ADAMAWA BUSINESS JOURNAL ISSN1 55274-2177 Volume 1, Number 2, Oct 2006 Adamawa Business Journal All rights reserved ADAMAWA BUSINESS JOURNAL ISSN 1 55274-2177 Editorial Board Founding Editor Dr. A.A.Aminu Department of Business Management University of Maiduguri. Associate Editor E.O.ONI Department of Business Administration Adamawa State University, Mubi-Nigeria Secretary Mr. John Ldama Department of Business Administration Adamawa State University, Mubi-Nigeria Editorial Advisers Prof. Usman A. Zahradeen Department of Business Administration Bayero University, Kano Prof Walter C. Ndubuisi Department of Business Management University of Maiduguri Prof. Abdullahi Mohammed Bashir Department of Accounting Usman Danfodiyo University, Sokoto Prof Dahiru Hassan Balami Department of Economic University of Maiduguri Copyright Copyright is vested in Adamawa Business Journal. However, permission to use articles in this journal for the purpose of teaching, research and academic discourses is given on the condition that the source article(s) is duely acknowledged and documented. Indemnity The views expressed or produced ideas reported in articles published in this Journal are those of the author(s) riot of Adamawa Business Journal or Adamawa State University, Authors are therefore strictly and severally responsible for any violation of copyrights of other author(s) and or Publishers. Adamawa Business Journal ISSN 1 55274-2177 NOTES TO CONTRIBUTORS Persons wishing to contribute in this journal should follow the following guidelines 1. Articles should be originally in nature and have not been submitted for publication elsewhere. 2. Papers/Articles should not exceed fifteen 15 pages on double spacing using Ms Word. 3. An abstract of not more than 200 words and should be precise and clear on the subject matter. 4. References should be in Harvard or A.P.A style. Tables and figures should be typed in the text and numbered sequentially. 5. Two printed copies of each article/paper and one on a new 3.5' diskette should be sent to the Editor together with an assessment fee of Nl,500.00 in cash or bank draft payable to the secretary. 6. Each article assessed and accepted for publication attracts token fee/charge to supplement the cost of printing the journal. Articles should not be submitted to: The Editor Adamawa Business Journal Department of Business Administration Adamawa State University P.M.B 25 Mubi-Nigeria ; Subscription Copies of this journal are available from Department of Business Administration, Adamawa State University, Mubi-Nigeria at a price of N500.00, N750.00 and N1000.00 for students, individuals and institutions respectively. The present volume contains nineteen articles from contributors from various universities in Nigeria and the journal has greatly contributed to the development of management education in Nigeria. Consequently 1 shall like to thank all our contributors for their scholarly articles and invites others to send in their articles/papers in our next edition so as to share their research findings with our numerous readers all over the world. Finally, I would like to thank the management of Adamawa State University, Mubi for their academic, moral and support given to the production of the journal. Dr. E.O.ONI Associate Editor ADAMAWA BUSINESS JOURNAL, ISSN I 55274-2177 CONTENT Volume 1. Number 2 October 2006 A PANACEA TOWARDS SOLVING CURRENT PROBLEM IN NIGERIA 1 M.k.AdebayoESQand Adekeye Shade (Mrs) A RE-EXAMINATION OF EXPORTS AND ECONOMIC GROWTH IN DEVELOPING ECONOMIES: EMPERICAL EVIDENCE FROM NIGERIA. lyeli.I.Iyeli 15 A S1TUATIONAL ANALYSIS OF UNEMPLOYMENT IN NIGERIA Dr. E.O.ONI 24 AN EMPIRICAL EXAMINATION OF THE ACCURACY OF PROFIT FORCASTS INCLUDED IN PROSPECTUSES Dr. S.S.Maimako 43 . AN APPRAISAL OF FINANCIAL PERFORMANCE OF PRIVATICED STATE-OWNED ENTERPRISES IN NIGERIA A.G.Alooma, and Chris Musa Sika, 52 ASSETS PORTFOLIO BEHAVOUR OF COMMERCIAL BANKS IN NIGERIA: A CO-INTEGRATION AND THE ERROR CORRECTION SPECIFICATION: ON EMPIRICAL ANALYSIS. Dr. E.O.ONI, 67 BANK CONSOLIDATION IN NIGERIA: EMPIRITIVE FOR THE SURVIVAL OF THE BANKING INDUSTRY Goshit, Gedeon Gokum. 78. CONTRIBUTORY PENSION SCHEME: OPURTUNITIES AND CHALLENGES FOR THE NIGERIAN FINANCIAL INSTITUTIONS Dr. Y.B.Maiwada 89 DO UNDERGRADUATES HAVE WHAT IT TAKES TO BE INTERPRENUERS AND MANAGERS OF SMALL BUSINESSES. A STUDY OF VALUES AND PERSONALITIES. Dr. (Mrs) S.L.Adeyimi 1OO DUE PROCESS OF MAKING PAYMENT IN HIGHER INSTITUTION OF LEARNING Paul Aondona Angahar. 