CONTENTS JSMAM VOLUME 9 , NUMBER 4 - FALL 2009 From the Editor 7 by Dan C. Weilbaker, Ph.D. ACADEMIC ARTICLES Psychological Climate Dimensions as Antecedents to Salespeople’s Organizational Commitment, Turnover, Success Beliefs and Performance 8 By Jeffery K. Sager, Alan J. Dubinsky, and Phillip H. Wilson Psychological Empowerment of Salespeople: Antecedents and Consequences By Rolph E. Anderson, Srinivasan Swaminathan and Frederick Hong-kit Yim Does the Quality of Consulting Related Behaviors Mediate the Relationship Between Those Behaviors and Salesperson Effectiveness? 28 43 By Alfred M. Pelham and Louis Tucci APPLICATION ARTICLE How to Minimize Realignment Issues: A Case Study 66 By Chuck Howlett Mission Statement The main objective of the journal is to provide a focus for collaboration between practitioners and academics for the advancement of application, education, and research in the areas of selling and major account management. Our audience is comprised of both practitioners in industry and academics researching in sales. ©2009 By Northern Illinois University. All Rights Reserved. ISSN: 1463-1431 Journal of Selling & Major Account Management Strategic Partner Northern Illinois University Journal of Selling & Major Account Management Subscription Form Name Company Title Address City State Zip Country E-Mail Phone Fax Subscription Type Domestic Individual— $50 Domestic Corporate— $60 Foreign Individual – $70 Foreign Corporate— $80 Payment Method Check Enclosed Please Bill Me Card Type: Visa Mastercard Credit Card Discover American Express Name as it appears on card Card Number Exp. Date Signature Mail This Form to: Dr. Dan C. Weilbaker JSMAM Northern Illinois University DeKalb, IL 60115 Or Fax this Form to: JSMAM Attn: Dr. Dan C. Weilbaker (815) 753-6014 We appreciate your help! If you know of colleagues who might benefit and would be interested in subscribing to The Journal of Selling & Major Account Management, please forward one of the subscription forms. Thank-you, Dan C. Weilbaker, Editor Place Stamp Here Dr. Dan C. Weilbaker Journal of Selling & Major Account Management Department of Marketing 128 Barsema Hall Northern Illinois University DeKalb, IL 60115 FOLD HERE Academic Article Fall 2009 Manuscripts 1.Articles for consideration should be sent by email to Editor: Dan C. Weilbaker, Department of Marketing Northern Illinois University, DeKalb, IL 60115 dweilbak@niu.edu. 2. Articles in excess of 6000 words will not normally be accepted. The Editor does welcome shorter articles and case studies. 3. A manuscript should be submitted via email to the Editor in Microsoft Word format, with author's name(s) and title of the article. Contributors are advised to check by telephone that submissions have been received. 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Wherever possible, full bibliographic details (e.g., volume number issue number or date, page numbers publisher year of publication) should be included. Footnotes - for clarification or elaboration should be used very sparingly. Footnotes should be typed at the bottom of the page and numbered consecutively throughout the text. 4. Any article or other contribution submitted must be the original unpublished work of the author(s) not submitted for publication elsewhere. 5. Manuscripts should be formatted on 8 1/2” x 11” paper with all margins of 1" and double-spaced. Font style should be Times New Roman in 12 pitch. 6. Cross references should not be to page numbers but to the text accompanying a particular footnote. 7. An address for correspondence (including Email address) should be supplied as well as a telephone and fax number at which the author(s) may be contacted. 8. Authors undertake the responsibility to check that the manuscript should be free of grammatical, syntax or spelling errors. The Editor reserves the right not to accept any manuscript in which excess alterations or corrections need to be made. PERMISSIONS Subscriptions To subscribe to Journal of Selling & Major Account Management, please go to www.cob.niu.edu/jsmam/subscription.asp or mail the subscription form to The Journal of Selling & Major Account Management,. 128 Barsema Hall, Northern Illinois University, DeKalb, IL 60115. Subscription prices are: U.S. Individual-$50; U.S. Corporation-$60; Foreign Individual-$70; Foreign Corporation-$80. EDITORIAL AND ADMINISTRATIVE STAFF EDITOR—Dan C. Weilbaker, Ph.D. McKesson Pharmaceutical Group Professor of Sales Department of Marketing Northern Illinois University dweilbak@niu.edu EUROPEAN EDITOR—Kevin Wilson Sales Research Trust Peyrenegre 47350 Labretonie France Kevin@sales-research-trust.org ASSISTANT—Joey Lata Administrative Assistant Professional Sales Program Department of Marketing Northern Illinois University jlata@niu.edu Vol. 9, No. 4 Journal of Selling & Major Account Management EDITORIAL BOARD Ramon A. Avila Earl D. Honeycutt Ball State University Elon University Terri Barr Thomas N. Ingram Miami University—Ohio Colorado State University Jim W. Blythe Mark C. Johlke University of Glamorgan Bradley University Pascal Brassier Buddy LaForge ESC Clermont - Graduate School of Management University of Louisville Terry W. Loe Steven Castleberry Kennesaw State University University of Minnesota—Duluth Daniel H. McQuiston William L. Cron Butler University Texas Christian University Peter Naude Laura Cuddihy Manchester Business School Dublin Institute of Technology Stephen Newell René Y. Darmon Western Michigan University ESSEC Business School Nikolaos Panagopoulos, Ph.D. Dawn R. Deeter-Schmelz Athens University of Economics & Business Ohio University Robert Peterson Bill Donaldson Northern Illinois University Aberdeen Business School Nigel F. Piercy Sean Dwyer University of Warwick Louisiana Tech University Richard E. Plank Paolo Guenzi University of South Florida, Lakeland SDA Bocconi Ellen Bolman Pullins, PhD John Hansen University of Toledo University of Alabama—Birmingham David Reid Jon M. Hawes Bowling Green State University Indiana State University Gregory A. Rich Bowling Green State University Northern Illinois University Fall 2009 From the Editor We are finally catching up with our publishing. This is the final issue of the 2009 Journal and we are well on our way to having two of the 2010 issues published before the end of the year. I want to thank the entire faculty that has submitted their work for consideration and all of the reviewers that do the work that they do to provide quality contributions. To completely catch up we still are in need of both academic contributions as well as practitioner articles. As a relatively new journal, we continue to work towards at least break-even with subscriptions since we do not accept advertising. We can use your help in getting the word out about the journal. Please consider passing along the subscription forms in the journal to your friends, associates or colleagues. In this issue we provide three academic articles and one practitioner article. The first academic article comes from authors that have published in some of the leading journals in our profession but they are new to the Journal. Their article deals with the salespersons psychological climate and how it acts as precursor to performance, turnover, success beliefs and organizational commitment (which has been a hot topic over the past few years). The second academic article is also from authors new to the Journal. Their article addresses the concept of psychological empowerment and looks at the consequences of the issue as well as the precursors. The third and final academic article is from an author that has published previously in the Journal. This article addresses impact of the quality of salesperson consulting behaviors and the salesperson’s effectiveness. The application article in this issue provides some new insights into how to manageterritory realignments that minimizes distractions and maximizes performance. The article takes the reader through a process and provides tips on how to have a new district up and running without the usual dip in performance as well as increasing the salesperson accountability for their new territory and helping other district salespeople. Our continued thanks also go to the University Sales Center Alliance for their financial support to help the journal while we build our subscriber base. Our thanks also go to the dedicated members of the Editorial Review Board and our ad hoc reviewers. Dan C. Weilbaker, Ph.D. Editor, The Journal of Selling & Major Account Management, McKesson Pharmaceutical Group Professor of Sales, Northern Illinois University Vol. 9, No. 4 8 Journal of Selling & Major Account Management PSYCHOLOGICAL CLIMATE DIMENSIONS AS ANTECEDENTS TO SALESPEOPLE’S ORGANIZATIONAL COMMITMENT, TURNOVER, SUCCESS BELIEFS, AND PERFORMANCE* By Jeffery K. Sager, Alan J. Dubinsky and Phillip H. Wilson Organizational climate plays an important role in a sales force environment. This study examines several dimensions of salespeople’s climate perceptions relative to performance and job turnover using organizational commitment and success beliefs as mediator variables. Direct and indirect relationships between constructs are tested using data obtained from a sample of telecommunications service salespeople. Study findings highlight the notion that salespeople’s perceptions of a firm’s senior management, immediate sales manager, support (non-sales) personnel, and the job directly and positively influence salesperson organizational commitment. In addition, a direct, positive relationship was observed between organizational commitment and salespersons’ success beliefs and between salespeople’s success beliefs and sales performance. A direct, inverse relationship between salespeople’s organizational commitment and job turnover was also obtained. Study results generally supported the proposed indirect mediating relationships. Through their direct relationships with organizational commitment, salespeople’s climate perceptions of non-sales employees, sales managers, senior management, and the job itself were related indirectly and positively to success beliefs. Also, organizational commitment, through success beliefs, was associated indirectly and positively to performance. The posited indirect relationship between salesperson climate perceptions and job turnover via organizational commitment, however, was not found. A variety of factors affect job responses (e.g., performance, turnover) of employees at any organizational level and position. Empirical research shows that an individual-level factor that can have an impact on salespeople’s jobrelated outcomes in particular is psychological (organizational) climate (e.g., Brown and Leigh 1996; Tyagi 1982). Notwithstanding its importance, the impact of psychological climate on salespeople’s performance and organizational commitment has been virtually ignored (see Brown and Leigh [1996] for an exception). The paucity of work in the foregoing area is surprising for several reasons. First, extant work has ascertained that psychological climate has an effect on such salesperson outcomes as motivation (e.g., Tyagi 1982), satisfaction (e.g., Northern Illinois University Evans, Landry, and Zou 2007), empowerment (Martin and Bush 2006), and job involvement and effort (e.g., Brown and Leigh 1996). Given that salespeople’s views of their work environment affect these foregoing job responses, logically one can presuppose that similar associations would hold for performance and organizational commitment. Second, examining relationships between psychological climate and performance and organizational commitment appears warranted owing to the fact that these latter two variables are the chief outcomes of interest to researchers in organizational behavior and to employers and employees (Colquitt, Lepine, and Wesson 2009). Therefore, ignoring these associations in a selling context appears questionable. Third, Fall 2009 9 Academic Article managers can have an impact on an employee’s psychological climate based on the interventions they take in helping shape the individual’s climate (e.g., Evans, Landry, and Zou 2007). Therefore, sales managers should have interest in ascertaining the efforts they can take to enhance salespeople’s work climate perceptions. Accordingly, the present study proposes and tests a model that links the way a salesperson perceives the context or climate of a work organization to his or her performance and organizational commitment. Climate is posited to have a positive impact on salespeople’s organizational commitment, which in turn is presumed to have a favorable effect on their success beliefs (a component of motivation). Success beliefs are posited to be positively associated with performance. Additionally, the linkage between organizational commitment and job turnover is examined to replicate previous work which has found that the former variable is a strong predictor of the latter (e.g., Sager, 1990). CONCEPTUAL HYPOTHESES FRAMEWORK AND Psychological climate, organizational commitment, success beliefs, turnover, and performance of sales personnel are the study variables and represent a web of potential phenomena that are interrelated. Based on previous empirical work, specific relationships explored in the investigation are described below and depicted in Figure 1. Dimensions of Psychological Climate Psychological climate of an organization is an individual-level construct comprising descriptive beliefs or perceptions held concerning work experiences (e.g., Denison 1996; James and James 1989). It encompasses an individual’s perceptions of the characteristics of the organization as well as the nature of the Figure 1 Specific Relationships Explored Perception of Senior Management Behavior (H 1) (H 5;H 6) Perception of Work Group Behavior (H7) (+) (H1) (+) (H5; H 6) Perception of Outside Group Behavior ( (+) H1) ) ;H6 (H5 (H Organizational Commitment Behavior (H2) (+) (+) 1) 6) (H 5;H Perception of Management Behavior (+) Success Beliefs (H3) Performance (+) (+) (H4) (H (H 1) 5;H 6) (-) Perception of Job Turnover Vol. 9, No. 4 10 Journal of Selling & Major Account Management relationships that person has with those with whom he or she works (Churchill, Ford, and Walker 1976). Employees appraise their work situation vis-à-vis whether it will be beneficial or harmful for their organizational well being (James and James 1989). As Brown and Leigh (1996, p. 359) aver: “It is important to study psychological climate because it is employee’s perceptions and valuations of the environment…that mediates attitudinal and behavioral responses.” Scholars differ regarding the components of psychological climate (James et al. 2007). Distilling the work on psychological climate by Brown and Leigh (1996), Denison (1996), and James and James (1989), five climate dimensions were used in the present work: (a) Perceptions of immediate work group behavior (i.e., behavior and attitudes of immediate coworkers) (b) Perceptions of outside work group behavior (i.e., behavior and attitudes of extended or distal work groups in the organization) (c) Perceptions of behaviors immediate manager or supervisor of the (d) Perceptions regarding the “organization” itself (e.g., senior management behavior) (e) Job-related perceptions (i.e., the job itself: its task components, customers, products, and performance objectives) The dimensions of climate categories correspond to the argument James and James (1989) advance that people are able to categorize perceptions toward jobs, leaders, work groups, and individual/organizational interfaces into separate internal compartments. Selected Consequences of Salespeople’s Psychological Climate Organizational Commitment. Mowday, Porter, and Steers (1982, p. 27) define organizational Northern Illinois University commitment as “the relative strength of an individual’s identification with and involvement in a particular organization.” It comprises both a positive affective attachment to and a behavioral intention to continue working in organization and is a form of attachment extant between employees and their company (Jaramillo, Mulki, and Marshall 2003). Success Beliefs. Bagozzi (1992, p. 182) characterizes success beliefs as the extent to which an individual believes that performing a goal-directed behavior results in success (´a la instrumentality of a behavior): “[an individual’s] predictions that if one tries to perform a goal-directed behavior, success or failure will result.” Success beliefs refer to an individual’s predictions regarding the consequences of performing a behavior (i.e., achieving or not achieving the goal) (Bagozzi, 1992). They do not pertain to one’s beliefs regarding ability to perform a behavior (selfefficacy) (Bagozzi and Warsaw 1990; Bandura 1977) or to feelings of success (the degree of felt success employees hold concerning their overall performance) (Brown, Cron, and Leigh 1993). Success beliefs have not been examined in prior work in sales. Job Turnover. Job turnover refers to a salesperson’s departure from membership in the firm. It is an extreme form of withdrawal whether voluntary or involuntary. In some cases turnover can have a salutary impact (e.g., when a poor performer opts to decamp from the company) (Jolson, Dubinsky, and Anderson 1987). When widespread, however, turnover of sales personnel can have a detrimental effect in an organization (Hair et al. 2009). Job Performance. Salesperson performance can be defined as execution of salesperson behaviors and the results of those behaviors on the achievement of organizational goals. Academic Article Performance can be viewed on both behavior and outcome bases (Oliver and Anderson 1994). In addition, it can have an impact on such issues as selection, recruitment, training, compensation, and supervision of sales personnel (Hair et al. 2009). Hypotheses Relationship between Psychological Climate and Organizational Commitment. Researchers investigating antecedents of organizational commitment have ascertained that it is associated with several contextual variables: leader behavior (Morris and Sherman 1981), job characteristics (Hunt, Chonko, and Wood 1985), commitment to top management goals (Reichers 1986), person-job fit (Werbel, Landau, and DeCarlo 1996), person-organization fit (Vilela et al. 2007), attitudes toward work, manager, and coworkers (Sager 1990), and manager behaviors (Agarwal and Ramaswami 1993). As such, we propose that salespeople’s perceptions regarding their immediate manager, coworkers and other work groups, upper management, and the job itself are positively related to organizational commitment (Sager and Johnston 1989). This expectation corresponds to scholars’ belief that organizational commitment is an outcome of socialization (e.g., Dubinsky et al. 1986; Sparks and Schenk 2006). Therefore, salespeople’s favorable perceptions of organizational climate involving the sales manager, other groups in the organization, fellow salespeople, and upper management developed through initial and ongoing socialization should heighten initial commitment to the organization (Muchinsky 2003). Hypothesis 1: Salespeople’s perceptions of their psychological climate are positively related to their organizational commitment. Fall 2009 11 Relationship between Organizational Commitment and Success Beliefs. As noted, Bagozzi (1992) characterizes success beliefs as to what extent an individual believes that performing a goaldirected behavior causes success. Blau and Boal (1987) promulgate that individuals possessing high organizational commitment and high job involvement (i.e., commitment to one’s work) are more likely to exert effort toward completing task-related activities as well as toward maintaining group membership. Essentially, they herald that involved, committed employees (“stars”) may be more motivated. The study model extends Blau and Boal’s (1987) ideas in that instead of interacting with job involvement, organizational commitment influences performance of salespeople through success beliefs. We postulate that identification with the organization and willingness to expend effort toward its goals (i.e., commitment to an organization) lead a salesperson to actively attempt to search for, learn, and absorb information relevant to the selling task, thus heightening success beliefs. Hypothesis 2: Salespeople’s organizational commitment is positively related to their success beliefs. Relationship between Success Beliefs and Sales Performance. Seligman (1998) theorizes that learned optimism—the evaluation of events and issues from a positive perspective—can be learned and that such learned optimism leads to rewards and fulfillment in a person’s life. Indeed, sales researchers have proposed that optimism and positive emotions can influence salespeople advantageously (e.g., Dixon and Schertzer 2005; Sujan 1999), but negative emotions can have a deleterious impact (e.g., Verbeke and Bagozzi 2000). Bagozzi’s (1992) notion of success beliefs reflects the idea that a salesperson can teach him/herself to be positive in perspective. Vol. 9, No. 4 12 Journal of Selling & Major Account Management Success beliefs may affect one’s “proximal motivation”: “…self-regulated processes aimed at the initiation and execution of goal attainment actions” (Jaramillo et al. 2007, 59). Whether the individual actually achieves set goals is predicated on the goal-directed behavior chosen and factors that facilitate and impede goal setting (Bagozzi 1992). Schulman (1999) observes that optimistic expectations have been found to be related positively to motivation and performance for employees in several research populations, sales among them. Hypothesis 3: Salespeople’s success beliefs are positively related to sales performance. Organizational Commitment and Turnover Behavior. Research findings across workplace contexts support a negative relationship between organizational commitment and intention to quit, a frequently used surrogate for turnover (e.g., Pettijohn, Pettijohn, and Taylor 2007). Moreover, organizational commitment has been ascertained to be a predictor of job turnover (e.g., Jaramillo et al. 2009). The study model proposes that organizational commitment mediates between climate dimensions and turnover. Hypothesis 4: Salespeople’s organizational commitment is inversely related to job turnover. Support for Organizational Commitment and Success Beliefs as Mediator Variables. The study model suggests that organizational commitment and success beliefs are mediator variables (Figure 1). Specifically, organizational commitment is expected to mediate relationships between salespersons’ climate perceptions and success beliefs and between climate perceptions and turnover behavior. Commitment is presumed to strengthen the relationship between climate dimensions and success beliefs and turnover. The Northern Illinois University model also implies that salespeople’s success beliefs mediate the relationship between organizational commitment and sales performance. Reasoning holds that success beliefs enhance the relationship between commitment and performance of sales personnel. Findings from organizational behavior research