The possible use of reward systems for
improving the collaboration between
the marketing and sales department
A multiple case study
Master Thesis
By
Sven Baars
University of Groningen
Faculty of Economics and Business
June 2015
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Title page
Title
The possible use of reward systems for improving the
collaboration between the marketing and sales department:
A multiple case research
Author
Sven Baars
Student
s1926608
Contact details
Haddingestraat 41b
9711 KC Groningen
S.E.T.Baars@student.rug.nl06-12607059
University
Rijksuniversiteit Groningen
Faculty
Economics and Business
Master program
Msc Business Administration – Organizational & Management
Control
Supervisor
B. van der Kolk
Co-assessor
A. Rehman Abbasi
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Preface
This thesis was the last project of my master Organizational & Management control at the University of Groningen. After years of hard work I am proud that I have reached this phase in my educational career. The time at the university of Groningen was an interesting period wherein a had the chance to learn a lot about the different subjects in the field of business administration and to develop myself as a person. I will never forget the great times i have had in Groningen and therefore I would like to thank the university of Groningen for all the great moments and educational opportunities they provide me.
Second, I especially would like Dhr. B. Van der Kolk for his enthusiasm, support, confidence and trust during this research. The supportive character of the meetings creates a constructive environment that functioned as a guidance through the process of writing the thesis.
Third , I would like to thank the respondents of the three organization for their time, openness and input for this research .The information they provided made it possible to perform this research and to finish my thesis.
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Abstract
During the past decades, turbulent and rapidly changing markets had foster the need for collaboration between the marketing and sales department. However, through horizontal differentiation, both departments developed different perspective and mindset from each other which created difficulties in the collaboration between both departments. Only a few authors mentioned the possible use of reward systems for improving the collaboration between both departments but the prior literature does not make clear how these reward systems could help for the improvement of the collaboration between both departments. Therefore this research is focused on how the possible use of reward system could improve the collaboration between both departments. Because many organization were not familiar with the use of reward systems for interdepartmental collaboration, the focus of this research was on the perception concerning the applicability of reward systems and the possible use of these systems for improving the collaboration between both departments. The findings showed that reward systems could be useful tools for improving the collaboration between both departments by creating collective goals, shared resources and a mutual understanding. However, reward systems were only perceived as useful tools when contextual factors (organizational culture, national culture, strategy, size and structure) were speak in favor of the applicability of reward systems.
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Contents
1. Introduction ... 6 2. Theory ... 9 2.1 Organizational design ... 9 2.2 Collaboration ... 10 2.3 Reward systems ... 112.3.1 Different types of rewards ... 12
2.4 The relationship between marketing and sales ... 13
2.4.1 Different perspectives ... 13
2.3.2 Collaboration between marketing and sales ... 15
3. Methodology ... 18
3.1 Scope ... 18
3.2 Multiple case studies ... 18
3.3 Data collection ... 19
3.4 Data Analysis ... 20
3.5 Reliability and validity ... 21
4. Results ... 22
4.1 Nimag B.V ... 22
4.1.1 Different perspectives ... 22
4.1.2 The collaboration between marketing and sales ... 23
4.1.3 Reward systems ... 24
4.1.4 Conclusion ... 25
4.2 AkzoNobel ... 26
4.2.1 Different perspectives ... 26
4.2.2 The collaboration between marketing and sales ... 27
4.2.3 Reward systems ... 27
4.2.4 Conclusion ... 29
4.3 Nuon ... 29
4.3.1 Different perspective ... 29
4.3.2 The collaboration between marketing and sales ... 30
4.3.3 Reward systems ... 31
4.3.4 conclusion ... 32
4.4 Overview result ... 33
5 6. Conclusion ... 39 6.1 Main findings ... 39 6.2 Managerial implications ... 40 6.3 Limitations ... 40 6.4 Future research ... 41 References ... 42 Appendices ... 48
Appendix I: Extended case descriptions ... 48
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1. Introduction
Through turbulent and rapidly changing markets, collaboration between departments is necessary to be able to react fast on market changes. As the customer becomes more and more demanding, they can put pressure on organizations to fulfill their needs. The product knowledge of customers is increasing because more information is available on the internet. Therefore, the close interface with the market makes the relationship between the sales and marketing department especially interesting, because both departments are focused on the market in their own way.
