DDBA 8524 Week 9 Sales Team Case Analysis Example

When the Commission Plan Speaks One Culture and the Sales Team Another: A Case Analysis of a Regional Sales Manager Reassigning Accounts Under an Individual Commission Plan in a Team Whose Members Expected to Share

Student Name

Walden University

DDBA 8524: Seminar in Multicultural Management

Instructor Name

Month Day, Year

When the Commission Plan Speaks One Culture and the Sales Team Another: A Case Analysis of a Regional Sales Manager Reassigning Accounts Under an Individual Commission Plan in a Team Whose Members Expected to Share

The Case

A composite medical device distributor operates a sales team of nine in Bogotá serving hospital accounts across Colombia. In January 2025, the company replaced a team bonus, shared equally when the team met its annual target, with an individual commission plan used across its Latin American and U.S. units. Under the new plan, each representative earns 4 percent of sales on accounts assigned to them. In March, the regional sales manager, Patricia, reassigned 22 hospital accounts to balance territories under the new plan. By September, three representatives had resigned, team sales were 11 percent below the prior year, and two large hospital clients had complained that representatives no longer covered for one another during absences.

What the Plan Assumed

The individual plan assumes that representatives will work harder when their pay reflects their own sales, and that assigning accounts clearly to one person will make responsibility clear. Gerhart and Fang (2005) reviewed research on national culture and human resource practice and cautioned that the effects of culture on how employees respond to pay are often overstated and that differences within countries usually exceed those between them. That caution matters here, since the case should not be explained only by saying that Colombians prefer team pay.

What the Team Expected

Interviews with the six remaining representatives showed that the team had long worked as a unit: they covered each other's accounts during absences, shared leads and introduced each other to hospital purchasing staff. Under the team bonus, that cooperation was rewarded; under the individual plan, helping a colleague cost the helper time without pay. Two representatives said they stopped covering absences because time on a colleague's account earned nothing. The plan did not create a cultural conflict so much as remove the reward for a practice the team relied on. Hofstede (1980) argued that preferences for individual versus collective arrangements vary across societies, and the team's history may reflect broader norms, but the specific mechanism is the incentive change.

The Reassignment

Patricia's reassignment worsened the effect. She moved accounts based on sales volume to equalize earnings potential, but did not consider which representatives had relationships with which hospital buyers. Five of the 22 accounts went to representatives who had never met the purchasing staff, and two of those five are the clients who complained.

Analysis

Kerr (1975) described firms that pay for one thing and then express surprise when they receive it instead of the thing they wanted, and the Bogotá team fits that description: the company hoped for team coverage and client service but paid only for individual sales. The decline in sales likely comes from both lost cooperation and broken client relationships. Tsui et al. (2007) noted that research on cross-cultural management often attributes outcomes to national culture when local organizational history explains them better; this team's own history of cooperation explains its response more precisely than a national label.

Recommendations

First, add a team component to the plan, such as a pool paid when regional targets are met, so cooperation is rewarded again. Second, credit coverage: when a representative serves a colleague's account during an absence, split the commission on that period's sales. Third, return the five reassigned accounts to representatives who know the buyers, or pair the new and former representatives for a transition period.

What Patricia Could Have Done Differently

Patricia acted on the plan she was given, and the reassignment was meant to be fair: equal earnings potential for each representative. Her error was treating accounts as volumes rather than relationships. Before moving accounts, she could have asked each representative which buyers knew them, kept those links where possible and balanced territories with new or unassigned accounts. She could also have told headquarters, before the plan began, that the team's practice of covering absences would lose its reward. Managers who apply a plan designed elsewhere have a duty to report how it fits the local work, not only to carry it out. That report would have given headquarters a chance to adjust the plan before the resignations.

Measuring Recovery

The team should track resignations, sales by account and the time to answer a hospital's request during a representative's absence for the next two quarters. Client complaints should fall within a quarter if coverage resumes.

Limits

The analysis rests on six interviews and one year of data. Representatives who left were not interviewed and may have had other reasons.

References

Gerhart, B., & Fang, M. (2005). National culture and human resource management: Assumptions and evidence. International Journal of Human Resource Management, 16(6), 971-986. https://doi.org/10.1080/09585190500120772

Hofstede, G. (1980). Motivation, leadership, and organization: Do American theories apply abroad? Organizational Dynamics, 9(1), 42-63. https://doi.org/10.1016/0090-2616(80)90013-3

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378

Tsui, A. S., Nifadkar, S. S., & Ou, A. Y. (2007). Cross-national, cross-cultural organizational behavior research: Advances, gaps, and recommendations. Journal of Management, 33(3), 426-478. https://doi.org/10.1177/0149206307300818