support a direct relationship between organizational commitment and performance (e.g., Becker et al. 1996). Recent research in the selling domain has found that organizational commitment is positively associated with salesperson performance (Mulki et al. 2008). Furthermore, a meta-analysis of the organizational commitment-performance nexus observed that the link between the two variables is stronger for sales employees than for nonsales employees (Jaramillo, Mulki, and Marshall 2003). Notably, though, organizational commitment explained only six percent of the variance in job performance. This finding implies that other mediating factors (such as success beliefs) between the two variables account for some of the unexplained variance between organizational commitment and performance. As such, the study model reflects the belief that commitment influences performance through success beliefs. Salespeople responding positively to the climate of their organization are presupposed to be more committed, to have stronger beliefs regarding their potential success in the market, and to be effective performers. Implications of the mediating role of the two variables are that the bulk of socialized influence for climate variables works through organizational commitment and that the impact of climate on performance works through organizational commitment and success beliefs. Hypotheses five and seven convey these Fall 2009 13 Academic Article expectations. Hypothesis six clarifies the expectation that salespersons’ organizational commitment mediates the influence of climate on retention of salespeople. A positive climate builds commitment, and commitment reduces turnover. Hypothesis 5: Salespeople’s organizational commitment mediates the relationship between salespeople’s psychological climate perceptions and success beliefs. Hypothesis 6: Salespeople’s organizational commitment mediates the relationship between psychological climate perceptions and job turnover. Hypothesis 7: Salespeople’s success beliefs mediate the relationship between organizational commitment and salesperson performance. METHOD Participants and Survey Administration Data were obtained through a survey of salespersons employed in the publishing arm of a large telecommunications firm. A salesperson in each district office was selected to administer the survey during a weekly sales meeting. The survey instrument tapped salespersons’ climate perceptions regarding district sales managers, sales divisions, senior management, other work groups, and their job, as well as their withdrawal intentions. The company provided sales performance and employment status data. The sample consisted of 343 salespersons drawn from fourteen sales divisions. Using an area canvass system, these salespersons sold Yellow Page advertising services to businesses. A total of 290 completed usable surveys were received, for an 85 percent response rate. Questionnaire The researchers reviewed relevant literature in sales management and organizational psychology to obtain the items that tapped the constructs of interest. The pre-survey process also included indepth interviews with germane host company personnel. The final survey instrument contained 50 items designed to represent the seven constructs included in the proposed model. All survey items were responded to on a 7-point Likert-type format, anchored by 1 = Strongly Disagree and 7 = Strongly Agree. Shown in Table 1 are the items used to represent the study constructs. The measures tapping psychological climate came from a panoply of sources. Both perceptions of work-group behavior and of outside group behavior were based on operationalizations offered by Dubinsky et al. (1986), James and James (1989), and Strutton, Pelton, and Lumpkin (1993). Drawing from James and James (1989), Netemeyer et al. (1997), Sager, Yi, and Futrell (1998), and Tyagi (1985), items were developed to measure salespersons’ perceptions of the immediate sales manager’s behavior. Six items specific to the context were identified as representing a salesperson’s perception of senior management behavior. Based on the work of Brown and Leigh (1996), James and James (1989), and Tyagi (1982), four items were used to represent salespeople’s job-related perceptions. The nine-item version of the Organizational Commitment Questionnaire (Mowday, Porter, and Steers 1982) was adapted to measure organizational commitment. Based on the operationalizations offered by Bagozzi (1992), five items were developed to capture success beliefs. Year-to-date percentage of the budgeted sales target achieved by a salesperson—the host company performance index—was used as an index of sales performance. Vol. 9, No. 4 14 Journal of Selling & Major Account Management Table 1 Scale Items and Construct Reliability Scale Items Cronbach’s Alpha Perceptions of Manager Behavior: My DSM coaches me on a regular basis.* My DSM effectively fends for our unit.* I can trust my DSM to back me on the decisions I make.* My DSM reinforces what I learned in XXX when I started.* My DSM explains the rationale behind any corrective counseling action.* My DSM listens to my side of any issue first.* I respect my DSM.* My DSM understands my personality.* My DSM manages all reps consistently.* My DSM gives me good suggestions regarding problems I encounter in selling.* I only hear from my DSM when something goes wrong. (R) My DSM holds my non-work obligations against me. (R) My DSM tries to schedule canvasses to fit around my personal needs. My DSM handles many of the details that would otherwise be dumped on me. % = .93 Organizational Commitment: Taking a job with XXX was one of my better decisions in life.* I think about leaving XXX every day. (R)* I cannot see myself working for another company.* I doubt I will be with this company six months from now. (R)* I regularly circulate my resume to other employers. (R)* Once I have established a track record here, I will start looking for another job. (R)* I plan to search for another sales job in the near future. (R)* XXX has shown a great deal of commitment to me. I took this job knowing that I will probably leave in a year or two. (R) % = .89 Perceptions of Senior Management Behavior: Senior management recognizes the contributions of the sales force.* Senior management makes decisions with the long run in mind.* Senior management sees that I have all the resources (technology, support) I need to sell.* I see little evidence that senior management trusts the sales force. (R)* Senior management cares about the opinions of sales reps, DSMs, and DMs.* My DM helps us see where our efforts fit into XXX’s business strategy. % = .84 Perceptions of Work Group Behavior: The atmosphere in my division helps me stay focused.* I look forward to hearing from other salespeople during the day.* The enthusiasm in my division is contagious.* People in this division care about one another.* In this division, issues and concerns are out in the open.* If I have a problem, there is always someone here who will help me. Others in my division took time to show me the ropes Northern Illinois University % = .79 Fall 2009 15 Academic Article Table 1 - continued Scale Items and Construct Reliability Scale Items Cronbach’s Alpha Perceptions of Job: My goal is to provide the advertiser with a plan that will bring them more business.* I really feel the products we sell help independent business people succeed.* My sales efforts are very valuable to XXX.* My goal is to exceed the budget, that’s all. (R) % = .78 Perceptions of Outside Group Behavior: I have to fight the system outside the division to place orders. (R)* Non-sales groups within XXX delay me in selling my ads. (R)* I find it unpleasant to deal with account management. (R)* I spend a disproportionate amount of time each day contacting non-sales operating areas. (R) Reps in other divisions use XXX policy against me. (R) % = .65 Success Beliefs: Performance targets are achievable* I am always uncertain that I will make budget. (R)* I am 80 percent confident that I can make or exceed the budget every pay period* I am confident I could move up in this organization if I so desire. I have trouble making budget because of outside responsibilities. (R) % = .65 * Denotes items retained for structural model measurement. (R) denotes items that were reverse scored. Note: DSM = District Sales Manager (first-line manager); DM = Division Manager (manages several districts). Salesperson employment status (stayed with or left the firm) over the eight-month interval following administration of the survey was used to measure turnover. RESULTS Measurement Model Initial factor analysis results revealed that ten of the fifty items in the measurement model crossloaded on multiple constructs or failed to load sufficiently. Consequently, these ten items were eliminated from further analysis. Subsequent analyses conducted with the remaining forty items supported a seven-factor structure (eigenvalues > 1.0; 61 percent of total item variance explained). Item loadings corresponded to the hypothesized constructs, thus suggesting suitable dimensionality (Table 2). Confirmatory factor analyses conducted as suggested by Anderson and Gerbing (1988), yielded acceptable model indices. Four items, though, exhibited unacceptably low squared multiple correlations and standardized loadings. After eliminating these four items, the respecified 36-item measurement model generated the following indices: χ2 (573 n = 290) = 892.19, p = .00; standardized RMR = .05; GFI = .86; AGFI = .83; NFI = .85; TLI = .93; CFI = .94; and RMSEA = .042. Thus, the overall measurement model fit was within ranges expressed by Hu and Bentler (1999) and Williams and Holahan (1994). Subsequent structural analyses of the seven constructs established their discriminant validity (Table 3). Vol. 9, No. 4 16 Journal of Selling & Major Account Management Table 2 Summary of Loadings for the Measurement Model Sq. Std. MultiConstructs and Items Loadple R ings Perceptions of Manager Behavior My DSM coaches me on a regular basis. My DSM effectively fends for our unit. I can trust my DSM to back me on the decisions I make. My DSM reinforces what I learned in XXX when I started. My DSM explains the rationale behind any corrective counseling action. My DSM listens to my side of any issue first. I respect my DSM. My DSM understands my personality. My DSM manages all reps consistently. My DSM gives me good suggestions regarding problems I encounter in selling. Organizational Commitment Taking a job with XXX was one of my better decisions in life. I think about leaving XXX every day. (R) I cannot see myself working for another company. I doubt I will be with this company six months from now. (R) I regularly circulate my resume to other employers (R) Once I have established a track record here, I will start looking for another job (R) I plan to search for another sales job in the near future. (R) Perceptions of Senior Management Behavior Senior management recognizes the contributions of the sales force. Senior management makes decisions with the long run in mind. Senior management sees that I have all the resources (technology, support) I need to sell. I see little evidence that senior management trusts the sales force. (R) Senior management cares about the opinions of sales reps, DSMs, and DMs. Perceptions of Work Group Behavior The atmosphere in my division helps me stay focused. I look forward to hearing from other salespeople during the day. The enthusiasm in my division is contagious People in this division care about one another. In this division, issues and concerns are out in the open. Perceptions of Job My goal is to provide the advertiser with a plan that will bring them more business. I really feel the products we sell help independent business people succeed. My sales efforts are very valuable to XXX. Northern Illinois University t- p< Value .46 .70 .75 .65 .48 . 38 .69 .49 .51 .69 .68 .84 .87 .81 .69 . 62 .83 .70 .71 .83 12.87 17.37 18.31 16.35 13.26 .001 .001 .001 .001 .001 11.44 17.16 13.45 13.68 17.11 .001 .001 .001 .001 .001 .60 .79 .34 .70 .48 .42 .78 .83 .59 .84 .69 .65 15.34 17.02 10.57 17.12 13.05 11.98 .001 .001 .001 .001 .001 .001 .73 .85 17.74 .001 .71 .53 .43 .50 .48 .85 .73 .66 .71 .69 17.06 13.73 12.00 13.18 12.81 .001 .001 .001 .001 .001 .61 .26 .72 .30 .30 .78 .51 .85 .55 .55 15.03 8.80 16.92 9.51 9.52 .001 .001 .001 .001 .001 .46 .68 11.58 .001 .69 .83 14.39 .001 .50 .71 12.17 .001 Fall 2009 17 Academic Article Table 2—continued Summary of Loadings for the Measurement Model Constructs and Items Perceptions of Outside Group Behavior I have to fight the system outside the division to place orders. (R) Non-sales groups within XXX delay me in selling my ads. (R) I find it unpleasant to deal with account management. (R) Success Beliefs Performance targets are achievable. I am always uncertain that I will make the budget. (R) I am 80 percent confident that I can make or exceed the budget every pay period. Sq. Multiple R Std. Loadings tValue p< .34 .61 .25 .58 .78 .50 9.20 12.33 7.86 .001 .001 .001 .67 .25 .25 .82 .50 .48 14.20 8.25 7.92 .001 .001 .001 Descriptive Goodness of Fit Indices: χ2 (573 N = 290), p=.00 892.19 Standardized RMR 0.051 GFI 0.86 AGFI 0.83 NFI 0.85 TLI 0.93 CFI 0.94 RMSEA 0.042 Structural Model Evaluations (Tests of H1 through H7) behavior and organizational commitment, however, were not supported. A correlation matrix (Table 4) of the summated construct measures was generated and used to evaluate the theorized model. To facilitate path analysis, item loadings of λ=.99 and λ=.95, respectively, were inserted to represent the directly observed constructs, performance and turnover. The theoretical model exhibited the following fit indices: χ2 (18 n = 290) = 67.21, p = .00; Standardized RMR = .06; GFI = .96; AGFI = .89; NFI = .89; CFI = .92; and RMSEA = .089. A path-by-path assessment of the structural model was undertaken, per Anderson and Gerbing (1988). A series of nested models was evaluated (Table 6), including the structural null, structural (hypothesized), and saturated models (Williams and Holahan 1994). Fit indices indicated the lowest AIC (112.78) and the lowest RMSEA (.06) for the hypothesized model. Shown in Table 5 are the standardized path coefficients along with their t-values and statistical significance for the hypothesized relationships (H1 - H7). Portrayed in Figure 2 are the paths tested along with their standardized path coefficients. Coefficients tend to provide overall support for the proposed relationships. All relationships, direct or indirect, that included a path between perception of work (sales) group Support existed for four of the five relationships tested under H1 (Table 5 and Figure 2). Salespersons’ perceptions of the (a) behavior of non-sales employees, (γ12 = .19, t = 1.89, p < .05), (b) behavior of salespersons’ sales < .025), (c) managers, (γ13 = .13, t = 2.11, p behavior of senior management, (γ14 = .31, t = 2.05, p < .025), and (d) sales job (γ15 = .17, t = 2.71, p < .005) were related directly and positively to organizational commitment. The posited direct, positive relationship between a Vol. 9, No. 4 18 Journal of Selling & Major Account Management Table 3 Assessment of Discriminant Validity: Chi-Square Difference Tests Models/Construct Pairs Model χ2 Unconstrained Measurement Model (d.f. = 573): All constructs are independent. D χ2 p< 1840.93 948.78 .001 1382.47 486.28 .001 1243.27 1212.63 1186.30 347.08 316.44 290.11 .001 .001 .001 1003.19 1127.55 1110.94 1121.53 1107.57 1009.52 989.27 107.00 231.36 214.75 225.34 211.38 113.33 .001 .001 .001 .001 .001 .001 .001 892.19 Constrained Models (d.f. = 574): Pairs of constructs constrained to one. Organizational Commitment & Perception of Manager Behavior Perception of Senior Management Behavior & Perception of Manager Behavior Perception of Senior Management Behavior & Organizational Commitment Perception of Work Group Behavior & Perception of Manager Behavior Perception of Work Group Behavior & Organizational Commitment Perception of Work Group Behavior & Perception of Senior Management Behavior Perception of Job & Perception of Manager Behavior Perception of Job & Organizational Commitment Perception of Job & Perception of Senior Management Behavior Perception of Job & Perception of Work Group Behavior Perception of Outside Group Behavior & Perception of Manager Behavior Perception of Outside Group Behavior & Organizational Commitment Perception of Outside Group Behavior & Perception of Senior Management Behavior Perception of Outside Group Behavior & Perception of Work Group Behavior Perception of Outside Group Behavior & Perception of Job Success Beliefs & Perception of Manager Behavior Success Beliefs & Organizational Commitment Success Beliefs & Perception of Senior Management Behavior Success Beliefs & Perception of Work Group Behavior Success Beliefs & Perception of Job Success Beliefs & Perception of Outside Group Behavior 93.08 954.91 58.72 .001 996.10 1012.43 990.16 923.70 942.15 953.13 989.46 941.63 99.91 116.24 93.97 27.51 45.96 56.94 93.27 45.44 .001 .001 .001 .001 .001 .001 .001 .001 Note: Critical α = .00246; Critical χ2 (1 d.f., p = .001) = 10.828; p = significance level. salesperson’s perceptions of the behavior of other salespersons (i.e., work group) in the organization and his or her organizational commitment was not supported (γ11 = .08, t = .60). H2 received empirical support. A direct, positive relationship was observed between the extent to which a salesperson felt committed to the Northern Illinois University organization and possessed favorable success < .001). beliefs (β21 = .75, t = 11.93, p Support was also provided for H3, which posited a direct and positive relationship between salespeople’s success beliefs and sales performance (β32 = .44, t = 6.65, p < .001). As H4 proposed, a direct, inverse relationship between a salesperson’s organizational Fall 2009 19 Academic Article 1 Table 4 Correlation Matrix of Study Constructs 2 3 4 5 6 7 1. PERDSM .93 2. ORGCOM 3. PERSM 4. PERWGRP 5. PERJOB .304** .288** .372** .182** .90 .483** .409** .259** .85 .620** .196** .79 .265** .78 6. PEROGRP .132** .318** .459** .255** .036 .66 7. SB 8. PERFORM .174** .118* .572** .276** .424** .052 .338** .046 .177** .095 .377** .027 .64 .378** 9. TURNOVER -.082 -.048 -.090 .059 -.027 -.105 .000 8 9 -.105 *p < .05 (2-tailed); **p < .01 (2-tailed). Note 1: PERDSM = Perception of Manager Behavior; ORGCOM = Organizational Commitment; PERSM = Perception of Senior Management Behavior; PERWGRP = Perception of Work Group Behavior; PERJOB = Perception of Job; PEROGRP = Perception of Outside Group Behavior; SB = Success Beliefs; PERFORM = Sales Performance TURNOVER = Voluntary Turnover. Note 2: Composite reliability coefficients of multi-item measures are reported on the diagonal. commitment and job turnover was found (β41 = -.11, t = -1.75, p < .05). Study findings generally supported the indirect mediating relationships proposed in H5 (Table 5). Through their direct relationships with organizational commitment, salespeople’s perceptions of the (a) behavior of non-sales employees (γ = .14, t = 1.87, p <.05), (b) behavior of sales managers (H (γ = .10, t = 2.08, p < .025), (c) behavior of senior management (γ = .23, t = 2.03, p < .025), and (d) job itself (γ = .13, t = 2.65, p < .025) were related indirectly and positively to success beliefs. Only perceptions of the work group were not found to be significantly associated (p > .05) with success beliefs. H6 did not receive empirical support. The indirect relationship between salesperson climate perceptions and job turnover via organizational commitment was in the desired direction, but not significant (p > .05). H7, though, was confirmed. Specifically, organizational commitment, through success beliefs, was related indirectly and positively with performance (γ = .33, t = 6.37, p < .001). DISCUSSION AND IMPLICATIONS Study findings support the overarching proposition that organizational commitment and success beliefs mediate (i.e., serve as intermediary factors between) salespeople’s psychological climate perceptions, job turnover, and performance. Apparently, salespeople develop a deeper commitment to the organization if they hold auspicious perceptions of their support personnel, immediate sales manager, senior management, and job. These findings undergird previous theoretical conceptualizations and empirical findings discussed in the socialization Vol. 9, No. 4 20 Journal of Selling & Major Account Management Table 5 Path Model Estimation Results Direct Relationships H Std. Path t-Value Sig. Path Coeff. H1 γ11 .08 0.60 n.s H1 γ12 .19 1.89 .050 H1 γ13 .13 H1 γ14 .31 2.05 .025 H1 γ15 .17 2.71 .005 H2 β21 .75 11.93 .001 H4 β41 -.11 -1.75 .050 .44 6.65 .001 Std. Path t-Value Sig. p≤ Perceptions of Work Group Behavior Perceptions of Outside Group Behavior Perceptions of Manager Behavior 2.11 .025 Perceptions of Senior Management Behavior PERSM ->ORGCOM Perceptions of Job Organizational Commitment ORGCOM -> SB ORGCOM -> TURNOVER Success Beliefs H3 Indirect Relationships β32 Coeff. p≤ PERWGRP -> ORGCOM ->SB (H5) .06 .60 n.s PEROGRP -> ORGCOM -> SB (H5) .14 1.87 .050 PERDSM -> ORGCOM -> SB (H5) .10 2.08 .025 PERSM -> ORGCOM -> SB (H5) .23 2.03 .025 PERJOB -> ORGCOM -> SB (H5) .13 2.65 .025 PERWGRP -> ORGCOM -> TURNOVER (H6) -.01 -.57 n.s PEROGRP -> ORGCOM -> TURNOVER (H6) -.02 -1.28 n.s PERDSM -> ORGCOM -> TURNOVER (H6) -.01 -1.35 n.s PERSM -> ORGCOM -> TURNOVER (H6) -.03 -1.33 n.s PERJOB -> ORGCOM -> TURNOVER (H6) -.02 -1.47 n.s ORGCOM -> SB -> PERFORM (H7) n.s. = Not significant .33 6.37 .001 Northern Illinois University Academic Article Fall 2009 21 Figure 2 Path Estimates (Standardized Path Coefficients) for the Salesperson Performance and Turnover Model (e.g., Schneider and Reichers 1983; Van Maanen and Schein 1979) and organizational commitment (e.g., Caldwell, Chatman, and O’Reilly 1990) literatures. Empirical work in these two areas suggests the considerable impact that interactions with both managers and coworkers plays in shaping an employee’s commitment to the organization. Importantly, the behavior senior management models to the sales force has an effect on the image salespeople carry of the company and its products (Hair et al. 2009). The positive relationship observed between salespeople’s perceptions of the actions taken by senior management and salespersons’ organizational commitment is particularly relevant in light of the finding in this study that such a perception is more instrumental in shaping commitment to the organization (γ14 = .31) than are perceptions regarding the actions of the immediate sales manager (γ13 = .13). Salespeople’s perceptions of the working situation with their immediate sales manager were found to have a beneficial impact on their commitment to the firm. Peradventure the favorable feelings sales personnel have toward their sales manager induces a personal loyalty toward that individual, particularly in a geographically-dispersed sales organization where the experienced commission salesperson functions in a semi-autonomous role. Such salutary affect may conduce to