Substantial research is conducted considering the collaboration between functional departments, based on the presumption that the collaboration between departments is improving business performance. Marketing’s interfaces with other business functions have attracted increased research attention. In the academic literature, much attention is devoted on the collaboration between marketing and research & development (R&D) (Homburg & Jensen, 2007). Others have investigated its interfaces with quality management, engineering, human resources and finance. However, in the existing literature, only limited attention was paid to the collaboration between the marketing and sales department (Homburg & Jensen, 2007). This is remarkable, as the customer becomes more and more demanding and habitually sees sales and marketing as a single function. For most of them, there is no clear distinction between these two departments and they think that they have the same purpose. However, in large organizations it is common that sales and marketing are separate and discrete functions (Le Meunier-Fitzhugh & Piercy, 2006). Nonetheless, the outcomes of both departments are dependent on each other. Therefore, it is crucial that there is a comprehensive collaboration between both departments (Day & Moorman, 2010).
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competitive advantage that might take years to realize (Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners, 2005 ( Kotler, Rackman & Krishnaswamy, 2006).
The sales and marketing departments bring different assets to an organization as a whole. The inherent connection between the departments lies in the fact that they share an overarching similar goal: Improving sales performance. Marketers generate leads and sales executives close the deal. It is clear that a strong collaboration between both departments is necessary for reaching this similar goal. (Kotler, Rackman, Krishnaswamy, 2006). The interdependencies between both departments results in the fact that they cannot survive without each other.
To bridge the gap between these departments, a carefully developed reward system could be a useful tool (Kerr & Slocum, 2005). Moreover, reward systems could be used to stimulate the motivation for departments to collaborate with each other and to achieve common overarching organizational goals (Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners, 2005). The purpose of this research is to create better insights in how reward systems could be used to motivate employees of both departments to collaborate more with each other and to achieve common goals. Because many organizations are not familiar with these systems for improving the collaboration between departments, it is all about the perception of how reward systems could be used and under with circumstances these reward systems are perceived as applicable tools. This will lead to the following research question and associated sub questions:
‘’How could reward systems be used for improving the collaboration between the marketing and sales department when they were perceived by organizations as applicable tools?
A: When are rewards systems perceived by organizations as applicable tools in order to improve the collaboration between the marketing and sales department?
B: How could reward systems be used for improving the collaboration between the marketing and sales department?
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2. Theory
The theoretical foundation is divided in four parts. In the first paragraph, the literature about organizational design gives a better understanding about the design of an organization with a narrow focus on horizontal differentiation followed by the literature concerning interdepartmental collaboration in the second paragraph. The third paragraph provides the literature concerning reward systems. The last paragraph is giving a broader view about the different perspectives of the marketing and sales departments. These perspectives are the outcomes of the differentiation between both departments. The last paragraph is explaining more about the collaboration between the marketing and sales department.
2.1 Organizational design
Organizational design is the process by which managers select and manage aspects of structure and culture in a way that organizations can control the activities necessary to achieve its goals (Lawrence & Lorsch 1967; Child, 2008; Jones, 2013). Horizontal differentiation is an important aspect of the structure in an organization and refers to the way an organization groups organizational tasks into departments (Child, 2008; Jones, 2013). Differentiation in departments increases organization’s control over its activities and allows the organizations to accomplish its tasks more effectively because of specialism(Lawrence & Lorsch 1967; Child 2008; Jones, 2013). Furthermore, The environmental uncertainty is playing an important role in the degree of differentiation in organizations. According to Olsen, Walker, Ruekert and Bonner (2001), horizontal differentiation enables organizations to spread and segment uncertainty by function and to charge groups of resolving the uncertainty that is concentrated in the domain of the function.
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2.2 Collaboration
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For managers it is important to achieve an appropriate balance between differentiation and collaboration and the mechanisms to use for a better collaboration between departments. The degree of collaboration versus differentiation is depending on the nature of the business, the structure of the organization and environmental uncertainty (Lawrence and Lorsch, 1986) For instance, a differentiated organization in a uncertain environment needs more collaboration compared to an differentiated organization in a simple market with standardized products (Child, 1972; Jones, 2010) . Nowadays it seems fair to conclude that there is always a degree of uncertainty because markets rapidly change which automatically means a need for collaboration between departments and the use of tools like reward systems to control this collaboration.