114 EFFECTS OF GOVERNMENT MARKETING ENVIRONMENT ON AGRICULTURAL DEVELOPMENT- A STUDY ON KWARA STATE COMMERCIAL FARMING INITIATIVES. R.A.Gbadeyan. 120 IMPACT OF THE CENTRAL SECURITIES CLEARING SYSTEM OPERATIONS ON THE DE VEOPMENT OF CAPITAL MARKET OPERATION. Ishaya Luka Chechet. 130 MANAGEMENT BY OBJECTIVES (MBO) AS A CHALLENG FOR '141 DEVELOPMENT OF ADAMAWA STATE: CASE STUDY OF SELECTED ORGANIZATIONS Ldarna John SMALL AND MEDIUM SCALE FNTERPRISES (SMEs) AS A CRITICAL FACTOR ECONOMIC GROWTH AND DEVELOPMENT IN NIGERIA: A THEORITICAL PERSPECTIVE John ltodo INTERNAL AUDIT AND CORPORATE CONTROL OF IRREGULARITIES AND FRUADS Dr. Adefila J. J 150 156 THE IMPACT OF CONPENSATION PLAN ON SALES PERSON PEFORMANCE: AN ATTRIBUTIONAL Dr. J.O. Olujide and Aremu Mukaila Ayanda. 164 THE ROLE OF E-COMMETCE IN CONSUMER BUYING DECISION Bananda Robinson A. 173 WOMEN 1NTERPRENUERSH1P DEVELOPMENT IN KWARA STATE: THE STUDY OF UNDP ASSISTED WOMEN DEVELOPMENT PROGRAMME Umar Gunu. WHY PEOPLE BUY THE GOALS OF THE CONSUMER VeronicaN.Ndubuisi. 189 181 THE IMPACT OF COMPENSATION PLAN ON SALESPERSON PERFORMANCE: AN ATTRIBUTIONAL APPROACH J. O. Olujide Ph.D. E-mail: olujack52@yahoo.co.uk Mobile line - 08033946877 and Aremu, Mukaila Ayanda E-mail: aremiiilaiaa@yahoo.com, aremuilala@unilorin.edu.ng Mobile line - 08036718531 Department of Business Administration, Faculty of Business & Social Sciences, University of llorin, llorin, Nigeria Abstract This study examined how managers of organizations compensate their salesperson effort to impact evaluations of salesperson performance. Compensation plan is attributed to the salesperson's ability or a performance attributed to the salesperson's effort. The results of the study indicated that managers of many organizations react more punitively toward salespeople with low performances attributed to effort than toward salespeople with low performances attributed to ability in most of the organizations. It concludes therefore that effective sales promotion performance will be determined by the good compensation plan by the manager of any organization. INTRODUCTION Putting the customer first, through effective sales promotion is probably the most popular phrase used by most of the organizations in recent time. This ranges from giant conglomerates to the corner barbershops. Businesses have long sought to distract and attract the attention of potential customers that live in a world of ever increasing commercial bombardment. Everyday Nigerians are exposed to thousands of voices and images in magazines, newspapers, and on billboards, websites, radio and television. Sales promotions of all varieties pop up everywhere on streets, in stores and restaurants, and on public transportation. Each of these sales promotion attempts to steal at least a fraction of an unsuspecting person's time to inform him or her of the amazing and different attributes of the product at hand. Because of the constant media saturation that most people experience daily, they eventually become numb to standard sales promotion. The challenge of the sales people is to find a hook that will hold the customer's attention and keep them from changing the channel or turning the page. However, effective sales promotion performance will be determined by the good compensation plan by the manager of any organization. The purpose of this study is to examine if good compensation plan determine the performance of sales person in an organization. It is believe that if organization adequately compensates the sales person they will handle sales promotion and programme effectively and this will affect positively the organization performance. 162 THEORETICAL FRAMEWORK Another area of interest in the sales management literature involves the role of the manager in providing guidance, direction, and compensation to the sales personnel as they operate in. their boundary spanning. Previous studies have directly or indirectly linked manager; behaviors in the work environments to a variety of desirable work related attitudes and perceptions. These include job satisfaction and reduced role stress (Babin & Boles, 1996; Kohli, 1989). Thus, previous research have demonstrated considerable interest in the area of salesperson as well as supervisory behavior/management style. While many studies have investigated these issues, one area that has not been directly addressed is how a compensation plan is influenced by the sales performance. Attribution theory pertains to the processes used by individuals to interpret events by developing causal explanations. According to