heightened loyalty to the manager and thus to enhanced organizational commitment. Further research is Vol. 9, No. 4 22 Journal of Selling & Major Account Management Table 6 Nested Path Models (Comparing Model Fit) Models d.f. χ2 AIC NFI TLI CFI RMS Model(UF) 36 619.72 866.01 0 0 0 Model(SN) 26 340.45 396.01 .45 .25 Model(T-1) 19 74.52 118.63 .88 Model(T-1A) Model(T) 19 18 70.69 67.21 112.96 112.78 Model(T+1) 17 67.13 114.36 Model(SS) 0 0 GFI AGFI .28 Std. RMR .26 .61 .51 .46 .21 .21 .78 .63 .82 .90 .093 .064 .95 .88 .89 .89 .83 .83 .91 .92 .087 .089 .063 .06 .96 .96 .89 .89 .89 .82 .91 .092 .061 .96 .89 Model(UF) = Model with no correlated factors and no relationships specified for latent variables. Model(SN) = Path model with correlated exogenous constructs but with no other relationships specified. Model(T-1) = Reduced path model in which the path from perception of identity to organizational commitment is deleted. Model(T-1A) = Reduced Model in which the path from perception of outside group behavior to organizational commitment is deleted. Model(T) = Model proposed in the study. Model(T+1) = Proposed model with an added path from perception of manager behavior to performance. Model(SS) = Fully saturated model. necessary to explore this possibility. The findings further indicate that salespeople who develop greater commitment to the organization also possess increased success beliefs and exhibit greater performance. These linkages are likely based on the nature of relationship expected between organizational commitment and sales performance. Support for indirect relationships between salespeople’s psychological climate perceptions and success beliefs suggests that climate dimensions, through their impact on organizational commitment, influence the extent to which salespeople feel positive and optimistic about achieving the outcomes of their job-related activities. The more favorable are salespeople’s perceptions regarding (a) the behaviors and Northern Illinois University actions of their immediate superior, (b) the dedication and direction of senior management, (c) the capabilities of employees in support departments, and (d) the nature of their own jobs, the greater is their commitment to the organization and the greater is their belief that performing sales-related activities will result in success. As noted in the results section, perceptions of behaviors of the salespersons in the work group have little influence on salespersons’ commitment to an organization. As compared to non-sales members of an organization, the interaction a salesperson has with other salespersons at the same level is typically limited. A salesperson’s job necessitates spending a significant number of work hours interacting with current and potential customers and non- Academic Article sales (support) workers, thus leaving less time for interaction with other salespersons in the work environment. (Salespersons in the study sample, for instance, worked out of their cars on area canvasses or in separate offices). Such isolation may inhibit esprit de corps and impair social learning, thus not affording the favorable impact that salesperson propinquity could have on sales personnel vis-à-vis organizational commitment. MANAGERIAL IMPLICATIONS Study findings offer several suggestions for sales management practice. First, the study demonstrated the important influence both sales managers and non-sales co-workers play in shaping a sales employee’s commitment to the organization. Sales organizations, therefore, need to exert efforts to strengthen interfaces between sales personnel and immediate and upper-level sales management, as well as with non-sales peers (e.g., order-processing personnel, customer service employees). Endeavors could include exchange of critical information among these key players via formal and informal meetings, written and electronic correspondence, social settings, and short-term job rotation. A major goal of such activities is to provide each party with the other member’s work perspective. Second, actions taken by senior management may well have greater influence on a salespersons’ commitment to the organization than their immediate sales supervisor. This phenomenon may occur because the salesperson is likely to equate senior management with the mission, direction, and values of the organization. Salespeople might view their immediate sales manager, though, as an entity separate from sales organization. By articulating the firm’s objectives and values, senior management affords sales personnel opportunity Fall 2009 23 to discern their fit with the company—the more compatible they are with the organization’s milieu, the more enhanced is their commitment to the company. Third, salespeople’s perceptions of the work situation with their immediate sales supervisor can also have a positive impact on their commitment to the company. If salespeople possess favorable feelings toward their sales manager, they might well develop personal loyalty toward him or her. This enhanced fidelity to the manager may well foster augmented organizational commitment. Accordingly, sales supervisor deportment with sales subordinates should be mutually beneficial, supportive, and respectful. Fourth, an organization should strive to develop commitment among new salespeople and, as well, provide sales training that reinforces new salespersons’ beliefs that success is achievable. Efforts should be directed at increasing salespeople’s confidence in their ability to perform their jobs effectively and efficiently. Therefore, sales supervisors could provide basic sales training and ascertain which new salespeople are to receive that training. An implication is that basic selling training is needed in most contexts where new salespeople are indoctrinated. Fifth, study results revealed that perceptions of behaviors of the salespersons in the work group have little influence on salespeople’s organizational commitment. Because a salesperson tends to have limited interaction with other salespersons in the organization, the salesperson-sales manager interaction appears to become more relevant in determining the salesperson’s relationship with the organization. Accordingly, the salesperson is likely to become more dependent on his or her immediate sales Vol. 9, No. 4 24 Journal of Selling & Major Account Management manager rather than on other sales personnel for information, support, and feedback. Sales managers thus need to attend to their sales subordinates so that sales personnel will feel comfortable asking their sales manager for assistance. Sixth, upper management efforts ultimately can assist to enhance success beliefs of salespersons and increase sales force retention. Organizational commitment can be enhanced by facilitating a positive psychological work climate. Ensuring that a salesperson’s psychological climate is favorable involves regular and positive interactions with senior management, sales managers, and support personnel. Cespedes (1995) suggests structures and mediation that may facilitate perceptions of a more favorable work climate. LIMITATIONS RESEARCH AND FUTURE Because data were collected through a crosssectional research design, any causal inferences made must be made with care. Accordingly, future research should be undertaken longitudinally. An intriguing research question is how salespeople’s psychological beliefs change over time. Additionally, interest could focus on how those changes influence their work-related responses. In using the findings, the nature of the sales force studied needs to be considered. Results of this study may, therefore, be more pertinent only to those sales forces where advertising is sold or where compensation is largely incentivebased (Yellow Page advertising in the current work). Conducting similar research with sales personnel drawn from several types of sales organizations will increase confidence in the Northern Illinois University applicability of the results obtained. The study model was deliberately underspecified. It omitted other antecedents of commitment identified in the literature (e.g., job satisfaction, job involvement, selected components of motivation) and therefore does not consider their impact on organizational commitment or their possible indirect impact on success beliefs, sales performance, and job turnover. Absence of key variables likely affected the goodness of fit indices for the model. One avenue for future research would be to include such antecedents and evaluate their direct and indirect influences on the constructs examined here. Finally, the present study used solely an objective company index to measure sales performance. Salesperson performance, though, is multifaceted (Hair et al. 2009). Therefore, a useful extension to this study could involve the inclusion of both objective and behavioral dimensions. Jeffrey K. Sager , Professor of Marketing, University of North Texas, Denton, Texas Email: sager@cobaf.unt.edu Alan J. Dubinsky, Dillard Distinguished Professor of Marketing Dillard College of Business Administration Midwestern State University 3401 Taft Boulevard , Wichita Falls, TX 76308 and Research Fellow, Center for Sales Innovation, St. Catherine University St. Paul, MN and Professor Emeritus, Purdue University West Lafayette, IN Email: dubindksy@purdue.edu Phillip H. Wilson, Assistant Professor of Marketing, Midwestern State University, Wichita Falls, Texas Email: phillip.wilson@mwsu.edu Academic Article REFERENCES Agarwal, S. and S.N. Ramaswami (1993), “Affective Organizational Commitment of Salespeople: An Expanded Model,” Journal of Personal Selling and Sales Management, 13 (2), 49 -70. Anderson, J.C. and D.W. 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(1999), “Optimism and Street-Smarts: Identifying and Improving Salesperson Intelligence,” Journal of Personal Selling and Sales Management, 19 (Sumer), 17-33. Tyagi, P.K. (1982), “Perceived Organizational Climate and the Process of Salesperson Motivation,” Journal of Marketing Research, 19 (May), 240-254. Vol. 9, No. 4 28 Journal of Selling & Major Account Management PSYCHOLOGICAL EMPOWERMENT OF SALESPEOPLE: SALESPEOPLE: ANTECEDENTS AND CONSEQUENCES By Rolph E. Anderson, Srinivasan Swaminathan, and Frederick Hong-kit Yim In this era of customer relationship management (CRM), companies that successfully empower their salespeople may obtain substantial advantages over competitors. Guided by social cognitive theory, we analyze the extant empowerment literature to develop an integrative conceptual framework to help sales managers understand how psychological empowerment of their salespeople may increase customeroriented selling, salesperson job satisfaction, and customer satisfaction. A conceptual model and several research propositions are presented to advance our understanding of psychological empowerment for salespeople, followed by a discussion of the implications for academic research and sales management practice. Finally, guidelines are offered to sales managers for psychologically empowering their salespeople. INTRODUCTION In recent years, employee empowerment has been garnering heightened attention among organizational researchers and business practitioners (Birdi et al. 2008). Growing interest in the empowerment concept is attributable, at least in part, to intensifying domestic and global competition that demands seller initiative and innovation in satisfying customers (Hair et al. 2009), the empirically validated relationship between empowerment and job performance (Liden, Wayne, and Sparrowe 2000), and the manifest move toward customer oriented selling and customer relationship management (CRM) in the twenty-first century (Kotler and Keller 2009, p. 133). Empowerment is a process whereby an organization, through its management, provides power to employees (Sagie and Koslowsky 2000, p. 81). Notwithstanding its widespread advocacy (Menon 2001), however, there is scant agreement on the definition and dimensions of the concept of empowerment (Melhem 2004, p. 73. According to Menon (2001), there are three conceptualizations of empowerment. First, Northern Illinois University empowerment can be considered an act: the act of granting power to subordinates. Second, it can be conceived as a process that involves both the release of power by managers and the experiencing of power by subordinates. Third, it can be considered a psychological state that manifests itself as cognitions in those being empowered. In support of the latter two conceptualizations, Robbins, Crino, and Fredendall (2002) aver that empowerment is a cognition-shaping rather than action-changing process that must occur within the mind-sets of both managers and salespeople. Despite the lack of agreement on its precise definition, empowerment is crucial for salespeople, given the necessity for them to provide tailored responses to changing customer expectations, the urgency to successfully handle complaints so as to turn initially dissatisfied customers into satisfied ones, and to help alleviate the role stress incurred in their boundary spanning jobs between seller and buyer organizations (Anderson and Huang 2006). Moreover, with salespeople increasingly perceived as the ultimate customer relationship Academic Article managers (Palmatier et al. 2008), empowerment can be a valuable tool for sales managers in motivating salespeople to build and nurture lasting customer relationships (Yim, Anderson, and Swaminathan 2004). To date, the empowerment construct remains under-researched despite its relevance and importance to service employees, especially for major account business-to-business salespeople (Anderson and Huang 2006). Its understanding in the sales literature is severely deficient as scant efforts have been made to rigorously link sales force empowerment to customer outcomes such as service quality perception and satisfaction (Sparks, Bradley, and Callan 1997). Only limited attempts have been made to look into the mechanism of how customer satisfaction or salesperson job satisfaction can be enhanced via salesperson empowerment, and a comprehensive conceptual framework incorporating the antecedents and consequences of empowerment in a sales setting has yet to be developed (Menon 2001, p. 154). In response to the call for a unifying model capable of integrating the diverse concepts and relationships that characterize the empowerment process (Robbins, Crino, and Fredendall 2002), the present investigation is designed to provide an integrative conceptual framework to more thoroughly understand how empowerment can impact both major account salesperson and customer outcomes in a sales setting. In particular, we focus on the construct “psychological empowerment” for two reasons. First, the benefits of empowerment will be actualized only if the salespeople actually perceive empowerment, i.e., they feel a psychological state of empowerment (Menon 2001, p. 158). Second, compared with the traditional managerial understanding and Fall 2009 29 practices of empowerment, it has received comparatively little attention as a psychological construct from the subordinate perspective (Dee, Henkin, and Duemer 2003, p. 258), particularly in a sales milieu. Therefore, we attempt to identify the critical antecedents and consequences of psychological empowerment of salespeople. To the best of our knowledge, this is the first attempt to comprehensively address the psychological aspects of empowerment in a sales environment. Drawing upon literature spanning across the disciplines of management, marketing, psychology, and sociology, we propose an integrated conceptual model depicting the psychological empowerment of salespeople. In accordance with the model, a number of research propositions are offered, followed by a discussion of their implications for academic research and improved sales management practice, including specific recommendations. E X TA N T RESEARCH EMPOWERMENT ON The concept of sales force empowerment seems particularly relevant to sales force management in this early twenty-first century where customer relationship selling is of ever-increasing importance (Kotler and Keller 2009). Salespeople need greater latitude over their selling and service activities to innovatively create superior added value for customers and thereby build profitable, long-term relationships with them. Given the extent of salespersoncustomer interaction and negotiation, an appropriate degree of responsiveness and flexibility for salespeople is needed to satisfy the ever changing needs of customers. Today, salespeople have instant access to information (e.g., price changes, inventory levels, new product introductions, promotional campaigns, Vol. 9, No. 4 30 Journal of Selling & Major Account Management or delivery dates) that used to be provided only through sales managers. Yet, most contemporary salespeople are still dependent on their sales managers for approval on anything exceptional that a customer requests in negotiations, such as special price discounts, credit for unsatisfactory products, accelerated delivery or installation dates, or unique service arrangements. And, most salespeople remain in the dark as to the profitability of different prospects or customers because that information is restricted to sales managers (Anderson and Huang 2006). Empowerment is aimed at “turning the front line loose” to use their knowledge, initiative, and creativity to promptly and fully satisfy customers in face-toface interactions (Bowen and Lawler 1992, p. 32). Sales force empowerment can provide major benefits to both the selling firm and its salespeople by enabling timely “on-the-spot” responses to customer requests, faster resolution of customer complaints, and more trusting interactions with customers (Bowen and Lawler 1992). Overall, salesperson empowerment seems highly conducive to not only meeting but exceeding customer expectations (Martin and Bush 2003) and bringing about long-term customer satisfaction and loyalty (Chow, Sha, and Hong 2006). To date, organizational policies and practices have largely characterized empowerment from a macro perspective (Seibert et al. 2004) at the managerial level. From a managerial perspective, empowerment has been viewed variously as participative management (Block 1987), job involvement (Rafiq and Ahmed 1998), and a managerial control mechanism (Chebat and Kollias 2000). However, when viewed from a micro (Seibert et al. 2004) or psychological perspective at the Northern Illinois University employee level, empowerment has been conceptualized as a motivational construct (e.g., Conger and Kanungo 1988; Spreitzer 1995). In the present study, we focus on the construct “psychological empowerment” for two major reasons. First and foremost, we argue that sales force empowerment will be effective and beneficial only if salespeople actually perceive or experience empowerment, i.e., they sense the psychological state of empowerment (Menon 2001, p. 158). Individual salespeople may respond differently to the same managerial efforts toward empowerment, and such initiatives will be efficacious only if salespeople feel personally empowered and experience an altered emotional state (Lashley 1998, p. 142). “Creating an empowered state of mind” (Bowen and Lawler 1995, p. 73) is paramount, thus the importance of fully understanding the construct “psychological empowerment” merits incisive inquiry (Spreitzer 1995). Second, the majority of research conducted to date has focused on the managerial perceptions and practices of empowerment, so relatively few research efforts have been devoted to understanding empowerment as a psychological construct from the perspective of subordinates (Dee, Henkin, and Duemer 2003, p. 258). This deficiency in understanding the construct of “psychological empowerment,” especially in a sales context, calls for more investigation and understanding because the potential benefits for managers, salespeople, and customers may be substantial. PSYCHOLOGICAL EMPOWERMENT Building upon seminal work by Conger and Kanungo (1988) and Thomas and Velthouse (1990), empowerment is operationally defined as a psychological or motivational construct Fall 2009 31 Academic Article manifested by a set of four cognitions (task assessments) reflecting the individual’s orientation toward his or her job role: meaningfulness, impact, competence, and choice. As defined by Thomas and Velthouse (1990, p. 672), meaningfulness is the individual’s intrinsic caring about a given task and is concerned with the value of the task goal judged in relation to the individual’s own value system. Impact is understood by the degree to which the individual perceives that his or her behavior makes a difference in terms of accomplishing the task purpose. Competence is the degree to which a person can perform task activities skillfully when he or she tries. Choice involves causal responsibility for a person’s actions. These four dimensions are considered “the essential prerequisites for the motivated individuals to engage in empowered behaviors in the work environment” (Robbins, Crino, and Fredendall 2002, p. 422). As a whole, this approach is predicated on the “perception aspect” where empowerment is the “psychological state of a subordinate” resulting from efforts by his or her supervisor (Lee and Koh 2001, p. 686) and/or the organizational empowering structures, policies, and practices (Seibert, Siler, and Randolph 2004, p. 332). Let's now turn to the antecedents and consequences of psychological empowerment of salespeople, and formulate a series of testable propositions. C O N C E P T UA L MODEL OF PSYCHOLOGICAL EMPOWERMENT OF SALESPEOPLE Figure 1 depicts the antecedents and consequences of psychological empowerment of salespeople. Focusing on psychological empowerment from the subordinate perspective Figure 1 Conceptual Model of Psychological Empowerment of Salespeople Consequences Antecedents Salesperson Satisfaction Work Environment - Sociopolitical Support + + + Managerial - Discretion Empowerment Job Characteristics -Task Significance -Task Identity -Skill Variety -Task Autonomy -Task Feedback + + Psychological Empowerment + + Customer-Oriented Selling + Customer Satisfaction Vol. 9, No. 4 32 Journal of Selling & Major Account Management instead of the widely researched managerial perspective of empowerment emphasizes the mediating link between empowering acts and outcomes such as satisfaction for salespeople and customers (Menon 2001, p. 158). Underlying this model are individual (cognitive and affective), behavioral (outcomes and consequences), and environmental (work setting characteristics) factors, which in accord with social cognitive theory (Bandura 1986) emphasize individual perceptions and interpretations of behavior and attitudes within a work environment. To better understand and analyze the salesperson's feelings of empowerment, let's examine the antecedents to psychological empowerment in more detail. ANTECEDENTS TO PSYCHOLOGICAL EMPOWERMENT Drawing upon organizational behavior research, we explore three sets of factors as important antecedents to psychological empowerment: sociopolitical support, discretion