Research: How Mixed Incentives May Be Hurting Your Company

Daniels faculty member Yashar Atefi shares results from recent sales research

Setting aggressive, but attainable goals is a crucial part of a sales organization’s recipe for success. But how do you balance individual and team goals? Does offering both pit employees against each other? Does it change their willingness to provide their colleagues advice?

Yashar Atefi, the Evelyn and Jay G. Piccinati Associate Professor of Marketing and the co-director of the Sales Leadership Center at the Daniels College of Business, recently completed research that sought to answer those questions.

Atefi and his co-researchers worked with a large sales team at an international firm to gather data, surveying how individual and team incentives impacted the way people sought and gave advice at the organization. The goal was to use a social science lens to find the “secret sauce” for getting sales teams to work together.

Yashar Atefi

The research, titled “Coopetition’ in the presence of team and individual incentives: Evidence from the advice network of a sales organization,” was published in the March 2024 issue of the Journal of the Academy of Marketing Science. The impact of incentives has been well studied, but little research explores this specific topic, Atefi said.

“Very few researchers have actually looked at situations where you have a mixed (individual and team) incentive system. So that’s why it’s unique in this setting that we were looking at this combination,” he said.

To gather data, Atefi and his fellow researchers surveyed 540 salespeople at a leading international business-to-business firm. They were asked a variety of questions that explored how team and individual incentives drove both advice seeking and advice giving. The survey also asked how the composition of the group of advice givers influenced the effectiveness of the advice in improving performance.

What they found was that conflict arose in giving and receiving advice in a mixed incentive system. With a team goal set by management, employees are more likely to give advice to others and less likely to seek it. Conversely, when assigned individual goals, employees are more interested in receiving advice and less interested in giving it. And those that do provide advice around individual incentives typically provide less helpful information.

“The overall conclusion of this research is maybe you shouldn’t mix the two types of incentives. It creates a very complex dynamic,” Atefi said.

As an alternative, Atefi said sales organizations should consider creating very specific team and individual goals that don’t overlap or compete. This may look like a situation that encourages the team to sell a shared product that is excluded from individual goals.

“It’s good to know where to apply team incentives and where to apply individual incentives, and distinguish between the two tasks as much as possible,” he said.

This social science and business research is applicable beyond the sales world. Atefi said the same themes from this research can be applied across a variety of organizations.

“Incentives are very effective in determining the behavior of people. For that same reason, it’s very important to think through what kind of behavior each incentive will trigger and not mix too many different goals together,” he said.

With this research completed, Atefi said he has brought it into his classroom at Daniels, instructing his students on how to create effective sales incentive programs at their current and future companies.