Weiner (1972), attribution theorists are interested in the relationship between events and the reasoning that is developed to explain those events. Weiner's (1972; 1980) attribution paradigm was derived from Heider (1958). In his analysis, Heider (1958) suggested that people act like "naive scientists" by trying to explain why particular behaviors or events occur. In attempting to interpret behaviors, individuals may consider factors within the person (such as ability and effort) or within the environment (such as task difficulty and luck). Weiner (1972) proposed that these perceived causes for behavior (ability, effort, task difficulty, and luck) vary along three dimensions: Locus - whether the cause in internal or external to the person; stability - whether or not the cause varies over time; and controllability - whether the cause in under the person's volitional control. Subsequent responses to a behavior (e.g., performance) depend more on the underlying dimension of the attributed cause than on the cause itself. Since both ability and effort are internal to the person, they may vary in terms of stability and controllability. Specifically, ability is generally considered a stable and uncontrollable cause; whereas effort is considered an unstable and controllable cause. According to Weiner, it is the controllability of the cause that affects evaluations. Since effort is generally considered as more controllable than ability, attributions to effort are predicted to result in more extreme evaluations than attributions to ability since the individual is seen as more personally responsible for the performance outcome when it is attributed to effort. A number of studies in non-sales environments have found that when success was attributed to effort, high performance was evaluated more positively, and when failure was attributed to effort, low performance was more severely punished (Weiner, Russell, and Lehrman, 1979; Knowlton and Mitchell, 1980; Pence, Pendleton, Dobbins, and Sgro, 1982). One area, however, that has received relatively less attention concerns how an organization's work environment/climate influences the actual behaviors occurring within the sales encounter between outside business-to-business salespeople and their customers (Oliver & Anderson, 1994; Vitell, Rallaplalli, & Singhapakdi, 1993). The stability rather than the controllability of the perceived cause determines responses that are based on expectations of future performance (Weiner, 1972). When performance is attributed to a stable cause, the individual is expected to perform in a similar manner in the future. Since ability is typically viewed as more stable than effort, responses that require some predictions of future performance, such as promotion should be governed by ability attributions. 163 COMPENSATION PLAN Salesperson compensation is another of the key issues in sales force management (Moncrief and Shipp, 1997). Organisations typically use compensation plans as one method to direct salesperson behavior and provide motivation. Unfortunately, given its importance to management and its influence on salesperson behaviors, empirical research concerning the effect of compensation plans is somewhat limited. Most of the academic literature examining this issue appears to focus either on the preferences of managers and salespeople for various types of rewards (Chonko, Tanner and Weeks, 1992) or the role of incentives to achieve sales objectives (Caballero, 1988; Hastings, Kiely, & Watkins, 1988). While the reward attractiveness literature suggests plans that may be more or less attractive to salespeople, it provides little insight into how the plan affects behavior other than motivation. Previous studies examining compensation and/or managerial behaviors on salesperson activities have examined the role of psychological climate on the attractiveness of rewards (Tyagi, 1985), the role of compensation as it influences the performance of service providers (Evans & Grant, 1992). Another area of compensation research that has recently received relatively greater interest involves examining the effects of an outcome-based versus behaviorbased management control system (Anderson & Oliver, 1987). Cravens et al. (1993) found that behavioral control systems are important in providing more direct control of salesperson behaviors. Most organizations intend to use their compensation system to influence salesperson behavior --thereby achieving important organizational goals (Churchill, Ford and Walker, 1997). However, if