empowerment, and job characteristics (e.g., Kraimer, Seibert, and Liden 1999; Spreitzer 1996). Sociopolitical Support Within the Work Environment Sociopolitical support is defined as “endorsement or approval from or legitimacy granted by organizational constituencies and is typically gained from membership in organizational networks” (Spreitzer 1996, p. 488). This support commonly involves an individual’s boss, subordinates, peers, and members in his or her work group. Membership in such support networks facilitates and enhances social exchange with key organizational constituencies and thus engenders a sense of personal acceptance and power, which may be manifested in augmented Northern Illinois University feelings of both self-determination and impact (Spreitzer 1996). Conversely, Gist and Mitchell (1992) argue that a lack of support from key constituencies may thwart feelings of competence, underscoring the importance of sociopolitical support in enhancing feelings of empowerment. Behaviors are affected by social relations and embedded in a social structure (Granovetter 1985). Participants in the social structure such as salespeople spanning the boundary between the seller and buyer organizations share tacit information, jointly solve problems (Uzzi 1997), and acquire knowledge from repeated and enduring exchange relationships (Inkpen and Tsang 2005). A supportive social network leads to increased feelings of competence (Spreitzer 1995) and thus enhanced empowerment. With sociopolitical support within the work environment, salespeople are likely to be more energized and to experience greater empowerment (Corsun and Enz 1999). Therefore: P1. Sociopolitical support enhances psychological empowerment of the salesperson. Managerial Discretion Empowerment. Conceptualized as the management practice of giving subordinates “the discretion to make dayto-day decisions about job-related activities” (Bowen and Lawler 1992; Hartline and Ferrell 1996), managerial discretion empowerment provides salespeople greater latitude in negotiating with prospects and customers. Kelly (1993, p. 104) stresses that when employees are truly empowered they experience greater freedom to exercise their own discretion during service provision. Allowing salespeople more discretion in their sales Academic Article negotiations and other interactions with customers would seem to be an essential prerequisite for boosting feelings of empowerment for salespeople. Furthermore, when prospects and customers see that the salesperson has the power and flexibility to resolve issues and make concessions without a time-out to obtain the approval of a manager, they feel more respect for the salesperson and more empowered themselves because they are dealing with someone with decision making authority. Therefore: P2. Discretion empowerment enhances psychological empowerment of the salesperson. Job (Task) Characteristics According to Hackman and Oldman (1976), there are five core job dimensions germane to motivation in the realm of job or task characteristics: skill variety, task identity, significance, autonomy, and feedback. As perceptions of empowerment arise from task assessments involving meaning, impact, competence, and self-determination (Thomas and Velthouse 1990), job characteristics are considered proximal predictors of psychological empowerment. While job characteristics are designed to measure the objective aspects of tasks, psychological empowerment is reflective of employees’ emotional responses to their work (Kraimer, Seibert, and Liden 1999). If the job task is significant and has a substantial impact on the lives or work of other people (Hackman and Oldman 1976), the salesperson’s perception of meaning is likely to be heightened and thus his or her feelings of empowerment are augmented. An autonomous task provides freedom to the salesperson in scheduling the work and determining the procedures to be Fall 2009 33 undertaken (Hackman and Oldman 1976) which are conducive to the feelings of self-determination and therefore psychological empowerment. Furthermore, positive direct and immediate task feedback from customers and superiors gives the salesperson clear information concerning his or her performance effectiveness (Hackman and Oldman 1976), thereby fostering feelings of competence (Kraimer, Seibert, and Liden 1999). In addition, prompt feedback allows cognitive assessments of impact (Liden, Wayne, and Sparrowe 2000) because “an individual is unlikely to be able to exert influence without knowledge of results” (Kraimer, Seibert, and Liden 1999, p. 130). The knowledge of results or feedback is therefore considered an important precursor to exerting influence or impact in a sales environment and generating feelings of empowerment. Prior research supports the contention that job characteristics are positively related to psychological empowerment (e.g., Kraimer, Seibert, and Liden 1999; Liden, Wayne, and Sparrowe 2000). Thus, we formulate the following proposition: P3. Job characteristics affect psychological empowerment of the salesperson. C O N S E Q U E N C E S O F PSYCHOLOGICAL EMPOWERMENT Specifically, we investigate salesperson job satisfaction, customer-oriented selling, and customer satisfaction as impor tant consequences of psychological empowerment as suggested in the extant literature (Peccei and Rosenthal 2001). Salesperson outcomes—Job satisfaction Job satisfaction can be defined as “an attitude stemming from an evaluative process in which the employee's perceived actual work Vol. 9, No. 4 34 Journal of Selling & Major Account Management environment is compared to a perceived standard” (Homburg and Stock 2005, p. 397). Thus, if salespeople can find meaning in their jobs (Spreitzer 1995) congruent with and fulfilling their desired work values, they are more apt to be satisfied. What's more, if salespeople feel competent, they are more likely to be confident and satisfied with their jobs. Furthermore, salespeople exhibiting higher selfdetermination can more readily attribute success to themselves, likely leading to greater job satisfaction. Consequently, we formulate the following proposition: P4. Psychological empowerment of a salesperson enhances his or her job satisfaction. Salesperson outcomes—Customer-oriented selling Customer-oriented selling has been described as “the practice of the marketing concept at the individual salesperson and customer levels” (Saxe and Weitz 1982, pp. 343-344). In their seminal work, Saxe and Weitz elaborate on the characteristics of customer-oriented selling as exemplified by the desire to help customers make satisfying purchase decisions by assisting them in assessing their needs, then accurately describing offerings that will satisfy those needs while avoiding manipulative influence tactics and the use of high pressure. Customer-oriented selling has been widely advocated by sales organizations in an effort to improve customer service and therefore achieve performance goals (Flaherty, Dahlstrom, and Skinner 1999). Achieving customer service excellence and implementing a CRM strategy are both predicated on salespeople exhibiting a strong customer-orientation to attain customer satisfaction (Saxe and Weitz 1982). The Northern Illinois University favorable results of enacting customer-oriented selling include greater sales force effectiveness (Baldauf and Cravens 1999) and improved customer-salesperson relationships (Williams and Attaway 1996). By virtue of the favorable outcomes brought about by selling in a customer-oriented manner, it is important to identify the critical antecedents to customer-oriented selling. One of these antecedents is the salesperson’s psychological empowerment (Peccei and Rosenthal 2001). Specifically, psychological empowerment is associated with flexibility (Thomas and Velthouse 1990) and the initiation of innovative actions when problems and opportunities are encountered (Spreitzer 1995) which constitute the essence of customer-oriented selling. Salespeople need the authority to make independent on-the-spot decisions to flexibly address dynamic customers’ needs (Knouse and Strutton 1996), and they also need the power to initiate creative solutions to proactively satisfy customers. In essence, a psychologically empowered salesperson is a procreator (Williams and Attaway 1996) who feels competent and free to design a market offering tailor-made to the idiosyncratic needs of the customer. Psychologically empowered salespeople who perceive that they are able to make significant impact on their jobs are more confident, and such perceptions can drive them to expend more customer-oriented efforts to better satisfy customers (Thomas and Velthouse 1990). Feeling competent at work means that salespeople can mobilize their skills and resources effectively to achieve task goals (Gist and Mitchell 1992) which translates into offering innovative solutions that more fully satisfy customer needs (Saxe and Weitz 1982). Additionally, perceiving choice or self-determination (Spreitzer 1995) when Academic Article interacting with customers is a prerequisite for responding flexibly to dynamic customer needs and underlies the practice of customer-oriented selling. Therefore, we posit: P5. Psychological empowerment of the salesperson promotes customer-oriented selling. According to social exchange theory (Blau 1964), salespeople who derive satisfaction from their jobs will reciprocate with behaviors supporting those they serve and from whom they benefit (i.e., customers). In other words, highly satisfied salespeople are likely to engage in more customer-oriented selling behaviors in a bid to further maintain and enhance these mutually beneficial relationships. Thus, consistent with the literature, we hypothesize: P6. Job satisfaction experienced by the salesperson enhances customer-oriented selling. Customer outcome—Customer satisfaction Customer satisfaction is defined as the degree of fulfillment of some need, desire, goal, or other plausible end state in a given exchange encounter between the customer and the salesperson (Oliver 1999). A psychologically empowered salesperson, who is energized, competent, and exhibits self-determination (Spreitzer 1995), is more likely to deliver product and service fulfillment from which customer satisfaction can be derived. Additionally, customers are likely to be more satisfied when they perceive that salespeople are empowered and willing to take responsive and competent action to promptly address their needs and handle their problems (Spinelli and Canavos 2000). When salespeople and customers are “physically, organizationally, and psychologically close” (Schneider and Bowen Fall 2009 35 1985, p. 431), psychological empowerment of the salesperson should augment customer satisfaction by contributing to customer perceptions of their own control, self-worth, and competence (Sparks et al. 1997). As such: P7. Psychological empowerment of the salesperson enhances customer satisfaction. In line with our foregoing discussion, a logical assumption is that customer-oriented selling behaviors will enhance the customer's satisfaction level in the sales encounter. It follows that customers will be more satisfied by customer-oriented salespeople who exhibit genuine caring for their needs and who will take the initiatives to fully meet those needs in timely fashion. Therefore, we presume: P8. The salesperson’s customer-oriented selling behaviors enhance customer satisfaction. C O N T R I BU T I O N S IMPLICATIONS A N D Marketing scholars commonly embrace empowerment as giving more discretion to subordinates to make day-to-day decisions in their jobs (Hartline and Ferrell 1996). No known research, however, has been undertaken heretofore to shed light on the specific dimensions for psychological empowerment of salespeople. In light of the dearth of research on psychological empowerment in a sales setting, the present study offers an integrative model to better understand the perceptions of empowerment by salespeople, and indicates how psychological empowerment may benefit selling firms in promoting customer-oriented selling behaviors, as well as in developing both salesperson and customer satisfaction. By focusing on the perceptional aspect of empowerment and looking into the concept of Vol. 9, No. 4 36 Journal of Selling & Major Account Management psychological empowerment within a sales setting, we also respond to the call from Williams and Plouffe (2007) who point out that sales research in the area of motivation has grown very incrementally due to a lack of new applied constructs. In this investigation, we draw from research across several social sciences to apply the concepts of psychological empowerment to the sales domain. Our findings and propositions offer significant implications for both academic research and sales management practice. IMPLICATIONS FOR RESEARCH First and foremost, we recommend research be conducted to empirically test and validate the theoretical framework provided herein. We conceptualize empowerment as a process, in accord with Conger and Kanungo (1988) and Robbins, Crino, and Fredendall 2002), and this calls for a longitudinal research design to test the tenability of our proposed model. Though we have identified what we believe are the most crucial links in the empowerment process as portrayed in our model, we realize that there may be other constructs and/or relationships that call for further research endeavors. For instance, leadership styles may possibly influence the perceptions of empowerment (Avolio et al. 2004). Furthermore, as psychologically empowered salespeople are more motivated to nurture customer loyalty, customer retention might also be an outcome variable in the model. Given the foregoing conjectures, we believe our inquiry significantly enhances knowledge on the nomological network of psychological empowerment in a sales setting, and sets forth appropriate testable hypotheses. Implication for Sales Management Practice Based on our analysis of the empowerment Northern Illinois University literature, development of an integrated conceptual framework, and setting forth eight research propositions for the psychological empowerment of salespeople, we feel confident that sales managers who psychologically empower their sales force are likely to see substantial benefits in terms of customer-oriented selling, and increased satisfaction for both their salespeople and customers. As set forth in our conceptual framework, there are three antecedents to successful salesperson empowerment: (1) sociopolitical support in the sales work environment, (2) discretionary empowerment from sales management, and (3) provision of essential job task characteristics. In carrying out the psychological empowerment of their salespeople, sales managers need to understand and follow several guidelines which may require a dramatic change of attitude. Sales Management Guidelines Giving salespeople the flexibility to make decisions about job-related activities or discretion empowerment (Bowen and Lawler 1992) is a necessary but not sufficient condition for salespeople to fully engage in empowered behaviors in the sales environment (Robbins, Crino, and Fredendall 2002). Sales managers, need to understand that empowerment is not simply granting salespeople increased leeway to make more day-to-day decisions. Empowerment means going beyond mere delegation to enabling salespeople by conveying trust and confidence in their ability and willingness to do a first-rate job f o r c u st o m e r s a nd t h e c o m p a ny. Understandably, empowerment may pose risks for sales managers and their salespeople. Some sales managers may be reluctant to give up control over results for which they are likely to be held accountable, thus they convey their lack of trust in subordinates. From the perspective Academic Article of salespeople, some may be fearful of making decision mistakes for which they will be reprimanded, so they hide behind bureaucratic procedures and develop decision paralysis when facing unanticipated customer requests. To overcome these fears, a bond of trust must be established between sales managers and their salespeople. Mutual trust is a shared belief that you can rely on each other in working toward organizational goals. Sales manager must be willing to become vulnerable to the decisions and actions of their salespeople and manifest confidence that they will perform as expected without being monitored or controlled. Unless sales managers can let go and trust their salespeople, they will not be able to fully empower them and optimize the achievement of desirable outcomes. Because empowerment will be fruitful only if the salespeople actually perceive or psychologically experience empowerment (Menon 2001), sales managers need to provide and champion sociopolitical support networks (Spreitzer 1996) conducive to providing salespeople with feelings of confidence and support from the entire organization: superiors, peers, and subordinates in serving customers. Sales managers should proactively identify and remove conditions in the organizational structure, policies, and procedures that foster feelings of frustration or powerlessness among salespeople. In addition, salespeople need to be encouraged and rewarded for exercising initiative and creativity in satisfying customers. Sales managers can further empower salespeople by confidently sharing information, such as profitability by market segments (products, customers, territories), to help them understand and contribute to organizational goals. Regardless of leadership style, every sales manager needs to show concern for the emotional needs and feelings of salespeople by Fall 2009 37 striving to enhance their sense of personal worth and thus feelings of independence in making decisions on behalf of the organization and its customers (Spreitzer 1996). This requires sales managers to release their authority sufficiently to allow salespeople to make occasional mistakes without fear of reprimand. In addition, sales managers should try to enrich the sales tasks (Hackman and Oldman 1976) of their salespeople so that they will enjoy positive feelings about the importance of their jobs to the organization and to customers, that they experience the freedom and autonomy to creatively handle special customer requests, and that they anticipate praise or rewards for exercising initiative and creativity in striving to satisfy customers. Sales jobs designed to be significant and meaningful to the salespeople, along with consistent constructive performance feedback from sales managers, can provide salespeople with enhanced feelings of empowerment. Moreover, salespeople who experience creative flexibility and personal control over decision-making in negotiating with customers are more likely to develop a positive attitude toward satisfying customers and greater commitment to organizational values (Schneider, White, and Paul 1998). Whereas, salespeople who feel relatively powerless may compensate for such negative feelings by attempting to dominate relationships with customers by behaving more bureaucratically and less responsively to customer requests, thereby resulting in lower customer satisfaction (Yagil 2001). In order for salespeople to feel empowered, sales managers need to release traditional power and prerogatives and manifest trust in their salespeople, demonstrate their commitment to CRM, eliminate organizational barriers to empowering salespeople and customers, nurture a customer-oriented culture Vol. 9, No. 4 38 Journal of Selling & Major Account Management and supportive working environment for salespeople, and provide frequent empowerment training along with suitable reward systems to promote desirable CRM behaviors. CONCLUSION In the intensely competitive markets of the twenty-first century, sales force empowerment will become increasingly important in academic research and business practice (Seibert et al. 2004). As a managerial tool (Chebat and Kollias 2000) aimed at “turning the front line loose” (Bowen and Lawler 1992, p. 32), empowerment has profound application to the sales domain (Martin and Bush 2003) where boundary-spanning salespeople need flexibility and discretionary freedom to properly and promptly address the changing needs of customers (Hair et al. 2009). Psychological empowerment can be an effective motivating force for salespeople with substantial favorable outcomes such as increased customer-oriented selling behaviors, enhanced salesperson job satisfaction, and improved customer satisfaction. Sales managers are strongly urged to recognize and focus on the crucial role of psychological empowerment in order to more effectively motivate their salespeople to better serve customers in the increasingly competitive and global environment of the twenty-first century. Salespeople, as the ultimate “relationship managers,” must continuously learn about their customers and adapt to their changing needs and wants in order to nurture long-term, mutually beneficially customer relationships (Turley and Geiger 2006). Aided by inexorable advances in telecommunication technologies, salespeople are becoming increasingly independent of their sales managers and better equipped to carry out their duties of forging long-term customer relationships while becoming more selfNorthern Illinois University managed, self-directed, and self-motivated (Kotler and Keller, 2009; Jones et al. 2005; Anderson 1996). Driven by the forces of technology to become more self-managed, salespeople also need to be psychologically empowered to fulfill their expanding CRM roles in front-line interactions with customers. Psychological empowerment for salespeople, therefore, is not only recommended but virtually essential in this era of relationship selling. Psychologically empowering salespeople also provides the added benefits of increasing their job satisfaction as they become more confident, able, and willing to fully satisfy customers and develop long-run relationships. Overall, psychological empowerment of salespeople can be an impressive win-win for all: sales managers, salespeople, and customers. Rolph E. Anderson (Ph.D., University of Florida), Royal H. Gibson, Sr. Professor of Marketing, LeBow College of Business, Drexel University . Email: andersre@drexel.edu Srinivasan Swaminathan, (Ph.D., University of Texas), Professor of Marketing, LeBow College of Business, Drexel University Email: swaminas@drexel.edu) Frederick Hong-kit Yim, (Ph.D., Drexel University), Assistant Professor of Marketing, School of Business, Hong Kong Baptist University Email: fred.yim@gmail.com) Academic Article Fall 2009 39 REFERENCES Chebat, J. and Kollias, P. (2000). The impact of empowerment on customer contact employees’ role in service organizations. Journal of Service Research, 3 (1), 66-81. Anderson, R.E. (1996). Personal selling and sales management in the new millennium. Journal of Personal Selling and Sales Management, 16 (4), 17-32. _____ and Huang, W. (2006). Empowering Salespeople: Personal, Managerial, and Organizational Perspectives. Psychology & Marketing, 23 (2), 139-159. Avolio, B.J., Zhu, W., Koh, W. and Bhatia, P. (2004). 