2.3 Reward systems
Horizontal differentiation makes it difficult for managers to coordinate the activities of the different departments in an effective way. Horizontal differentiation is creating pressure on senior management to developed a system of impersonal controls through the use of formal procedures like rewards systems (Child 1972, 2008). According to Groot & Selto (2013), reward systems are the set of procedures and standards for rewarding and compensating employees
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The primary goal of reward systems is to motivate employees to align their own natural self-interest with organization’s goals (Merchant, Van der Stede & Zheng, 2013). The focus of a reward system is on motivation and increasing the performance of individuals in an organization, and most interesting for this research, groups within an organization (Bonner & Sprinkle, 2002; Malmi & Brown, 2008). Important to notice is that there is no universal reward system because of the uniqueness of an organization. Although, no organization is exactly the same which also means that they have different goals (Groot& Selto, 2013). Organizational reward systems contain multiple elements as can be seen in figure 1.
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The goals and the structure of decision making which are the outcomes of the organizational strategy are directly influencing the structure and choice of the reward system. A reward system is a collection of objectives, measures, rewards and processes to reward individuals or groups (Groot & Selto, 2010). Rewards systems are important control tools for managers because they are a source of arousing employees motivation towards organizational goals (Flamholtz, Das & Tsui,1985). The reason why reward systems can motivate people and groups for increasing their performance is that employees are willing to make more effort in the presence of rewards than without rewards (Bonner & Sprinkle, 2002; Malmi & Brown,2008). An organization can control these rewards to influence behavior of employees towards the organizational goals. The controlling power over rewards is most effective when rewards are perceived as contingent upon performance and valued (Flamholtz. Das & Tsu, 1985). Furthermore, the motivational function of rewards is working strongest when the goals of the organization are in line with the goals of the employees. In this case goal congruence is taken place. Thus, control over rewards is strongest and most effective when reward-contingency and goal congruence are taking place (Flamholtz, Das & Tsui,1985).
2.3.1 Different types of rewards
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rewards is interesting because through different targets, both departments develop different time horizons. Individual rewards are related to the performance of the employee as an individual whereas group rewards are based on the performance of a group of employees (Mitchell & Silver, 1990). Because this research is based on the comparison of two departments, we are most interesting in the rewards based on group performance, in this case departmental performance. In organizations, departments are responsible for achieving specific goals which are together contributing to overarching organizational goals. Therefore, organizations set up control mechanisms like reward systems for departments to motivate managers and employees to achieve departmental goals and to develop goal congruence (Bonnera & Sprinkle, 2002). According to Tjosvold (1988) control mechanisms like reward systems could also be used for cross-functional collaboration by assigning departments common goals, informing them that their role is to exchange information and ideas and rewarding them for successfully accomplishing common goals. This means that reward system could be interesting for the collaboration between the marketing and sales department
2.4 The relationship between marketing and sales
In large organizations, horizontal differentiation is resulting in different departments for sales and marketing (Kotler, Rackham & Krishnaswamy, 2006). Because both departments have their own goals and tasks, they have necessarily their own expertise and activities performed by different individuals (Shapiro, 2002; Kotler, Rackham & Krishnaswamy, 2006; Meunier-FitzHugh & Piercy, 2007). The differentiation between both departments is leading to the fact that both functions are creating their own mindsets and perspectives on how to approach things. These perspective are leading to difficulties in the collaboration between marketing and sales. A constructive collaboration between both departments is essential because both departments have the same ultimate goal of selling products and services and therefore they must collaborate with each other to achieve this ultimate goal. In this paragraph, the paper is first giving a broader description about the different perspectives that could exist between both departments. The second part of this paragraph is focusing on the collaboration between the departments.
2.4.1 Different perspectives
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complains and rejections of customers. The environment of the marketing department is the safe home office without direct interaction with the customers which means that the marketing department is separate from the turbulent environment in the field. The fifth difference between both departments is the fact that the sales department is focusing on the results of their activities and the marketing department is more focused on the process in which they are involved. For the sales people, feedback on their actions is relatively quick in the form of direct results. For the marketing department the outcomes of their actions are hard to measure and the outcomes of their actions develop over a long period of time. The last difference between both departments is related to the time span both departments are operating in. Because of the relatively quick feedback from the environment, the sales people are more short-term focused than the marketing department (Homburg, Jensen & Krohmer, 2008) The long-term orientation is resulting in the fact that marketing has been characterized as having long-term goals, while sales has been characterized as having short-term goals (Homburg & Jensen, 2007) or as Guenzia and Troilo (2006) describe, marketing mainly adopts a strategic, long term perspective, while sales primarily focuses on tactical, short-term objectives and activities
The different perspectives are resulting in the fact that it is difficult for employees of both departments to understand and appreciate the issues raised by both departments. The most cited difficulty between marketing and sales is the difference in the time frame concerning processes of goals setting (Strahle, Spiro & Acito, 1996; Guenzi & Troilo,2007). The long-term goals of the marketing department are conflicting with the short-term goals of the sales department which is resulting in that both departments develop a stronger in-group identification and more stereotypes about the other group (Hogg & Terry, 2000; Homburg & Jensen, 2007). This makes it difficult for both departments to collaborate with each other.