that system is resulting in negative or unwanted behaviors, then the organization may see unanticipated consequences of the compensation plan. Further, a manager will see the compensation system as guiding and directing his/her managerial focus. Thus, a compensation plan that is improperly targeted or imprecisely thought out may result in unwanted results in terms of salesperson behaviors relative to customers. SELLING AND CUSTOMER ORIENTATION Customer orientation is "the practice of the marketing concept at the level of the individual salesperson and customer" by providing customer satisfaction and establishing mutually beneficial long-term relationships (Saxe and Weitz 1982). On the other hand, a firm engages in selling orientation when "an organization seeks to stimulate demand for products it produces, rather than producing products in response to customer needs" (Saxe and Weitz, 1982). A salesperson's customer orientation has been linked to several very positive outcomes in the buyer-salesperson dyad. One set of these results relates to salesperson performance from the selling firm's perspective. Customer orientation has been linked to salesperson performance in various settings. These include both industrial and retail settings (Dunlap, Dotson & Chambers, 1988; Swenson and Herche, 1994). Salespeople that adopt a customer oriented versus a sales oriented approach to selling appear to perform better across time. A second set of consequences occurs in the dyadic interaction between a salesperson and his/her customer. First, customer orientation is related to relationship quality in a business-to-business sales environment (Williams and Altaway, 1996). In addition, the greater the customer orientation a salesperson exhibits toward a customer, the greater the customer satisfaction with the salesperson and indirectly with the organisation and manufacturer (Goff, Boles, Bellenger, and Stojack, 1997). These results indicate the great importance that an organisation should place on a salesperson that sells expensive or risky products/services adopting a customer oriented approach to the sales process. The question that remains to be answered are how to develop a customer oriented sales force? 164 Steps in Sales Promotion In using sales promotion, the organisation must take some major decision steps, which (include: • Establishing the sales promotion objectives • Selecting the sales promotion tools • Developing the sales promotion programme • Implementing and controlling the promotion programme • Evaluation of the sales promotion result. Establishing the sales promotion objectives: According to Ostland (1969) sales promotion objectives are derived from basic marketing communication objectives, which are derived from more basic marketing objectives: such promotion varies with the type of target market. For consumers, objectives include encouraging more usage and purchase of large size units, building trial among members and attracting competitors' brand users. For the retailers, objectives include inducing retailer to carry new items and higher levels of inventory, encouraging off-season buying, encouraging stocking of related items, building brand loyalty of retailer, and gaining new retail outlets. For the sales force objectives include: encouraging support of a new product, or model, encouraging more prosperity and stimulating off-session sales. Selecting the Sales Promotion Took: The promotion planner should take into account the type of market, sales promotion objectives, competitive conditions and cost effectiveness of each tool. The main tools are: samples, coupons, price packs, premium and trading stamps. These tools made up the bulk of consumer promotion. Samples are offers of amount or trial of a product to consumers. Coupons are certificate entitling the bearer to a stated scoring on the purchase of a specific product. They can be effective in stimulating sales of a mature brand and inducing early trial of a new brand. Price packs (also called cents off deals) are offers to consumers of savings off the regular price of a product, flagged in the label or package. Price packs are very effective in stimulating short terms sales, even more than coupons. Premiums are merchandise offered at a relatively low cost or free as incentives to purchase a particular product. A with-pack premium accomplishes the product inside (in pack) or (on pack) the package. Trading stamps are special type of premium received by customers making purchases, which they can redeem