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Northern Illinois University Fall 2009 43 Academic Article Does the Quality of Consulting Related Behaviors Mediate the relationship Between those Behaviors and salesperson Effectiveness? By Alfred M. Pelham and Louis Tucci This study sought to develop a model of performance including well documented salesperson behaviors (adaptive selling and customer orientation) as well as little studied salesperson behaviors (listening and sales consulting) to measure the relative impact of these behaviors. The study also sought to determine if the quality of those behaviors, measured by the extent of value-added for customers, mediated the relationships between behaviors and performance variables (customer retention and quota percentile). The results also suggest that the extent of value added for the customer, fully mediates four of six possible behavior-performance relationships. An examination of direct and indirect effects reveals that sales consulting behavior has the largest effect on customer retention, while active listening behavior has the largest effect on quota percentile. The authors discuss explanations for, and the implications of, these results. INTRODUCTION Growing recognition of the importance of customer retention has influenced modification of sales management programs to encourage sales force consulting in order to create value for the customer and not merely communicate it. Baber (1997) suggests that the objective of a sales consultant is to “to develop industry, customer, and/or technical knowledge, become an expert in some area of value to the customer, and then look for and solve customer wants, needs, problems, and opportunities related to that knowledge and expertise” (p. 162). Effective sales consulting activities lead to lower customer operating costs in the use of the product for the customer and/or lower supply chain costs. Pelham’s studies (2002a, 2002b, 2006), documented links between consulting-oriented sales management programs and firm sales growth and profit. However the models documented in those studies were at the firm level, not the at salesperson level, and did not study the impact of multiple consulting related salesperson behaviors on performance outcomes more under the control of salespeople. This study seeks to investigate whether multiple consulting behaviors directly impact performance outcomes, such as customer retention and quota percentile, or indirectly impact those outcomes, through the quality of those behaviors. At the salesperson level, Plank and Reid (1994) suggest an expansion of the Walker, Churchill, and Ford (1979) model of the antecedents and consequences of salesperson’s behaviors. Plank and Reid suggest that the immediate outcome of a salesperson selling interaction (e.g. persuading purchase to decision makers) or a non-selling interaction behavior (e.g. a contact with non-decision makers to service an existing account) is behavioral quality. Plank and Reid also suggest that most salesperson research is in the context of the selling interaction with buyers, neglecting the impact of salesperson behaviors outside of the selling interaction, such as interactions with Vol. 9, No. 4 44 Journal of Selling & Major Account Management users. For example, studies of adaptive selling (Spiro and Weitz, 1990), customer orientation (Saxe and Weitz, 1982), and active salesperson listening (Castleberry and Shepherd, 1993) have been in the context of the selling interaction. Those studies (see Franke and Park’s 2006 metaanalysis) document positive bi-variate relationships between adaptive selling, customer orientation, listening, and salesperson effectiveness outcomes such as achievement of quota. However, as suggested by Plank and Reid (1994) salespeople’s effectiveness are also dependent on the quality of interactions with buyer personnel other than decision makers such as information gathering from users or technical employees or exploring solutions to customer problems. There have been no studies of adaptive selling or customer orientation in this context of salesperson consulting. In addition, there has been no study of comprehensive relationships between adaptive selling, customer orientation, listening, and consulting behaviors and the outcomes of those behaviors. consulting behaviors, and the whether that quality mediates the relationships between behaviors and appropriate effectiveness measures. One measure of salesperson behavioral quality would be based upon Pelham’s (2002b) construct of consulting effectiveness, the extent of value added to the product/service from sales-force suggestions to buyer to reduce costs. Therefore the purposes of this study are to :1)determine the relationship between salesperson adaptive selling, listening, customer orientation and salesperson consulting behaviors, 2) measure the quality of those behaviors in terms of consulting effectiveness, and 3) test Plank and Reid’s (1994) model by determining if consulting effectiveness mediates the relationships between salesperson behaviors and quota performance and customer retention. HYPOTHESIZED RELATIONSHIPS Salesperson Consulting Plank and Reid (1994) indicate that salespeople are only partially responsible for effectiveness outcomes such as profit and sales growth. At the salesperson level and the firm level, sales growth and profit are affected by the actions and decisions of other functions. The implication of their suggestions is that sales managers should consider more emphasis in evaluation and reward programs on behavioral quality to complement traditional output oriented evaluation and rewards. They suggest that the quality of behaviors mediate the relationships between behaviors and salesperson effectiveness (e.g. sales versus quota). Salesperson consulting behaviors provides a crucial conduit for customer need information to the technical and marketing personnel of the selling firm. Pelham’s (2006) results suggest that successful firms involve customers early in the product development effort, resulting in enhanced performance for the buyer and the seller. The salesperson's ability to develop a deep understanding of customer goals and problems, as well as the ability to develop potential solutions allows the selling firm to be more innovative and increases the potential for successful product modifications. To be an effective consultant it would be expected that the salesperson would practice adaptive, customer oriented, and listening behaviors. This study sought to test their model by measuring the quality of salesperson customer orientation, adaptive selling, listening, and Salesperson consultants would tend to spend a higher percentage of their time, compared to other salespeople, seeking to solve my Northern Illinois University Fall 2009 45 Academic Article customers' problems, compared to the time making sales presentations. Salesperson consultants would also tend to spend more time, relative to other salespeople, listening to users of the product than the time spent in the buyer's office making presentations. Salesperson consultants would spend more time consulting, compared to other salespeople, with current clients seeking to lower their costs, at the expense of time spent developing new accounts. Adaptive Selling Adaptive salespeople (Spiro and Weitz, 1990) have a greater tendency, compared to nonadaptive salespeople to experiment with different sales approaches, to be flexible in the selling approach used, and to use a wide range of selling approaches. Because of these tendencies, adaptive salespeople have the ability to gather appropriate customer information, correctly process that information, and correctly adapt and adjust their interactions to the unique nature of the situation. Thus, they are more likely to perform better than salespeople who are less able to adapt their interactions (Spiro and Weitz, 1990). Adaptive salespeople adjust messages in response to customer reaction, which is related to customer oriented behaviors and listening behaviors designed to uncover the needs of customers in order to satisfy those needs. Franke and Park (2006) argue that adapting to customers entails focusing on their individual needs and preferences, which should lead to a customer-centered, problem-solving orientation (customer orientation) Their results suggest that the direction of influence goes from adaptive selling (e.g. flexibility and trying to understand how one customer differs from another) to customer orientation (trying to find out which products would be most helpful, taking a problem solving approach, and having the customers’ best interests in mind). Customer Orientation Customer oriented salespeople (Saxe and Weitz 1982) try to figure out a customer's needs, have the customer's best interests in mind, and take a problem solving approach in selling products or services to customers. Customer-oriented behaviors include recommending products that are best suited to solving customer problems. Interpersonal Listening in Personal Selling Salespeople are competent listeners if they ask appropriate questions, uncover the customer’s problems/needs, and seek appropriate feedback throughout the interaction (Castleberry et al., 1999). Ramsey and Sohi (1997) argue that successful implementation of a customer orientation requires that salespeople have the necessary listening skills to effectively gather information about the customer. Castleberry et al., (1999) tested a scale to measure Interpersonal Listening in the Personal Selling Environment (ILPS). The items seek to measure the extent of active listening behaviors such as avoiding interrupting customers, using a lot of probing questions and continuing q u e s ti o ns , a nd re ad i ng n o n-v e r bal communication. They found that this construct was associated with higher quality of sales presentations as well as output measures such as closing sales, dollar volume of sales, and converting prospects into customers. Functional Integration Theory Functional integration theory (Griffin and Hauser, 1992) suggests that the marketing/R&D interface is critical because it integrates knowledge about market needs with knowledge about how to create a product to meet those needs. Thus, successful salesperson consulting is Vol. 9, No. 4 46 Journal of Selling & Major Account Management critical in the ability to deliver value added products to customers. In this study salesperson consulting is defined as time spent by salespeople seeking to solve customers' problems as well as time consulting with current clients to lower their costs. Franke and Parke (1996) found a causal relationship between adaptive selling. In the model that will be tested in this study, we will expect relationships between all salesperson behaviors, but limit causal links to those between consulting related behaviors, behavioral quality, and salesperson effectiveness (customer retention and quota percentile). SOCIAL EXCHANGE THEORY AND RELATIONAL COMMUNICATIONS THEORIES Social exchange theory (Heider, 1958) and relational communications theory (Alloy and Tabachnik, 1984) provide further support for the supposition that a salesperson’s consulting and related behaviors should be positively related to consulting effectiveness and its outcomes. These theories are based upon the thinking process about the expected behaviors of the other party within the contexts of social norms in their roles and relationships. Personnel in the buying firm may expect typical salespeople to push and manipulate to sell their products, with little regard or understanding of the needs or problems of that firm. Salesperson consulting behaviors signal buying firm personnel that the salesperson intends to understand the firm’s goals, needs, and problems. These behaviors signal buyers of the salesperson’s desire to collaborate in seeking solutions to problems and indicate problem-solving competence. This results in buying firm personnel being more willing to cooperate with the sales consultant in the process to seek solutions to the buying firm’s problems, leading to a greater ability to uncover and solve customer problems. As problems are Northern Illinois University uncovered and solved to the satisfaction of customers there is likely to be an increase in the salesperson’s sales and improvement in that salesperson’s customer retention. Sales consulting behaviors which result in reduced customer costs should lead customers to value the relationship with the seller, lead to longer relationships, and, thus, higher level of sales. Based upon the Plank and Reid (1994) model, the influence of consulting behaviors on customer retention or quota percentile sales may be mediated by the quality of those behaviors. However, based upon the Walker, Churchill, and Ford (1979) model and the theories discussed above we present the following hypotheses: H1: There is a positive relationship between Sales Consulting (SALCONS) and Consulting Effectiveness (CONSEFF). H2: There is a positive relationship between Sales Consulting (SALCONS) and customer retention. H3: There is a positive relationship between Sales Consulting (SALCONS) and percent of quota. In this study additional measures of Sales Consulting and Consulting Effectiveness will be tested for reliability and validity to provide a more comprehensive view of those constructs, compared to the more limited measures in Pelham’s (2002b and 2006) studies. In this study measures of constructs will be based on those previously found to be reliable and valid by other researchers. The methods section the results of further validation to eliminate items that load on multiple constructs. Various studies, at the firm level, discuss the benefits of enhancing product value for customers, including reduced customer costs, customer satisfaction, customer retention, sales growth, and profitability (Wisner, 2001). Academic Article Customers are likely to be more loyal to vendors who provide continuous product value improvements and who provide consulting suggestions that decrease operational costs. Pelham (2002b; 2006) discussed why sales-force efforts to reduce customer costs should also result in customer satisfaction/retention, leading to selling firm growth and profitability. For the same reasons, at the salesperson level, there should be a positive relationship between salesperson consulting effectiveness and measures of salesperson effectiveness. When a salesperson’s consulting efforts add value to the product/service by reducing costs or enhancing customer revenue, customer satisfaction should increase and the customer should desire to continue their relationship. Salespeople who are effective in their consulting effort should have higher levels of customer retention and sales performance, compared to salespeople who have lower levels of consulting effectiveness. Thus: H4: There is a positive relationship between salesperson Consulting Effectiveness (CONSEFF) and salesperson customer retention H5: There is a positive relationship between salesperson Consulting Effectiveness (CONSEFF) and salesperson percentile of quota achievement. It is possible that adaptive selling, customer orientation, and active listening could have direct influences on consulting effectiveness, and not just indirect influences through consulting behaviors. Salespeople who practice adaptive selling modify sales presentations across and during customer interactions in response to the perceived nature of the sales situation (Spiro and Weitz, 1990). This could result in a more cooperative, rather than adversarial, relationship with customer personnel, leading to a more Fall 2009 47 conducive context for effective problem solving. A number of studies (e.g. Spiro et al., 1990; Johlke, 2006) have provided the theoretical justification for expectation of a positive relationship between adaptive selling and various measures of salesperson effectiveness, such as sales growth. Those studies and others (see Franke and Park, 2006) have documented the significance of those relationships. It is possible, however, that in a model with other related salesperson behaviors, that the relationship between adaptive selling and measures of salesperson effectiveness may be indirect. Also, based on the Plank and Reid (1994) model, it may be possible that the relationship between adaptive selling and salesperson effectiveness may be indirect through the quality of adaptive selling behaviors. But, consistent with the theories discussed above, previous empirical evidence, and the Walker, Churchill, and Ford (1979) model we present the following hypotheses: H6: There is a positive relationship between Adaptive Selling and Consulting Effectiveness (CONSEFF). Franke and Park (2006) summarize studies documenting links between adaptive selling behaviors and customer orientation (Saxe and Weitz, 1982). Franke and Park’s argue that the adaptive salesperson would tend to take a problem-solving orientation. In a similar fashion, adaptive selling behaviors, designed to modify interactions with customers based on the unique nature of the situation, should be positively related to consulting behaviors that implement a salesperson’s customer oriented motivation to figure out a customer’s needs and are consistent with the salesperson’s motivation to keep the customer’s best interests in mind. Thus: Vol. 9, No. 4 48 Journal of Selling & Major Account Management H7: There is a positive relationship between Adaptive Selling and Salesperson Consulting (SALCONS). H9: There is a positive relationship between Customer Orientation and Salesperson Consulting (SALCONS). As indicated above, Ramsey and Sohi (1997) argue that salespeople listening skills are necessary to successfully implement the motivational component of customer orientation. If salespeople cannot ask appropriate questions they cannot uncover the explicit and implicit customer’s problems/needs and therefore would be unlikely to engage in consulting behaviors. Wotruba (1996) argues that in order to create value for a customer, the salesperson must sense and diagnose customer needs and problems, which require listening behaviors. These listening behaviors should be necessary elements of salesperson consulting efforts to diagnose and solve customer problems. The salesperson must effectively listen to understand, not only the symptoms of those problems, but uncover the important causes of the problems before solutions are explored with the customer. Thus: Since active listening or ILPS creates the impression that the salesperson sincerely cares about what the customer’s employees are saying this should lead to stronger relationships with those employees. The stronger relationships enable more productive exploration of customer needs and a more appropriate match between those needs and the seller’s products and services. Consistent with the theories discussed above we suggest that: H8: There is a positive relationship between Interpersonal Listening in Personal Selling and Salesperson Consulting (SALCONS). Salesperson customer orientation requires salespeople to be motivated to understand customer needs, to be motivated by the customers' interests, and to recommend products that are best suited to solving customer problems. Therefore, it is necessary that the customer-oriented salesperson perform diagnostic and problem solving behaviors associated with salesperson consulting. It would be expected that salesperson customer orientated motivation and behaviors would lead to behaviors designed to uncover and solve customer problems. Thus: Northern Illinois University H10: There is a positive relationship between Interpersonal Listening in Personal Selling (ILPS) and Consulting Effectiveness. Social exchange theory (Heider, 1958) and relational communications theory (Alloy and Tabachnik, 1984), in a selling situation, would lead to the expectation that the customeroriented behaviors of salespeople provide informational cues to buyers as to the salespersons’ intentions to solve customers' problems, leading to a consultative and reciprocal dialogue. This expectation is reinforced by the finding by Saxe and Weitz (1982) of a positive association between salesperson customer orientation and buyer cooperation, as well as repeat purchase, trust, and lack of conflict. Thus: H11: There is a positive relationship between Customer Orientation (CO) and Consulting Effectiveness. Franke and Park’s meta-analysis (2006) summarize the theoretical justification for expectation of relationships between adaptive selling, as well as customer orientation, and salesperson effectiveness. They found a significant relationship between ADAPTS and effectiveness measures. That meta-analysis Academic Article Fall 2009 49 discusses studies providing empirical evidence supporting those expectations and evidence of relationships between those adaptive selling and effectiveness measures such as sales versus quota. There is a positive relationship between: As indicated above, based on the Plank and Reid (1994) model, it may be possible that the relationship between salesperson behaviors and salesperson effectiveness measures may be indirect through the quality of adaptive selling behaviors. But, consistent with the theories discussed above and the Walker, Churchill, and Ford (1979) model we present the following hypotheses: The link between active listening, Interpersonal Listening in the Personal Selling Environment Castleberry et al., (1999), and measures of salesperson effectiveness would be expected based on Kohli et al.’s (1998) conclusion that the accumulated knowledge and learning of individual organizational members are the only sources of sustainable competitive advantage. Castleberry et al., (1993) discuss how Spiro and Weitz (1990) arguments for the adaptive sellingperformance link also provide a theoretical justification for the expectation of a relationship between salesperson listening and salesperson effectiveness. Sharma and Lambert’s (1994) study found that inaccurate salesperson’s perceptions of customers led to negative salesperson effectiveness. These links may be mediated by the quality of listening behaviors, consistent with the Plank and Reid (1994) model. However, consistent with previous empirical evidence the theories discussed earlier, and the Walker, Churchill, and Ford (1979) model we hypothesize that: There is a positive relationship between: H12: Adaptive Selling and Customer Retention. H13: Adaptive Selling and Percent Quota. Customer Orientation (Saxe and Weitz, 1982) is described as behaviors directed toward determining and understanding the needs of the target customer and adapting the selling organization’s response in order to satisfy those needs better than the competition, providing a competitive advantage, leading to superior salesperson effectiveness. Empirical studies have supported this supposition (e.g. Sigauw et al., 1994). It is possible, however that the presence of other salesperson behaviors in a more comprehensive model may result in insignificant links to effectiveness measures. It is also possible that, consistent with the Plank and