flexible constraints and management, and can enhance the organization's cohesion and solidarity,and provide the Seller the "right things" direction. 3.5 Reconstruction of organizational Culture The organizational culture is a soft binding for the organization s management and operation. The purpose of reengineerin the organizational culture is build the new organizational culture which is "customer" oriented, with a strong service philosophy, and focus on efficiency and effectiveness. 4 Conclusion Psychological contract is attracted wide attention in the management of academic psychology and organizational behavior theories. This theory looks the expectations on each other between organization and employees as a hidden contract. It will bring negative impact on organization and employees performance once obeying or breaking the contract. Scholars make extensive and in-depth research on psychological contract from different angles. They use a lot of empirical validation to proof the positive impact for organizations and individual on psychological maintenance. This paper analyzes problems in salesman s incentive mechanism including performance management, career planning, training and development, compensation management, benefits and insurance and other aspects. The way to solve these problems is to construct salesman s incentive mechanism based on psychological contract. The approaches include paying more attention to individual differences, psychological contract maintenance in the performance evaluation, putting emphasis on staff career management, remuneration and welfare reform, the insurance system, norms, corporate culture change and so on. References [1]. Perter Makin.Cary Cooper.Charles Cox.Organizations and the Psychological Contract[M],Peking University Press,2000:5(in Chinese). [2]. Wei Feng.Zhang Wenxian.New Progress in Psychological Contract at home and abroad[j],management Science, 2005,8(5):82(in Chinese). [3]. Sun Boying.Qi Guanghua.Human Resource Development and Management in Public Sector [M].Beijing: China Renmin University Press :192(in Chinese). [4]. Bao Guoxian.Ren Yi. Majia Zhen. The research of Civil Service Performance Management Incentive [J]. Lanzhou University (Social Sciences).2010,38 (3): 9(in Chinese)7. [5]. Stephen P Robbins.Management(fourth edition)[m].huang Weiwei. Beijing: China Renmin University Press.2003,5:320(in Chinese). [6]. Perter Makin.Cary Cooper.Charles Cox.Organizations and the Psychological Contract[M],Peking University Press,2000:131(in Chinese). 1035