2.3.2 Collaboration between marketing and sales
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Figure 2 presenting on the left side the activities that are performed by the marketing department with input of the sales department. On the right side, the activities from the sales department are presented with the input of the marketing department. The tasks in the middle where both circles are crossing each other, can only be performed by strong collaboration between both departments. (Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners , 2005). For a better collaboration between both departments, bridging the aforementioned perspectives is important. Collaboration between sales and marketing is important for the performance of an organization and this could be achieved by integrating goals. Integrated goals are objectives that are superordinate to the interest of departments within a firm. They serve to align interest of departments with other departments (Fisher, Maltz and Jaworski, 1997; Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners , 2005). Integrated goals can help to focus the energy of the sales and marketing functions in a desired direction (Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners , 2005). Sales and marketing can have integrated goals, pertaining the activities at the intersection of the sales and marketing departments as described in figure 2. One example could be the value proposition
These goals can be realized through rewards which motivates employees of both departments to expend their efforts to realize the common goals (Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners, 2005). Some authors have found evidence that the collaboration of the marketing department with other departments in the organization is positive related to the use of reward systems. Thus, to the extent that rewards for sales and marketing in a organization focus on the achievement of integrated sales and marketing goals, the sales-marketing collaboration is likely to be enhanced (Dewsnap & Jobber, 2000; Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners , 2005).
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In the existing literature the amount of articles addressing the collaboration between the marketing and sales are scarce and only a few research have mentioned that reward systems could play a role in improving the collaboration between both departments. (Rouziès, Anderson, Kohli, Michaels, Weitz & Zoltners , 2005). However, there is no research addressing the applicability of reward systems for improving the collaboration and how these systems could be used for improving the collaboration between the marketing and sales departments.
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3. Methodology
This section addresses the research method by giving a deeper understanding about the different elements the research method is built on. First of all, the scope of this research is described followed by a clarification of the multiple case studies. Hereafter, a comprehensive explanation is given about the data collection and the data analysis of this research. Finally, the validity and reliability of this research is discussed.
3.1 Scope
The aim of this research is to explore how reward systems could bridge the differences between the marketing and sales department which eventually could lead to better collaboration. The exploration of new insight is most successful in the knowledge creating process of theory development. Theory development is a qualitative research approach. The main purpose of this type of methodology is to build a theory or gain an in-depth understanding of the issue being researched (Cooper & Schindler, 2008). The business phenomenon that forms a gap in the existing academic literature is how reward systems could be used for improving the collaboration between the sales and marketing departments. Although tension is close related to the collaboration between both departments, it falls outside the scope of this research. The aim of this research is to provide deeper insights about the collaboration between the marketing and sales department and how these reward systems could be used for improving collaboration between the marketing and sales department. Therefore, the unit of analysis will be individual sales and marketing departments. By selecting cases that have both departments and are from different sectors, efforts are made to give a comprehensive view about the collaboration between both departments and how rewards can play a role to improve this collaboration.
3.2 Multiple case studies
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Netherlands. They are purchasing the products from the Suzuki manufacturer and sell them to the Suzuki dealers in the Netherlands. The third case that is selected is Nuon. Nuon is one of the largest suppliers of electricity and natural gas for the consumer and busines market in the Netherlands. The extend version of the case descriptions can be found in appendix I
3.3 Data collection
In order to research the business phenomenon, interviews were conducted to collect the data from the case studies. Interviews are a vital source for case study research, because they can give a broader understanding about the human affairs and behavioral events in an organization (Yin, 2009). As this research investigates the relationship between two departments and the behavior of the members of these departments, interviews are an essential source for collecting data. To give a broad understanding about the business phenomenon, 4 interviews were conducted within each case with respondents that where closely related to the business phenomenon. Table 2 gives an overview of the conducted interviews.
