Joe Salatino, President of Great Northern American
Colby Rampton MGT 8050-01 Chapter 5 Case Study 1. What kind of reinforcers does Salatino use to motivate his salespeople? Salatino’s methods are primarily based upon positive reinforcement methods, using secondary reinforcers. In the case study, it mentioned several devices in the salesroom. There are rotating blue lights that flash when a deal is on. There are large dry-erase boards where a manager would draw “snowballs” at the end of each sale, which would serve as visual cues to the salespeople. By providing commissions to his salespeople, Salatino uses secondary reinforcers, ie money, to incentivize his salesforce to keep selling.
Salespeople can receive between 5% and 12% commission, and the level of commission would provide an increasing incentive to sell the higher-commission items. I would assume that the salespeople that had been there awhile also might enjoy the frenetic pace of the sales floor, and that would serve as a secondary reinforcer for them to come to work each day. It’s probably an exciting environment for them to work in. 2. What kind of reinforcement schedule is used by Great Northern American to pay salespeople? I would break this question into two portions.
Simplistically, Great Northern American probably uses a fixed interval schedule to pay their salespeople according to a specified pay period, perhaps biweekly or monthly. If you consider the earning of commission as “payment,” though, you could also argue that they use a form of a fixed ratio schedule to pay their salespeople. When the “sale is on,” each salesperson has great incentive to close as many deals as possible in the period, because they are going to be able to sell more and earn higher commissions during that time period. The case mentions that the noise and pace is “fast and furious. This is in line with a description of the fixed ratio schedule, which “produces a high response rate when the time for reinforcement is close, followed by periods of steady behavior. ” While it sounds like the sales team is always a little crazy, I would imagine that the special promotions amp it up even more while they’re going on. And regardless of whether there is a promotion going on, the sales floors’ pay is tied directly to their sales performance, similar to manufacturing plants with their piece-rate system. 3. If you were Salatino, how might the concept of self-efficacy help you hire successful salespeople?
It sounds like he’s already thought about it, in terms of the types of salespeople he hires. The case says that he looks for telemarketers that have an upbeat attitude, are highly self motivated, can take responsibility for both the good and the bad results, and take initiative without being told what to do all the time. Self-efficacy is basically an individual’s confidence in their ability to perform a specific task in a specific situation. By seeking telemarketers with the attributes mentioned in the above paragraph, Salatino is essentially looking for salespeople with a high level of self-efficacy.
These would be independent people with an internal locus of control; they would probably not be stressed by a loud, fast-paced environment and a reward system that only rewards them when they perform well. And they would push themselves to do better each month. Self efficacy influences what activities and goals individuals choose for themselves and how much persistence and effort they exert. Potential new hires that had already been effective previously as a salesperson would probably have a higher level of self-efficacy, so it would make sense for Salatino to hire salespeople with as much experience as possible.
General analysis It seems like Great Northern American has done a decent job of using learning concepts to improve salesperson performance…they have been going at it for 35 years, after all, and are still competitive in the marketplace. It would appear that Salatino has proven techniques that help incentivize people to generate sales for the company. The case mentioned that the company was faced with stiff competition from internet sellers. With the developments in the past decade of telecommuting arrangements, there may be threats from direct competitors that employ cheaper methods of direct selling.
Implications/future recommendations The case really didn’t give a ton of details about the company, so it’s hard to know how much work they’ve put into maximizing salesperson performance. If they haven’t spent much time on it, I would recommend they experiment with a variable ratio reinforcement schedule. They may perform even better if they know that they’ll get paid within 1-3 days’ time, rather than every two weeks. Additionally, I would recommend they become more educated about telecommuting, and effective ways of improving performance when salespeople are in remote locations.
Buyers are turning more and more towards the web to make their purchases, and having a large workforce in a salesroom carries overhead costs that some of their online competitors may not have. It’s possible that the camaraderie shared by working in the salesroom carries its own form of positive reinforcement that is a financial benefit to the company. But if competitors begin to undercut them, they could look at ways of maintaining high performance through telecommuting. This could be done by having a live web page that shows active sales promotions, top sellers for the hour/day/week, and current commission due to the telemarketer.