for merchandise through stamp redemption centers. Developing the Sales Promotion Programme: Kotler (2004) make some additional decisions to define the full promotion programme such as size of incentive offered: - here some of the large consumer package goods firms have a sales promotion manager who studies the effectiveness of past promotions and recommends appropriate incentives to brand manager. Other programmes are conditions for participation, distribution vehicle for promotion, duration of promotion, timing of promotion and total sales promotion budget /cost. Implementing and Controlling the Promotion Programme: Implementation and control plan for individual promotion should be established. Implementing planning must cover lead-time and self off time; lead-time is the time necessary to prepare the programme prior to launching it. It covers initial planning, design, and approval of package modification or material to be mailed or distributed to the home, preparation of conjunctive advertising and point of sales materials, notification of field sales personnel, establishment of allocations for special premium, or packaging and printing of special premium, or packaging materials production of advance inventories and staging at distribution centers in preparation for release at a specific date and finally the distribution to the retailer. 165 Evaluation of sales promotion result: Evaluation is a crucial and yet according to Strang (1976) "evaluation of promotion programs receives little attention". Even where attempt is made to evaluate a promotion, it is likely to be superficial. Evaluation in terms of profit ability is even less common. The most common method is to compare sales before, during and after a promotion. Sales promotion plays an important role in the total promotion mix. However, all the promotional elements are important and therefore, have to interact with each other to make any promotional activity successful. METHODOLOGY The study was conducted with business-to-business salespeople in Ilorin metropolis among the sales personnel of manufacturing organisations located in Ilorin. The organisations covered during the investigation were Nigerian Bottling Company, Dangote Industries, Global Soap and Detergent Industries, all in Ilorin. The sampling method used for this research is modeled on purposive sampling (Jancowicz, 1991), whereby the choice of sample is made so that certain pre-conditions are met in respect of choosing sales persons whose views are relevant to the issue in question. The purposive sampling approach covered organisation with over 50 employees. The researcher administered the questionnaires to salespeople in the selected organisations. A total of one hundred and fifty (150) questionnaires were sent out; 123 replies were received, of which 113 were deemed to be valid. This constitutes a usable response rate of 75.3 per cent. Of the 113 usable responses, Nigerian Bottling Company sales persons had a higher proportion (42.3 per cent) of valid responses, while Global Soap and Detergent Industries had next to it (31.5 per cent) and Dangote Industries having the least (26.2 per cent). The typical sales personnel used for the investigation had a college education. Average sales experience with the organisation was slightly over two years. A non-parametric measure, which was based on chi square statistical method of analysis was used to test the formulated hypothesis. The primary purpose of this is to determine the association between compensation plan and sales person performance. Analysis of Variance - ANOVA was also used to test the relationship between the compensation plan and sales force performance among the three groups of the selected sales force in the three chosen organisations. MEASURES organisations is probably due to chance. DISCUSSION AND IMPLICATIONS Sales promotion is refer to as special selling effort employed All items used for this investigation were scored on a 1-5 response scale where 1 = uncertain, 2 4 items. Chi square analysis for goodness of fit, shows that our X20bt value (1.736) is less than the X2crit value (7.642) at 3 degrees of freedom and 0.05 significance level, therefore we deduce that the distribution of responses across = strongly disagree, 3 = disagree, 4 = agree and 5 = strongly agree. The sales person compensation plan measure consisted of 2 items; the management support for sales person selling approach measure was composed with 5 items; the management support for selling oriented sales approach scale consisted of 5 items; and the salesperson customer oriented selling scale included by different organizations to boost the image of their products in the competitive market and hence achieve high sales, maximizing profit and at the same time gaining competitive advantage over other organisation of the same trade. Sales promotion may be directed at consumers in the form of consumer promotion, or middlemen in the form of trade promotion. Even operators of the department store and supermarket use sales promotion periodically to clear their inventories in the form of Business Promotion. 