Table 2. Overview Interviews
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differentiation between both departments followed by the second part that is more focusing on the consequences of this horizontal differentiation in terms of the different perspectives and the collaboration between both departments. The first two parts of the interview are necessary to give a comprehensive view about the current situation between both departments as starting point before reward systems are introduced. The third part of the interview is purely focused on the current reward systems followed by the applicability of rewards system as a tool for improving the collaboration between the marketing and sales department. Hereafter the interview is focused on how reward systems could be used for improving the collaboration between both departments. The complete interviewcan be seen in appendix II.
The interviews are conducted in a semi-structured manner, which means that they are conversational and informal in tone. They allow for an open response in the participants own words rather than a ‘yes’ or ‘no’ (Longhurst, 2003). Answers can be ‘probed’, by letting the interviews build on their responses. It can be very helpful if respondents have the opportunity to give a broad explanation about the answers they give. Afterwards, these explanations are giving a broader understanding about the meanings the respondents ascribes concerning the phenomenon that is investigated (Saunders, lewis & Thornhill, 2007) The data collection is completed by collecting secondary information by carrying out desk research. This desk research is based on external documents like annual reports and collective labor agreements. This information is used as support for the primary data.
3.4 Data Analysis
The semi-structured interviews are recorded and hereafter transcriptions were made. The transcriptions are further analyzed by coding important terms which are connected with important terms of the literature review. Important terms that cannot be placed in the framework of the literature review, are also coded. The data analysis starts with collecting information for each organization separately in the form of a within case analysis. This process allows the unique pattern of each case to emerge before investigators push to generalize patterns across cases (Eisenhardt, 1989). Hereafter, the results for the within case analysis are combined in a multiple case analysis. The purpose of this multiple case analysis is to find intergroup similarities and differences by analyzing four key areas (Organizational design, differences between marketing and sales, the collaboration between marketing and sales and reward systems). After analyzing the differences and similarities, general findings can be made.
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3.5 Reliability and validity
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4. Results
In the next section, the results from the three cases are described in separate paragraphs. Each paragraph is organized as follow: first of all, a small introduction about the structure of the organization is given. Second, the results concerning the different perspectives between both departments are presented. Third, the collaboration between the marketing and sales department is described. Fourth, reward systems are discussed by first giving an introduction about the current use of reward systems, followed by the factors that are perceived as important for the applicability of reward systems. Hereafter, the results of the perception concerning the use of reward systems for improving the collaboration between both departments are followed by the suggested goals that could serve for rewarding both the departments. Finally, a conclusion with the main findings is given for each case study. The last paragraph presents an extended version of the results in table 3 as only the most cited results were mentioned in the first three paragraphs.
4.1 Nimag B.V
Just one week before the interviews were conducted, Nimag B.V. (hereafter: Nimag) reorganized the organizational structure and relocated product management from the marketing department to the sales department. This means that Nimag still has a separate marketing and sales department, however, the task and goals are different. The starting point is the old situation, because the respondents are most familiar with this situation. In the old situation, there was a clear distinction between the marketing and sales department and they both had their own tasks and goals. The respondents mentioned the span of control as the main reason for the horizontal differentiation between the marketing and sales department. According to a marketing managers.
‘There could be one department for both functions. however, in this situation the control panel becomes too large for managers.’
4.1.1 Different perspectives
Through horizontal differentiation, both departments are focused on the achievement and performance of their own goals and tasks which created different perspectives and mind-sets between both departments. A frequently cited difference between the marketing and sales department in this organization was that marketing was focused on segmentation and analyzing data behind their desks, while sales was more people-oriented and sold products in the field. A sales manager noted:
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The difference that was cited the most at Nimag was the difference in time frame. Marketing was perceived as having a strategic long-term focus, while sales was more focused on the short-term and solving the daily problems their customers face. A sales manager noted:
‘The main difference between both departments is that marketing is thinking in longer periods of time and is trying to bring it back up to one year, while the sales department is thinking in days, weeks and maybe months. Sales react on the heat of the market at daily basis and the market and they react immediately to solve the problems of their customers.’
4.1.2 The collaboration between marketing and sales
All the respondents believed that the collaboration between both departments should be improved. When we took a closer look at the relationship between both departments we saw that the aforementioned differences influenced the collaboration between both departments in this organization. Especially, the long-term focus of the marketing department versus the short-term focus of the sales department influenced the collaboration between both departments. A sales manager mentioned:
‘When we have too many products in stock, we ask the marketing department to help us to get rid of our stock by means of action-oriented advertising. They are not willing to do that by explaining that they are focusing on the brand Suzuki for the long-run. We respect that, but we must sell the products in the short-run to get rid of our stock.’