Reid (1994) model that the quality of customer orientation behaviors may mediate relationships between customer orientation and effectiveness measures. However, consistent with previous empirical evidence the theories discussed earlier, and the Walker, Churchill, and Ford (1979) model we hypothesize that: H14: Customer Orientation and Customer Retention. H15: Customer Orientation and Percent Quota. There is a positive relationship between: H16: Interpersonal Listening in Personal Selling and Customer Retention. H17: Interpersonal Listening in Personal Selling and Percent Quota. A salesperson cannot be customer oriented unless he/she develops a good understanding of customer needs through effective listening (Ramsey and Sohli, 1997), 2) analyzes and understands customer problems, and 3) tailors products and services to meet customer needs and solve their problems (Saxe and Weitz, 1982). Vol. 9, No. 4 50 Journal of Selling & Major Account Management Figure 1: Theoretical Model Customer Orientation (CO) H14 H15 CUSTOMER RETENTION 1 H1 H9 Adaptive Selling (Adapts) H7 2 H1 H H18 H13 6 PERCENTILE QUOTA H16 H8 Salesperson Consulting (SALCONS) Behaviors H1 0 H17 H4 Listening (ILPS) H2 H3 Consulting Effectiveness (CONSEFF) H5 H1 Performance Effectiveness Model Fit: Chi-square 333, d.f. 151; NFI .932; FRI .905; IFI .961; TLI .946; CFI .961; RMSEA .054; PNFI .670; SMC SALCONS: .335; SMC CONSEFF: .246; SMC Percent Quota: .317; SMC Retention: Given the documented relationships between those behaviors, the model will assume covariance links between those behaviors. Figure 1 illustrates the hypothesized relationships, which assume both direct links from behaviors to effectiveness (Walker, Churchill, and Ford model) and indirect links (Plank and Reid model). Reicheld (1996) document a positive relationship between customer retention and firm performance (sales and profit). This implies a possible equivalent relationship at the salesperson level. Thus the following is a replication hypothesis: Northern Illinois University H18: There is a positive relationship between Customer Retention and Percent Quota. METHOD The sample was obtained by utilizing an Internet panel operated by Markettools. ZoomPanel, an actively managed on line panel community devoted to supporting market research. Controls are established to detect questionable survey taking behavior and remove bad data from the data set. An invitation to participate in this study was sent to the 2,316 panelists who indicated that their profession was full-time, non-retail sales. In addition, a screening question to eliminate those involved in retail Academic Article sales was utilized as a panelist may have changed occupation since joining the panel. Given Weitz’s (1981) conclusion that much of the previous research on sales performance was contradictory or inconclusive because of overgeneralization across too many situations, this study’s sample was limited to non-retail salespeople. Non-retail salespeople are less likely to engage in purely transactional selling, providing more opportunities for consulting. Four hundred and twenty panelists completed the entire questionnaire. The response rate is 18.1% (420/2,316) for respondents meeting the screening criteria. There were 27 respondents who did not meet the screening criteria. The composition of respondents were: 22% manufacturing, 12 % professional services, 2% pharmaceutical representatives, and 65% other services. By way of comparison, the composition of non-retail salespeople, as measured by the 2000 U.S. Census of Business, is 32% manufacturing/wholesale sales representatives and 68% service sales representatives. Early responders and late responders were compared based on the above proportions, as well as a comparison of the means for the constructs of interest and there were no significant differences (Armstrong and Overton, 1977). There could be a concern that the diversity of this study’s sampling frame could mask relationships if there are significant differences in relationships across types of selling situations. Pelham (2002a) discusses why the extent and outcomes of sales consulting could differ across typologies of selling positions. But his (2002b) study found that the there were few significant differences in levels of sales force consulting behavior or consulting effectiveness across types of manufacturing industries although the relationship was somewhat stronger in low customer/product differentiation industries. A Fall 2009 51 study of means of the variables of interest found no difference between manufacturing salesperson’s responses and service salesperson’s responses. For instance, the mean for salesperson consulting (with a scale from 1 to 7) in the manufacturing sub-sample was 4.6 (s.d. 1.3), compared to 4.7 (s.d. 1.4) for the service sub-sample. The mean for consulting effectiveness (with a scale from 1 to 10) in the manufacturing sub-sample is 5.0 (s.d. 1.3), compared to 4.9 (s.d. 1.4) for the service subsample. A study of correlations between variables of interest, with the sample split between manufacturing and service firms, found no significant differences, which is consistent with Franke and Park’s (2006) conclusion in their meta-analysis that there is little evidence of moderators of ADAPTS or CO. Hypotheses were tested using SEM (AMOS 5.0). Bi-variate correlations indicated that none exceeded the level of .8 indicated by Gujarati (2003) as an indication of a serious level of multicollinearity. Variance Inflation Factor (VIF) levels were examined and no variable exceeded the level of 10, considered by Kleinbaum (1988) to indicate a highly collinear variable. Although the survey items were derived from scales validated in previous research, confirmatory factor analysis was conducted, given the documented high correlations between behavioral constructs. Some items were eliminated from these previously validated scales due to low loadings on the appropriate construct. These low loadings on validated constructs are due to the high correlations between salesperson behaviors in this study. This was not the situation when those scales were validated in the original studies. Researchers can contact the authors for the items used to represent constructs and the results of CFA. Vol. 9, No. 4 52 Journal of Selling & Major Account Management The measurement model achieved good fit indices. The model fit statistics were: Chi-Square 188.4, d.f. 71; p= .000; NFI .95; RFI .93; IFI .969; TLI .95; CFI .97; and RMSEA .063.The SMC (squared multiple correlation) score for a latent performance variable combining quota performance and retention performance was below .50 and therefore it was not possible to include a multiple item effectiveness construct. The parameters for the items measuring the latent variables were significant. The average variance extracted of .50 equals the cutoff level of .50 level suggested by Bagozzi and Yi (1988). The average variance extracted values for the remaining latent variables are at 50 or above (Bagozzi and Yi, 1988). Discriminant validity is indicated for all constructs by noting that the squared correlations of the constructs with each other is less than the average variance extracted values for each construct (Hair et al. 2006). All items had significant regression weights on the construct. However, there were three construct items included in the model with SMC scores below .5, which negatively affected model fit. Future studies should seek to improve construct measurement to deal with the high correlations between behavioral variables. Four items were chosen from Robinson et al.’s (2002) shortened five item version of Spiro and Weitz’s (1990) ADAPTS scale. These four Adaptive Selling items achieved a good coefficient alpha score of .86. SMC levels range from .46 to .74. The item eliminated (I try to understand how one customer differs from another.) was eliminated because of a low factor loading and SMC score. It also tends to measure a motivational aspect of adaptive selling versus the behaviors which the focus of this study. Five items measuring salesperson customer orientation were derived from Periatt et al.’s (2004) shortened version of Saxe and Weitz’s Northern Illinois University (1982) customer orientation component of their SOCO (Selling Or ient at ion/Cus tom er Orientation) scale. The coefficient alpha score for these five items was .93 and SMC levels range from .64 to .84. Factor analysis reduced the original fourteenitem ILPS scale (Castleberry and Shepherd, 1993) to four items (Appendix 1). The four-item scale resulted in a coefficient alpha score of .87 (compared to .93 for the full 14 item scale). All four items achieved significant regression weights on the construct and squared multiple correlation levels ranged from .57 to .69. .The four items retained were: I wait for the buyer to finish speaking before evaluating what has been said; I ask clarifying questions like "I'm not sure I know what you mean”; I restate what the buyer has stated or asked; I summarize what the buyer has said. Some of the items eliminated measured motivation rather than behavior, such as: I make an effort to understand the buyer's point of view; I try to find things I have in common with the buyer. Other items eliminated were very similar to the retained items and seem to be included in the original scale to measure respondent consistency. There is concern whether the four items measure the same construct as the original one. However, when the shortened four-item construct was substituted for the full fourteen item construct in multiple regression models there was no significant differences in the size of the parameters or their significance. Three sales consulting (SALCONS) items, of seven items tested, achieved acceptable squared multiple correlation scores. These measures sought to provide more detail than Pelham’s (2002b) single measure of non-buyer consulting time, which used a constant sum question to comparing salesperson’s time talking (about Fall 2009 53 Academic Article experiences /problems with the company’s product) with engineers, users, and other customer employees, compared to time spent talking to buyers/purchasing agents. Salesperson Consulting Effectiveness (CONSEFF) was measured with two items based on the measures from Pelham’s (2002b) study. The parameters for the items were significant in the measurement model. The correlation between the two measures of consulting effectiveness was .63. The use of salespeople as respondents for independent and dependent variables and the high level of correlations between variables of interest raise the issue of common method variance. However, those high correlations were also found in other studies of relationships between salesperson behaviors and relationships between salesperson behaviors and outcomes (Franke and Park, 2006; Castleberry et al.1999; Pelham, 2002b; Ramsey and Sohi, 1997). A salesperson’s reports of the levels of behaviors and performance could have an upward bias due to desires for social acceptability. However, Churchill et al. (1985) conclude in their metaanalysis that self-report measures of performance do not demonstrate any particular upward bias. Recently, Franke and Park’s (2006) meta-analysis noted significant correlations between self-rated, manager rated, and objective measures of performance. Tests were conducted to estimate the extent of common method variance. Applying Harmon’s one factor test (Podsakoff and Organ, 1986) did not reveal one general factor accounting for most of the covariance between independent and dependent variables. Confirmatory factor analysis, assuming one factor with all items, revealed a poor model fit (RMSEA = .15). Poor fit was consistent in both high and low performance sub-groups. Partial correlations between SALCONS and CONSEFF, as well as CONSEFF and the combined performance variable, remain significant, controlling for the “method factor.” RESULTS Table 1 provides the standardized regression parameters, their significance, and model fit for the theoretical model testing direct and indirect links between behaviors, performance, and effectiveness. The results of a reduced model results, a nested model with only significant effects, is provided in the last column, this reduced model gives an indication as to whether the influence of a behavior on outcomes is direct or indirect. The theoretical model fit statistics indicate a reasonable fit with fit indices above .9 and RMSEA at .054. The model’s p statistic is below .05, reflecting the large sample size (n = 420). The Hoelter (1983) statistic indicates that the sample size would have to be less than 228 for the significance level to exceed .05. The SMC (squared multiple correlations) for dependent variables indicate a reasonable amount of variance explained (SALCONS .34; CONSEFF .25; PERCENT QUOTA .32; and RETENTION .34). The NFI, RFI, IFI, TLI, and CFI fit statistics for the reduced model are very similar to the theoretical model, while the PNFI and PCFI fit statistics are improved in the reduced model due to the reduced number of parameters. The parameters linking Sales Consulting (SALCONS) to Consulting Effectiveness (CONSEFF) and Customer Retention are positive and significant (.242, p < .01; .190, p < .01), leading to acceptance of hypotheses 1 and 2. The link from SALCONS to Percent Quota is not significant. Thus hypothesis 3 is rejected. This lack of significance is due to the inclusion of CONSEFF in the model as a mediating variable, since the bivariate correlation between SALCONS and Percent Quota is Vol. 9, No. 4 54 Journal of Selling & Major Account Management Hypotheses Table 1: Simultaneous Equation Model Statistics (n = 420) IndependentDependentVariTheoretical Reduced Model 2; 1 SALCONS CONSEFF .242** .337*** 2 3 4 SALCONS SALCONS CONSEFF RETENTION PERRETENTION .190** -.057 .325*** .200*** 5 6 7 8 9 10 CONSEFF ADAPTS ADAPTS ILPS CO ILPS PERCONSEFF SALCONS SALCONS SALCONS CONSEFF .454*** .163* .135* .395*** .140 .143 .493*** .248*** .179** .484*** CO ADAPTS ADAPTS CO CO ILPS ILPS RETENTION CONSEFF RETENTION PERRETENTION PERRETENTION PERPER- .074 .075 -.02 .160* .045 .012 .120* .106 332.8 151 2.204 11 12 13 14 15 16 17 18 Chi-Sq. d.f. Chi.Sq./d.f. .354** .207*** .149** 349.7 160 2.186 p .000 .000 NFI (2) .932 .928 RFI (3) .905 .906 IFI (4) TLI (5) .961 .946 .960 .947 CFI (6) RMSEA (7) PNFI (8) PCFI (8) Hoelter (9) SMC SMC SMC CONSEFF PERRETENTION .961 .054 .670 .691 228 .246 .317 .343 .959 .053 .707 .731 229 .243 .311 .345 SALCONS .335 .348 SMC Note: 1. * = p < .05; ** = p< .01; *** = p< .001 Northern Illinois University Academic Article positive (.17) and significant (p < .001). Since the link between CONSEFF and PERCENT Quota is significant, CONSEFF serves as a mediator in the relationship. Thus the influence of sales consulting on percent quota is indirect. This result provides only partial support for Plank and Reid’s (1994) mediating model since the link between SALCONS and Customer Retention is significant. The parameters linking Consulting Effectiveness (CONSEFF) to Customer Retention and Percent Quota are positive and significant (.325, p < .001; .454, p < .001). Thus, hypotheses 4 and 5 are accepted. CONSEFF is responsible for the largest influence on those two measures of effectiveness, when both direct and indirect effects are considered (Table 2). These results, at the salesperson level, are similar, to Pelham’s (2006) results, indicating a positive link between sales-force consulting effectiveness and firm performance. Given the non-significant link between Salesperson Consulting and Percent Quota and the significant link between Sales Consulting and Consulting Effectiveness, we can conclude that Consulting Effectiveness acts as a full mediator in the relationship between Salesperson Consulting and Percent Quota. The parameters linking Adaptive Selling (ADAPTS) to CONSEFF AND SALCONS are positive and significant (.163, p < .05; .135, p < .05), leading to the acceptance of hypotheses 6 and 7. Given these results, it can be concluded that Salesperson Consulting partial mediates the relationship between Adaptive Selling and Consulting Effectiveness. The parameters linking ADAPTS to Customer Retention, as well as Percent Quota are not significant, leading to rejection of hypotheses 12 and 13. These results appear contrary to those cited in Franke and Park’s (2006) meta-analysis, however those results were bivariate correlations. This study’s Fall 2009 55 non-significant parameters are due to the inclusion of other behaviors and consulting effectiveness into the model. The correlations between ADAPTS, Retention, and Percent Quota based upon the data in this study are .34 (p < .001) and .22 (p < .001) which are consistent with the studies cited by Franke and Park. Since the link from ADAPTS to CONSEFF is significant, CONSEFF acts as a full mediator in the relationship between ADAPTS and Percent Quota as well as Customer Retention. These results support Plank and Reid’s (1994) model. The parameter linking active listening (ILPS) and SALCONS is positive and significant (.395, p < .001). Therefore, hypothesis 8 is accepted. However, the link between Customer Orientation (CO) and SALCONS is not significant, leading to the rejection of hypothesis 9. This lack of significance is due to the inclusion of other correlated antecedent behaviors in the model, since the bivariate correlation between CO and SALCONS is positive (.32) and significant (p < .001). The correlations between variables are provided in Appendix 3. As indicated in Table 2, providing both direct and indirect effects, ILPS has the largest total effect on Salesperson Consulting. The parameter linking ILPS to CONSEFF is not significant, leading to the rejection of hypotheses 10. This result is due to the inclusion of SALSONS in the model, since the bivariate correlation between ILPS and CONSEFF is positive (.51) and significant (p < .001). Thus Salesperson Consulting acts as a full mediator in the relationship between ILPS and CONSEFF. The link between ILPS and RETENTION is not significant, leading to rejection of hypothesis 16. This result is not consistent with Ramsey and Sohi’s (1997) significant relationship between ILPS and customer intentions to continue future Vol. 9, No. 4 56 Journal of Selling & Major Account Management Table 2 Standardized Total, Direct, and Indirect Effects Reduced Model of Significant Effects Only Independent Variables CO ILPS ADAPTS SALCONS SALCONS .14 .40 .14 CONSEFF .11 .24 .20 .24 RETENTION .22 .16 .16 .27 .33 PERCENT QUOTA .11 .22 .08 .08 .49 SALCONS .14 .40 .14 CONSEFF .08 .14 .16 .24 RETENTION .16 .01 .08 .19 .33 PERCENT QUOTA .05 .12 -.02 -.06 .45 .11 CONSEFF .03 .10 .03 RETENTION .06 .15 .08 .08 PERCENT QUOTA .06 .10 .10 .14 .03 .00 Dependent Variable CONSEFF RETENTION Total: .11 Direct: Indirect SALCONS interactions. However, the bivariate correlation (see Appendix) between ILPS and Customer Retention in this study is positive and significant (.44, p < .001). Since the link between ILPS and SALCONS and the link between CONSEFF and RETENTION are significant, Salesperson Consulting and the immediate outcome of S a le s p e r s o n C o n s u l t i n g ( C o n s u l t i ng Effectiveness) mediate the relationship between active listening and Retention.. However, the parameter linking ILPS to PERCENT QUOTA is positive and significant (.12, p< .01) , leading to the acceptance of hypothesis 17. The parameter linking active listening (ILPS) to Customer Retention is not significant, leading to rejection of hypotheses 16. These results provide Northern Illinois University only partial support for Plank and Reid’s (1994) mediating model. The parameter linking CO to SALCONS is not significant, leading to the rejection of hypothesis 10. Again, this result is due to the inclusion of other antecedent variables since the bivariate correlation between CO and SALCONS is positive (.32) and significant (p< .001). The parameter linking CO to CONSEFF is not significant. Thus, hypothesis 11 is rejected. This result is due to the inclusion of SALCONS as a mediating variable, since the bivariate correlation between CO and CONSEFF is positive (.41) and significant (p < .001). As indicated in Table 2, indicating direct and indirect effects, with the inclusion of other Fall 2009 57 Academic Article behaviors in the model, CO has the weakest influence on CONSEFF. The parameter linking CO to Customer Retention is positive and significant (.16, p < .05), leading to acceptance of hypotheses 14. This finding is consistent with Williams’ (1998) results, which found a strong link between customer orientation and customer commitment. However, the parameter linking CO to Percent Quota is not significant, leading to rejection hypotheses 15. It should be noted, however, that the bivariate correlation between CO and Percent Quota is positive and significant (.29, p < .001). Again, the lack of a significant parameter between those two variables may be due to the inclusion of other behaviors in this study’s model. These results do not provide support to Plank and Reid’s (1994) model. The parameter linking salesperson Customer Retention to salesperson Percent Quota is not significant. Thus, hypothesis 18 is rejected. There is, however, a positive and significant bi-variate correlation between these two variables (.36, p < .001), which consistent, with Reicheld's study (1996) documenting a positive relationship between firm level customer retention and firm performance. The lack of a significant parameter link between the variables is due to the strong influence of CONSEFF on both Customer Retention and Percent Quota. It should be noted that the covariance links between ADAPTS, CO, and ILPS are positive and significant, as would be expected from the studies cited in Franke and Park’s meta-analysis. The covariance link between ADAPTS and CO is .54 (p < .001). The covariance link between ADAPTS and ILPS is .428 (p < .001) and the covariance link between CO and ILPS is .57 (p < .001). Therefore, it can be concluded that, while some of the links between those behaviors and outcome variables were not significant, those variables do have an influence on those variables though supporting relationships with other behaviors. Figure 2 illustrates a model with only the significant links documented in the last column of Table 1. The model fit statistics provided at the bottom of Figure 2 indicate that there is little change in the fit statistics in this reduced model, compared to the full model with all links. The few direct links (two of six) between the antecedent variables of ADAPTS, CO, and ILPS with effectiveness variable provide partial support Plank and Reid’s (1994) model suggesting that the influence of salespeople’s behaviors are mediated by immediate behavioral quality variables. It is possible that the direct effects found in this study between behaviors and quota or retention may be due to the lack of inclusion of selling behaviors with buyers/ decision-makers. Future research should rectify this omission to provide a more robust test of the Plank and Reid (1994) model. DISCUSSION This study’s