166 The steps involves to plan and implement a sales promotion are quite similar to those in advertising campaign. You need to understand the target audience, establish objectives, identify resource constraints, select methods and vehicles, and evaluate the program after it is launched. The degree of salesperson performance exhibits has been linked to compensation plan established by the organisation. Saxe and Weit (1982) suggest that purchasers involved in risky situations where failure may be critical to the organisations are likely to be particularly motivated by a salesperson exhibiting a customer orientation. Research supports that position since it indicates that business-to-business customers and big-ticket retail buyers respond to a salesperson's aggressiveness. For these reasons, adequate compensation plan is very essential for the sales person if organisation wants to achieve its organisational goal(s). Previous studies have shown how a firm's market orientation (Siguaw, 1994) and culture (Williams and Attaway, 1996) can influence a salesperson's customer orientation. This study adds to this body of literature by indicating how a compensation plan affects sales performance that, in turn, can influence sales person selling approaches. Results from this paper indicate that the compensation plan used by an organisation has a strong influence on the selling style and performance of the sales person. It specifically revealed that compensation plan is positively related to managers encouraging a customer-oriented selling approach by their salespeople and negatively related to a manager emphasizing a selling oriented style of selling in their various organisations. Decisions concerning whether or not to compensate appear to be based on performance level in the three selected organisations, whereas decisions concerning the amount of pay increases appear to require comparisons among equivalent sales personnel. The study indicates that adequate compensation plan has been considered as the most appropriate parameter that will boost the morale of sales personnel. This was strongly agreed by the 68.8% of the sales person respondents. The calculated % c2 value 11.3 is greater than %t2 value at 9.42. Comparing Sales Person Responses Group Analysis of Variance (ANOVA) Source Between sales person group Within sales person group d.f 2 110 Sum of square 146.0500 1983.5034 Means square 73.025 18.03 F 4.050 4.050 Source: Authors Computation Since the F calculated is greater that F tabulated using ANOVA table at 0.05 level of significance with vi = 3 and v2 = 115 - 3 = 112 i.e. f* > f 0.05 (4.05 > 2.76) we reject the null hypothesis. The implication of this is that there is strong correlation between the compensation plan and sales person performance. Therefore, organization must repackage their compensation plan for the sales person in order to increase their performance. This will also enhance organisation performance. SUMMARY AND CONCLUSION The more complex a product or service is to understand and use, the slower is its adoption rate by the customers and buyers. This will then affect the sales effort of the : sales people. This usually call for sales aggressive on the part of the sales person. before the product or services can be pushed to the potential buyers. A variety of factors may moderate attributions for performance and subsequent'! responses to those attributions by the sales person. Dubinsky, Skinner and Whittler (1989) discovered that both attributions for responses to low performing salespeople \ varied depending on the salesperson's work history (good/bad). In this paper, it was : 167 assumed that the salespeople as having the same degree of training, experience education. One research direction would be to see what impact varying the levels of these, or other variables, would have on the effects of ability and effort attributions. 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