Effects of top-performer rewards on fellow salespeople: a double-edged sword

Abstract

Rewarding top performers is of strategic importance to the sales organization. Top-performing salespeople not only contribute significantly to the success of their firm but may also motivate the skill development of peer salespeople. However, both academic research and anecdotal evidence suggest that top performer rewards can boomerang by damaging peer salespeople's morale and productivity, although the underlying mechanisms and boundary conditions remain unclear. Using a sample of salespeople and their managers from financial investment firms in Taiwan, the authors uncover both positive and negative effects of top-performer rewards. Specifically, it is found that when behavior control is employed, top-performer rewards are positively associated with perceived top-performer customer-relationship-building competence only when overall organizational justice is high. By contrast, when organizational justice is low and behavior control is employed, top-performer rewards give rise to perceived favoritism. Moreover, in large sales units, top-performer rewards are much less likely associated with perceived favoritism when organizational justice is high. It is through the perceived top-performer customer-relationship-building competence and perceived favoritism that top-performer rewards have a double-edged sword effect on fellow salespeople's selling skills, opportunism, and sales performance. Theoretical and managerial implications are discussed.