results suggesting the full or partial mediating influence of Consulting Effectiveness in relationships between salesperson behaviors and measures of effectiveness provide partial support for Plank and Reid’s (1994) model. This study extends the findings of Pelham’s (2006) firm level study of the impact of consulting behaviors, by indicating the supporting role of adaptive, customer oriented, and listening behaviors in the influence of those consulting behaviors on the quality of those behaviors (consulting effectiveness). The results of this study, at the salesperson level, extend Pelham’s Vol. 9, No. 4 58 Journal of Selling & Major Account Management Figure 2: Significant Effects Model Customer Orientation (CO) Adaptive Selling (Adapts) Listening (ILPS) H7 H14 CUSTOMER RETENTION H6 PERCENTILE QUOTA H17 H4 H8 Salesperson Consulting (SALCONS) Behaviors H2 Consulting Effectiveness (CONSEFF) H1 Performance (2006) findings, at the sales-force level, of a positive influence of consulting effectiveness on ultimate firm performance (profit). It does so by measuring the influence of salesperson behaviors and salesperson consulting behaviors on individual performance outcomes more directly under the control of the salesperson, namely the retention of the salesperson’s customers and quota performance. In this study, consulting effectiveness was the strongest influence on customer retention and percent quota, reinforcing Reicheld's (1996) suggestions as to the benefits of enhancing product value for customers. This study’s finding of a significant link between Adaptive Selling, as well as Listening, and Salesperson Consulting and the Northern Illinois University H5 Effectiveness finding of significant links between Adaptive Selling, as well as Salesperson Consulting, and Consulting Effectiveness, at the salesperson level, extend Pelham’s (2002B) results, at the firm level. This study also extends Pelham’s (2002B) results by providing more comprehensive measurement of the Salesperson Consulting construct. This study’s finding of direct and indirect links between sales consulting and salesperson effectiveness measures is similar to Anglin et al.’s results, (1990) finding a significant relationship between their Adaptive Selling behavior of contacting others in the buying organization and objectively measured salesperson market share. The results of this study also lend support to Academic Article arguments of Flaherety et al., (1999) that salespeople should focus more on solving customer problems and adding value to the customer’s business. This study results suggest that management, in appropriate business-to business contexts, should encourage their salesforce to increase consulting activities with their customers and evaluate the quality of those outcomes. The significant influence of active listening supports Wotruba's (1996) argument that salesperson listening is crucial for the development of mutually beneficial long-term relationships with customers. The indirect influences of ILPS on customer retention reinforce Ramsey and Sohi’s (1997) finding that the customer’s perception of listening behavior is positively related with the anticipation of future interaction with the salesperson. MANAGERIAL IMPLICATIONS Given the importance of salesperson consulting effectiveness suggested by this study, the implication for sales managers is that sales training, evaluation, and reward programs should be adjusted to foster more high quality consulting related behaviors. Sales training today still is heavily oriented toward product knowledge and the feature/benefit/closing aspects of the selling encounter. Pelham (2002a) found little sales training content related to active listening exercises or problem diagnosis exercises, despite studies indicating that customers are seeking more assistance in problem solving. He cited studies indicating that poor salesperson listening skills and inadequate problem diagnosis skills were leading causes of poor performance. If a firm does not provide adequate active listening/diagnostic question training and followup evaluation by sales managers, then a Fall 2009 59 salesperson who seeks to engage in consulting efforts with customers can only learn consulting skills through trial and error. The lack of such training or evaluation also sends a message that these behaviors are not valued by the firm, reducing the likelihood of salesperson consulting. Pelham (2002b) found that an evaluation program that includes measures of the quality of consulting efforts has a more powerful influence on sales-force consulting than the commission program. This study reinforces the need to pay more attention to the immediate outcomes of consulting efforts in terms of savings in the use of the product. Such emphasis might include sales managers accompanying salespeople on service visits with product users, technical personnel, and production personnel. The sales manager would then be in a position judge the quality of diagnostic questions in these encounters. Sales managers could also follow up with customers to monitor the outcomes of previous consulting efforts. This study reinforces Pelham’s (2002a) arguments for the importance of salesperson consulting, in business-to-business contexts, given its mediating influence in relationships between adaptive selling/listening behaviors, consulting effectiveness, and customer retention. The implication for sales managers is that there should be more attention paid in salesperson evaluation to the quality of salesperson behaviors, including consulting related behaviors. The quality of behaviors is under more salesperson control, compared to output measures, such quota performance. Unfortunately, given senior management pressure to achieving quarterly sales results, there is the natural tendency for a sales manager to be preoccupied with inputs such as prospecting or sales calls and outputs such as orders. Pressures Vol. 9, No. 4 60 Journal of Selling & Major Account Management to achieve short term sales results can also result in too much emphasis on sales presentations to secure orders at the expense of service calls to strengthen long term customer relationships. If salespeople are only measured and rewarded based upon input and output quantity, disregarding the quality of the inputs, there is the also potential for counterproductive behaviors. Some examples of the counterproductive behaviors are: excessive discounting, premature closing, and pushing products/services that do not adequately solve customer problems. Inadequate emphasis on active listening and problem diagnosis in training and evaluation programs reinforce those counterproductive behaviors because salespeople will tend to shorten the needs discovery step in the sales process, leading to premature presentation of product features and benefits before adequate understanding of the customer's situation. But if the quality of a salespersons' behaviors, especially consulting behaviors, is adequately measured this should encourage more of those behaviors and as well as greater motivation to improve the effectiveness of those behaviors. Behavioral quality evaluation would be most effectively measured by sales management observation. But given the limited time available to perform these observations of the salespeople reporting to a sales manager, formal customer surveys of the extent of value added from salespersons' efforts could supplement observation. Post sales call reviews by sales managers should include critiques of pre-call information gathering on the customer and customer's industry. The sales manager should: 1) review the salesperson's depth of understanding of the customer's situation, including the customer's goals and obstacles to those goals, 2) review the extent and quality of the salesperson's diagnostic Northern Illinois University questions raised with customer production or technical personnel, 3) evaluate the salesperson's ability to dig deeply with his/her questions into the customer's processes searching for inefficiencies 4) evaluate the salesperson's ability to aid the customer in reduction of process steps 5) evaluate the salesperson's ability to participate in product modification designed to increase customer efficiency, 5) evaluate the salesperson's ability to suggest appropriate outsourcing of activities and 6) evaluate the salesperson's ability to aid customers in efforts to increase sales through enhanced product quality or more effective marketing efforts. Sales managers who appreciate the value of effective salesperson consulting to enhance product/service value should modify the nature of sales meetings. In addition to recognition of star sales versus quota performers, salespeople who saved their customers the most money should also be recognized. In sales meetings, experienced sales consultants should share how they went about discovering money-saving efficiencies in the use of their products or services. Sharing of customer cost-saving scenarios would also benefit experienced salespeople by expanding their ability to creatively modify solutions across differing customer environments. Star salesperson consultants would probably share how they developed a deep knowledge of the customer's industry, such as participation in customer trade associations. These consulting related sales meeting events would positively influence the motivation of less experienced salespeople to increase consulting activities, as well as suggest scenarios that could act as a framework for consulting behaviors. The direct links, in this study, between consulting related behaviors and quota percentile suggest potential benefits in sales presentation Academic Article effectiveness. The modification of sales training and evaluation programs to include more active listening and diagnostic skill training would not only enhance the quality of consulting activities with current customers, but also should improve the effectiveness of selling activities with prospective customers. The skills needed to adequately uncover inefficiencies in the customer processes and to work with customers on solutions would be beneficial in working with prospective customers on their problems, leading to increased levels on new customers. Sales management activities that encourage consulting efforts and monitor the effectiveness of those efforts would also tend to influence the firm's culture to be more market oriented, characterized by widely held values emphasizing customer satisfaction. If this were to occur the firm would begin to see the benefits associated with high customer retention. LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH A limitation of this study is that it measured the quality of adaptive, customer oriented, listening, and consulting behaviors only from the standpoint of the extent of value added for the customer from non-selling activities. This study did not measure or investigate the influence of other possible measures of the quality of selling activities, which could have also mediated the influence of these behaviors on salespeople’s effectiveness. An example of such a measure might be customer feedback as to the persuasiveness of sales presentations. The lack of such a selling activity outcome variable could explain this study’s finding of some direct influences of salesperson behaviors on measures of effectiveness. Future studies should rectify this omission. The model tested in this study is Fall 2009 61 an incomplete model of the antecedents and consequences of salesperson buyer/non-buyer interaction behaviors. The model did not include organizational and environmental variables that should moderate the influence of salesperson interaction performance and effectiveness, consistent with Weitz’s (1981) contingency model of salesperson effectiveness The model examined in this study did not include salesperson interaction behaviors with buyer/decision makers and the outcomes of those behaviors. An indication of the need to include these behaviors in future models of salesperson performance and effectiveness is indicated by the results of a study by Anglin et al., (1990) which found significant correlations between various subjective measures of salesperson interaction performance, such as clear presentations and handling of objections, and salesperson effectiveness measures. Inclusion of these variables would provide a more thorough test of Plank and Reid’s (1994) model. The model also did not include other salesperson consulting behaviors, such as the involvement of the salesperson with internal selling firm personnel in the modification of the product or service to better meet customer needs. Future studies should include other key constructs in testing of the relationships between sales consulting behaviors, sales consulting performance, and salesperson effectiveness. In addition, the retention and quota percentile measures in this study did not successfully combine into one effectiveness construct. Future studies should develop a composite effectiveness outcome variable with multiple items. As indicated in the methods section, the respondent for both independent and Vol. 9, No. 4 62 Journal of Selling & Major Account Management dependent variables were salespeople. Despite tests indicating that common methods variance did not present a serious problem, future studies should endeavor to measure performance based on sales manager reports. Thus, the conclusions based on this exploratory study must be considered tentative due to factors stated above. Future studied should also endeavor to utilize longitudinal performance and effectiveness data in order to draw causal implications. Anglin, Kenneth A., Jeffrey J. Stolman, and James W. Gentry (1990), “The Congruence of Manager Perception of Salesperson Performance and Knowledge-Based Measures of Adaptive Selling,” Journal of Personal Selling and Sales Management, 10, Fall, 81-90. Baber, Michael (1997), How Champions Sell, New York: AMACOM, a division of the American Management Association. Bagozzi, Richard P., and Youjae Yi (1988), “On the Evaluation of Structural Equation Models,” Journal of the Academy of Marketing Science, 16, 2, 74-94. Alfred M. Pelham Phone: 609-771-3027 FAX: 609-637-5129 Email Pelham@tcnj.edu Louis Tucci Phone: 609-771-2900 Email: ltucci@tcnj.edu Castleberry, Stephen B., C. David Shepherd, and Rick Ridnour (1999), “Effective Interpersonal Listening in the Personal Selling Environment: Conceptualization, Measurement, and Nomological Validity,” Journal of Marketing Theory and Practice, 7, 1, 30 -38. The College of New Jersey PO Box 7718 2000 Pennington Rd. Ewing, NJ 08628-0718 Castleberry, Stephen B., C. David Shepherd (1993), “Effective Interpersonal Listening and Personal Selling,” Journal of Personal Selling and Sales Management, 13, Winter, 3549 REFERENCES Churchill, Gilbert A., Jr., Neil M. Ford, Steven W. Hartley, and Orville C. Walker, Jr. (1985), The Determinants of Salesperson Performance: A Meta-Analysis,” Journal of Marketing Research, 22 (May), 103-118. Alloy, L.B. and Tabachnik, N. (1984), “Assessment of Covariation by Humans and Animals: the Joint Influence of Prior Expectation and Current Situational Information,” Psychological Review, 91, 112149. Armstrong, J. Scott and Terry Overton (1977), “Estimating Non-response Bias in Mail Surveys,” Journal of Marketing Research, 14, August, 396-402. Northern Illinois University Flaherty, T.B., R. Dahlstrom, and S.J. Skinner (1999), “Organizational Values and Job Stress as Determinants of CustomerOriented Sales Performance,” Journal of Personal Selling and Sales Performance, 19, 2, 118. Franke, George R and Jeong-Eun Park (2006), “Salesperson Adaptive Selling Behavior and Customer Orientation: A Meta Analysis,” Journal of Marketing Research, 43, 4 (November), 693-702. Academic Article Griffin, A. and R.R. Hauser (1992), “Patterns of Communications among Marketing, Engineering, and Manufacturing-A Comparison Between Two Product Teams,” Management Science, 38, 1, 360-373. Gujarati, D.N. (2003), Basic Econometrics, 4th Ed., McGraw-Hill International Edition. Hair, Joseph F., William C. Black, Barry J. Babin, Rolph E. Anderson, and Ronald L. Tatham (2006), Multivariate Data Analysis, 6th Ed., Upper Saddle River, NJ: Prentice Hall.Heider, F. (1958), The Psychology of Interpersonal Relations, Hillsdale, N.Y.: Lawrence Erlbaum Associates.Johlke, Mark C. (2006), “Sales Presentation Skills and Salesperson Job Performance,” The Journal of Business & Industrial Marketing, 21, 5, 311321. Kohli, Ajay K., Tasadduq A. Shervani, and Goutam N. 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Sohi (1997), “Listening to Your Customers: The Impact of Perceived Salesperson Listening Behavior on Relationship Outcomes,” Journal of the Academy of Marketing Science, 25, 2, 127-137. Reicheld, Frederick F. (1996), Loyalty Effect: The Hidden Face Behind Growth, Profits, and Lasting Value. Cambridge, MA: Harvard Business School Press .Robinson, Leroy Jr., Greg W. Marshall, William C. Moncrief, Felicia G. Lassk (2002), “Toward a Shortened Version of Adaptive Selling,” Journal of Personal Selling and Sales Management, 22, 2 (Spring), 111-119. Saxe, Robert and Weitz, Barton (1982), “The Customer Orientation of Sales People: Measurement and Relationship to Performance,” Journal of Marketing Research, 19 (August), 343-351. Vol. 9, No. 4 64 Journal of Selling & Major Account Management Sharma, Arun and Lambert, Douglas (1994), "How Accurate are Salesperson's Perceptions of their Customers?" Industrial Marketing Management, 23, 4, 357-365. Sigauw, Judy A., Gene Brown, and Robert E. Widing, II (1994), “The Influence of the Market Orientation of the Firm on Sales Force Behavior and Attitudes,” Journal of Marketing Research, 31, 1 (February), 106-116. Spiro, Rosann and Barton Weitz (1990), “Adaptive Selling: Conceptualization, Measurement, and Validity,” Journal of Marketing Research, 27 (February), 61-69. Walker, Orville C., Gilbert A. Churchill, and Neil M. Ford (1979), “Where Do We Go From Here? Some Selected Conceptual and Empirical Issues Concerning the Motivation and Performance of the Industrial Salesforce,” in Gerald Albaum and Gilbert A. Churchill (eds.), Critical Issues in Sales Management: State of the Art and Future Research Needs, Eugene, OR: University of Oregon, 10-75 Weitz, Barton A (1981), “Effectiveness in Sales Interactions: A Contingency Framework,” Journal of Marketing, 45,Winter, 85-103. Wisner, Stanley D. (2001), “Service Quality Along the Supply Chain: Implications for Purchasing,” Journal of Operations Management, 19, 3, 287-3-6. Wotruba, Thomas R. (1996), “The Transformation of Industrial Selling: Causes and Consequences,” Industrial Marketing Management, 25, 327-338. Northern Illinois University Fall 2009 65 Academic Article Appendix Correlations of Constructs (N = 419) Mean/ 1 2 3 4 5 6 7 (S.D) 1. ADAPTS 5.16 .86 (1.13) 2. CO . 6.06 .56 (.98) 3. ILPS . 5.61 (1.02) . 4. SALCONS 4.55 (1.10) 5. CONSEFF 4.90 (1.17) 6. RETENTION (1.27) 7. PERCENT 7.06 QUOTA (2.65) .93 *** .47 .64 *** *** .32 .33 .45 *** *** *** .36 .43 .53 .46 *** *** *** *** .34 .40 .48 .40 *** *** *** *** *** .22 .29 .34 .24 .32 .36 *** *** *** *** *** *** 5.27 .87 .73 .83 .47 Note: 1) * = p < .05; ** = p< .01; *** = p< .001 Vol. 9, No. 4 66 Journal of Selling & Major Account Management How to Minimize Realignment Issues: A Case Study By Chuck Howlett The goal of this paper is to discuss the impact that addressing team dynamics before structural logistics may have in a realignment process. Specifically, it will examine accountability that representatives take for their territory, product knowledge, selling activities and sales performance. The paper will also highlight numerous team building, team dynamics and leadership techniques to complement individual employee’s strengths and motivators to understand the impact on management effectiveness. All of this is done while creating a brand that unifies the new district to establish business ownership for each representative (territory) while maintaining company values of integrity, excellence and respect for people across the team. INTRODUCTION Selling in the US marketplace has been very dynamic over the years. In fact, in a 22-year sales career (4 years as salesperson and 18 years of management experience) with one company, there have been six geographical realignments, over a dozen new product introductions and responsibilities in eight different states. These changes are essential if more value is to be delivered to the customers. However, these same value delivering changes can be extremely disruptive on employee motivation, their connection to the company and their engagement in their new territory and district. During the formation stages of any re-alignment, a performance gap consistently emerges which predicts the sales performance for the next 12 months. The question then is: “Can a sales manager have a positive impact on future sales during the first 100 days of a re-alignment?” The objective of this case study is to provide sales managers with information on how one approach to realignment can positively impact individual salesperson and the new sales district. This can then serve as a road map for other sales managers to help them minimize disruption, Northern Illinois University engage every employee and use the inevitable realignments as a springboard to establish a performance culture that will thrive. THE SITUATION In January 2010 company realignment forced a major change in geography, direct reports and, of course, the customer data base. The previous four years the district covered the NW corner of Illinois (Rockford District included the Illinois towns of McHenry, Plainfield, Moline, and Galena). In the 2010 realignment, the new district contained less than 20 percent of the old alignment. The new district, Chicago South, included the area from DeKalb, IL, to Michigan Avenue in downtown Chicago, south to Kankakee then west to Dwight, IL. This new district contained 10 new direct reports of the 14 total sales representatives. The fourteen individuals are of varying ages and experiences from four different districts (and management styles). Four of the 14 came from the previous district and two others representatives had previously been part of the district prior to a previous alignment change. Thus less than half of the new district had any previous work Application Article experiences with their new manager. Additionally, this team was sole owners of a specific geography and not aligned with a partner to allow specialization of skills or styles to meet the unique customer needs. Now there will be one representative for one territory. Thus, the new team consisted of nine general representatives and five specialty representatives. The new team representatives ranged from 25 to 47 years old with an average age of 34. The experience level within averaged seven years and ranged from two to 21 years of service. Job levels for sales careers are distinguished in five levels (S1 to S5). Representatives are promoted to higher levels based on consistent performance and leadership over time. The new district has seven S2, six S3 and one S5 representatives. In their careers, three representatives have been eligible for the top sales award, President’s Council, but only one has been selected by management. Education accomplishments revealed diverse undergraduate degrees across the team and three having completed MBAs. There were three minority individuals on the team. The gender make up was eight women, six men with marital status of nine single representatives and five married; three with children. The primary goal of most territory realignment processes is to improve efficiency that leads to improved performance. The unintended consequences that follow realignments, however, may have significant impact on performance. This case study focuses on these secondary consequences first by emphasizing personal accountability in each district member as part of a team, developing each salesperson based on their needs and finally focusing on performance of each sales representative that Fall 2009 67 comprise the district. IMPLEMENTATION: A DIFFERENT REALIGNMENT PROCESS The company realignment was completed in late 2009 (for execution on January 1, 2010) and provided a “customer centric” model working toward enhancing the value provided to customers. Any realignment, no matter how small, can be disruptive to the customerrepresentative continuity as well as to a sales team. While customer interactions are a journey of its’ own, the disruption of sales representatives and the rebuilding of a team in this case is the first priority. 1. Assemble the New District Representatives 2. Develop a Team Building Strategy 3. Team Interactions to Allow Connections 4. .Develop Internal Structure and Process 5. Accountability for Results Step One: The New Team What needs to happen is to combine 14 strangers with a common purpose of performance and utilize their strengths to form something greater than the sum of their parts. The goal is to have these individuals desire to be part of this team versus merely doing a job. That would require that each person trust and respect each other while doing everything to help the others. What could hinder this team’s development? The marketplace is relentless, competition is fierce and customers are demanding value. Our customers will not give us time for handholding for team dynamics development. The company will not tell us to “take your time for the first six months and get to know all your teammates”. They want to maximize shareholder value and Vol. 9, No. 4 68 Journal of Selling & Major Account Management that starts January 1, 2010. When developing a new district, one of the first tasks is to ask each of the new direct reports to do a preliminary SWOT (strengths, weaknesses, opportunities, threats) analysis of their new geography. This is not an unusual request but in this case since only 20% of the customer base was know by the new representative, it forced inter representative communication to accomplish the task. Actions This began with an introduction conference call, December 4, 2009. In this call each person introduced themselves and highlighted their work history, family, college, and favorite holiday memory. This was followed by the manager’s expectations of the team and guidelines for engagement. Then each representative was given an assignment regarding personal style assessment. This included Strengths Finders completed via website, motivators worksheet and preliminary assessment of team strengths and opportunities. The next event was a district “after work” event in mid-December for everyone to meet face to face. This was a differential advantage over other districts due to our location and was a way to begin to develop team dynamics before the kick off meeting in January 2010. From face to face meetings with previous district managers, a better understanding of unique strengths and weaknesses of each individual was gathered. In addition, highlights of 2009 results and leadership potential for each individual was obtained. Following the holiday break, corporate-driven strategy meetings were scheduled for early January. Set agendas usually include product strategy and implementation expectations, a practical selling skills workshop and time for team building. Our district met in Naperville, IL with another Chicago district to assist in the Northern Illinois University transition of customer experience between the new territories. These meetings provided a chance to reconnect with old team members and a springboard into understanding the strengths of the new district. A critical aspect of these meetings was the mutual understanding of leadership principles, Chicago South 2010 vision, administrative expectations, and the rules of engagement. District meetings occur quarterly and are a great opportunity for role play practicing and implementation alignment. To encourage more frequent interactions among the team, shorter monthly meetings were planned and executed to complement the corporate and district meeting cycle. The intent is to drive connections, build trust across all representatives and engage the leadership, business ownership and creativity of all members. Beginning with the February session, one representative facilitated the review of Five Dysfunctions of a Team. During this exercise, representatives rated the team on principles from the book. This provided for a discussion on actions that can be taken to be a better team. In addition comments from one day of field observation for each representative were provided by the new sales manager. Together these provided team direction on notable strengths and possible gaps. Finally, the district capitalized on the relationship with Northern Illinois University’s Professional Sales Program when three representatives and the manager attended a presentation by Jerry Acuff which focused on his pharmaceutical selling experiences via his book, The Relationship Edge in Business. His insights were shared at the March district meeting and representatives requested a review the book at the June district meeting. Acuff revealed that the key to strategic influence and selling success is in the Application Article relationships with customers. While not rocket science, it is a fundamental to increasing value to the customers. Impact Through these preliminary actions, teammates were able to gain insight on each other, identify common backgrounds and interests and observe the sales manager modeling the behavior that was expected: real conversation, the ability to balance work and life and no hidden agendas The Strengths Finder assessment of each new representative, found in the book Now, Discover Your Strengths, provided an overview of the new team. The book postulates that when you concentrate development on an individual’s strength (rather than a weakness), more total growth happens for that individual. The results of the survey provided each person with their top five strengths from a potential 34 specific themes. While everyone has a unique profile, the team composite snapshot found 10 individuals with an “achiever” theme. This was fortunate in that research has indicated that for the team to grow the fastest, the “achiever” theme has drive. This person, or team, has a constant need for achievement and that every day starts at zero and something tangible must be accomplished in order to feel good about them. This internal fire pushes the person for achievement. The other team top strengths were “competition” and “positivity”. Both of these themes use performance as the unit of measurement and must have comparisons. The competition theme shows that if you can compare, you can compete; and if you can compete, you can win. The positivity theme indicates that we are generous with praise, quick to smile and looking for the positive in situations. By balancing the tenacity of competition and achiever strengths with the high Fall 2009 69 level of positive energy, the team dynamic appears to have huge upside potential if it can be aligned, framed and coached toward this potential. To complement the Strengths Finder, each member completed a personnel survey highlighting their hobbies, why they chose their career, what would they like to change about the job, characteristics of their best and worst managers and how they liked to be coached. In addition, the representatives ranked 12 unique areas that each representative found important. These areas included: 1. money 2. recognition from management 3. job security 4. being trusted 5. a sense of belonging 6. opportunity for promotion 7. opportunity for travel 8. challenging work 9. pleasant work environment 10. interesting work 11. loyalty from management 12. opportunity to learn Teams will achieve top performance only if all individuals are working at their highest and are engaged in what they do. The surveys showed those characteristics that each representative value in their career and life while establishing a road map for individual coaching. The district overall, noted “money” as the top motivator while “being trusted” and “loyalty” were the also selected characteristics from the group. These data helped form an individual coaching plan of Vol. 9, No. 4 70 Journal of Selling & Major Account Management how to coach for top performance. Finally, the plan was enhanced with recent performance management documents and verified with previous managers’ behavioral observations. Going into 2010 and the “launch” of the new district, the team building strategy was built around each individual. Step Two: Development of a Team Building Strategy Developing a Team Strategy was accomplished by dividing the 14 sales representatives into smaller units (pods) which resulted in three pods (City, Suburb and Specialty). Each of the pods then assigned an individual to be a product expert for the pod (on the currently marketed products). Impact Individuals that meet face-to-face built connections and common interests quicker than those that were limited by telephone or email (or even texting with a photo attachment). Because the new district was geographically smaller than others in the country, this provided a differential advantage for Chicago South District. Next, to promote ownership, each representative named their territory to highlight the uniqueness, grow their sense of ownership and to have a little fun. The overarching goal was to seek consistent district expectations in order to promote strategy execution across the entire team (calls, frequency, programming) while allowing each individual owner to make decisions to maximize results. The team took it to heart with territory names reflecting geography, personal interests and customer dynamics. Some examples included: Jersey Shore, The Appointment, The Hub, Southside and Money Pit. These 14 territories now make up the Chicago South District, renamed the Franchise. Northern Illinois University Step Three: Team Interactions This step was to provide support and assistance by sharing product information between pods. Thus, the product expert for one pod would communicate with the same product expert in the other two pods. In this way ideas were shared to obtain best practices information to assist in developing the best marketing plan for each product. This provided consistency and allowed for some creativity. Impact At the April and July district meetings, a follow up survey of the Five Dysfunction’s team principles revealed some progress had been made: February April July Absence of Trust C- B B (3 A’s) Fear of Conflict C+ B B (3A’s) Lack of Commitment C B A- Avoidance of Accountability C B B+ Inattention to Results C+ B+ A The greatest improvement areas were in “lack of commitment” and “inattention to results”, areas that can cripple any district. Observing this growth has been refreshing yet challenging to continue the trends. I have worked through a sales representative team member and she has taken responsibility to drive the improvement. Application Article After the July meeting, she provided the team the report card and coaching: “The team seems to agree that overall all are committed and focused on results to drive for an achievement trip as a district. One area that was flat is “fear of conflict”. Conflict is a part of a good team and knowing when and how to call people out is a good thing. Some team members may want to be held accountable publically while others prefer one on one phone call. Bottom line, from the survey, ALL feel conflict is necessary and do NOT want to hold it back, but knowledge of how to approach each member is critical”. The team dynamics are growing with individuality, personality and some vulnerability which will lead to growth. Step Four: Developing Internal Structure and Process This step was needed to assist each pod in their ability to communicate with each other. In most cases when realignment occurs, each salesperson is so busy trying to make an impact in the new territory that little time is left to communicate with other members of the district (lone ranger syndrome). This step was to provide structured time for each product expert in each group to meet with the other pod product experts. The time frame along with the purpose of the meeting is listed below: • February SWOT of territory • March Specific product 1 targeting, resources, action plan • April 50 • May State of the District presentations (Hits/misses of sales results, Implementation and targeting, Leadership impact for pod, district Product action plan FQ310, Expected YTD results, Peer feedback with selection of top plan) Specific product 2 tracking top Fall 2009 71 Impact Business ownership of individual territories (while being part of a larger unit) is addressed through naming the district, “Franchise”, and each individual territory being named. This name reinforces consistency of expectations, results, and integrity while allowing individuals opportunity to make their own decisions of resource utilization, targeting, and message priorities. Product leaders were identified and expectations were set and reviewed. Each representative was provided leadership opportunities to assist in implementation of brand strategy across the district. Representatives are asked for their interest in product teams and other leadership positions and 12 of 14 representatives were accommodated with their first or second choice. Step Five: Accountability for Results This is the final step in preparing the new district for success. Each representative presented their business plans to their pod teams, district manager, and sales trainer. This presentation required each team member to evaluate implementation plans and provide written feedback on analysis, content and the plan. Impact Confusion with new alignments and territories was absent with this structure and a desire to start strong in the team. This structure forced communications between new teammates around product knowledge, business ownership, and implementation. Thus the representatives forgot about the company-driven chaos and turned to putting their territory back into order. Observations and implementation from the three pods varied with the completeness of SWOT analyses, speed of execution, team dynamics and candor among teammates. The district mantra was focused on winning in the marketplace. In our industry, the true value is providing Vol. 9, No. 4 72 Journal of Selling & Major Account Management information and products to help customers. However, every salesperson is driven by competition and reaping the rewards of respect and performance. Representatives started to combine projects and programs in order to stretch budget in the Suburb pod. They quickly sensed that a local expert would have an impact across each of their territories, provide less risk of program cancellations and help foster the customer networks across the western suburbs. Plus they could participate in the bigger event when a territory specific intervention was not cost justified. Additionally, this team quickly adapted best practices observed in the discussion of strategy, business acumen and implementation. By the March meeting, one representative proactively distributed an agenda and requested information at the pod meeting. In the Specialty pod, customer location limitations forced two monthly meetings to a collaboration site conference call. This use of technology reduced the time investment to 45 minutes versus the three hour travel time necessary for 40 % of the team. Even with this time efficiency, team connection of these five representatives (from districts) slowed versus the two general pods. To complement the team dynamics, the area director facilitated two face-to -face meetings with the entire Specialty sales team (22 representatives from five states) in March and April. This intervention played into the development of the team and brought the five teammates together in their execution of the area sales strategy. Additionally, the area meeting clarified the role each representative had within the Specialty pod and solidified the role of candor among the team. In the City pod, two of the four had completely new geographies and saw the new territory as a challenge to master. In the first several Northern Illinois University meetings, locations presented suboptimal conditions to discuss business and time of day to conduct business conflicted among territories. At the same time, the two new territories were located at least an hour away from any city meeting site and held a trade off - meeting versus selling. During the first two meetings, the majority of the dialogue was “reporting in” on each individual territory and sharing customer information/transition. Observations from both the City pod and with three Specialty territories, revolves around the small impact of a vast number of customers. This will deserve additional research during the second half of 2010. As for the City team, logistics don’t allow joint programming but the shear opportunities for team brainstorming may align and combine this group for long term performance. At the May business plan review of each pod, a new opportunity was provided that would increase the possibility of candor in business ownership while enhancing trust, force analysis of each territory and benchmark those skills with other representatives. For this meeting, each presentation was limited to 30 minutes with an assigned agenda. Additionally, the area sales trainer was present to reduce bias and provide her in-depth analysis of the data. Finally, written peer feedback on each “State of the Territory” was utilized for determining the top plan and identifying best practices. Feedback from representatives indicated that the published data was more efficient (less time consuming), offered a fresh insight of customer investments (calls, frequency, messages, programs, samples) and made them think more strategically of their own territory franchises. But like all good things, habits take time and repetition to form effectiveness. The top three plans (one from each pod) will also be showcased at an upcoming district meeting to Application Article show “what good looks like” and raise the level of analysis and planning RESULTS The consistent implementation and first quarter sales results rank the district in the top 15 percent across the country. Implementation (e.g., calls, frequency, and messages) was slow into early February, but has consistently been above expectations for all parameters measured by management since then and leads the Midwest Area. Some territory plans were streamlined into an updated SWOT analysis followed by two pages of an executive summary that were handed out to be reviewed by the pod. Other updates were available only by presentation format, while some were small binders of data to support the action plan. Regardless of style, the “the bar has been raised”. Specific customers that influence specific products were interwoven with quantity of interactions (calls, frequency) and interventions (programs, lunch or breakfast dialogues) to determine if actions had impacted the business. Further, a clear plan for top performance for the rest of 2010 was developed for every territory. Business owners are emerging across the district! At the July session, the final piece of the team development puzzle was presented and discussed, accountability. Yes, accountability had previously been addressed but in the Oz Principle review led by two district MVPs, however, accountability was “double clicked” and brought to life. It spoke of seeing a problem, owning it as your own, solving the riddle of what needed to get done, then doing it! As owners of each territory, this mentality must become part of the culture. The company has been occupied tracking calls per day, frequency of contacts over a rolling three month period, programs and the size of customers attending events. Other measures include quantity of product dialogues with the top 50 customers Fall 2009 73 for each product, budget compliance and the quantity of samples utilized with all customers. Finally, customers are now being asked to rate our company in three distinct areas compared to the competition. Bottom line: A lot of things to evaluate monthly in order to modify and maximize the value to the customer which will drive sales. Customer Comments The first set of data was collected January thru March with customers in the five-state area ranking the company above the competitors in trust, satisfaction of delivering value to their practice and engaging them in a manner to help achieve better outcomes District Results Since February, the team has exceeded company expectations on calls per day, frequency of contact and programs. In fact in the first 100 days an the eight district area, Chicago South is the leader in calls, frequency, programs, and targeted physicians attending programs and with appropriate dialogues with top customers for every product. That means the district is the benchmark for implementation. SALES PERFORMANCE With the quick pace of the change and the increasing complexities of selling, the year is far from over. Five months of sales data have been collected and the district is exceeding quota and is ranked in the top 10% of districts in the US. That means the customer surveys, implementation data and sales results are providing a scorecard that supports a successful process. Chuck. Howlett is District Sales Manager— Chicago, IL area Phone: (630) 461-3242 Vol. 9, No. 4 74 Journal of Selling & Major Account Management REFERENCES Acuff, Jerry with Wally Wood (2007), The Relationship Edge in Business, Hoboken, NJ, John Wiley & Sons, Inc. Buckingham, Marcus and Donald O. Clifton, Ph. D (2001) Now Discover Your Strengths, New York, NY, The Free Press. Conners, Roger, Tom Smith, Craig Hickman (2004), The Oz Principle, New York, NY, Penguin Group. Griffin, Natalie Shope (2003), "Personalize Your Management Development," Harvard Business Review, March, pages 3-8. Kim, W. Chan and Renee Mauborne (2003), "Tipping Point Leadership," Harvard Business Review, April, pages 3-11. Lencioni, Patrick (2002), The Five Dysfunctions of a Team, San Francisco, CA, Jossey-Bass. Northern Illinois University