Another difference between both departments that was creating difficulties in their collaboration was the fact that marketing was making analysis and advertisements while the sales department was selling their products in the field. A marketing manager noticed:
‘When there is no connection between the commercials of the marketing department versus the field experiences and information of the sales department, you get definitely troubles between both departments.’
Eventually, the differences between the marketing and sales department created a lack of common vision between both departments. One marketing manager mentioned:
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4.1.3 Reward systems
Nimag only used reward systems for the general managers of the sales and marketing departments and not for the employees of both departments. General managers received a bonus with a maximum of two months’ salary. The general managers were earning this reward by the achievement of their own goals and the subordinate goals of the organization, while the employees only earned a fixed salary each month.
4.1.3.1 Applicability reward systems
An important factor that determined the applicability of reward systems within Nimag was the organizational culture. Nimag is a very traditional family company and not familiar with reward systems. Therefore, the respondents were not enthusiastic about the possible use of reward systems within Nimag. The HRM manager noted:
‘Nimag is a very no-nonsense company and I think that a variable pay-system does not suit this organization very well.’
Furthermore, the respondents recognized that besides the organizational culture, national culture could be an important factor for determining the appropriateness of using reward systems. According to the sales manager:
‘Reward systems are not really fitting the Dutch culture. In the Netherlands, we are helping and taking care of each other. For example, in Amerika it is the survival of the fittest and everybody is fighting for its own goals and rewards without taking others interest into account.’
Besides culture, strategy and environmental uncertainty played an important role in the need for collaboration and the tools to guide this collaboration. According to one of the marketing managers:
‘For an organization it is easier to get a comprehensive view about the market when it is only selling one product. That is different from our organization, because we are making a variety of products for different markets, which makes it more complex. This complexity makes a difference when you take the need for collaboration between both departments and how you can improve this collaboration.’
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important in smaller organizations. Besides, in smaller organizations it was easier to locate the departments physically close to each other. The sales manager of Nimag mentioned:
‘If both functions are physically closely located to each other, the lines are much shorter and both departments communicate and collaborate more with each other. This is important in smaller organizations like these. If we talk about companies like Unilever, this is a totally different world with larger departments, which are difficult to locate next to each other.’ The structure of the organization was the last factor that was important. According to the respondents of Nimag, the structure determined the relation between both departments, the easiness to communicate with each other and the decision making process between both departments. The HRM manager noted:
‘When both departments were separate and there was a lack common vision, it takes very long to make decisions and it was very confusing, who was responsible for certain actions and decisions.’
4.1.3.2 Reward systems as a tool
The aforementioned factors influenced the applicability of reward systems for Nimag. According to the respondents, the aforementioned factors made the use of reward systems for improving the collaboration between the marketing and sales departments not suitable for Nimag. They seek other solutions for improving the collaboration between the two departments by restructuring the organization. They relocated product management from marketing to sales. The product management was especially focused on long-term strategy and segmentation behind the products. In this way, they combined the short-term orientation with elements of the long-term orientation into one department. One of the marketing managers noted:
‘Because of the fact that the long-term and the short-term orientation are now located in one department, a more dynamic environment is created in which both function have a common vision and are reinforcing each other.’
4.1.4 Conclusion
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for improving the collaboration between both departments and restructured the organization by relocating product management from the marketing department to the sales department.
4.2 AkzoNobel
The interviews for this research were conducted in the business unit specialty coatings, which was subdivided in several sub-business units: Automotive & Aerospace Coatings, Marine & Protective Coatings, Powder, Coatings, industrial Coatings and Wood Finishes & Adhesives. The interviews are conducted in the sub-business unit Automotive & Aerospace coatings. This sub-business unit consisted out of different departments like production, customer service, logistics, sales and marketing. Most interesting for this research was the clear differentiation between the marketing and sales department. Specialism was according to the respondents the main reason for the horizontal differentiation between both departments.One sales manager mentioned:
‘Both departments have their own skills and responsibilities to use these skills for accomplishing their own tasks and goals in favor of the superordinate goals of the organization.’
4.2.1 Different perspectives
Due to horizontal differentiation, both departments developed different perspectives and mindsets from each other. The difference between the product/brand-orientation of the marketing department versus the customer-orientation of the sales department was cited the most by the respondents. One sales managers mentioned:
‘If you are operating in a technical market like we do, the sales department is picking up signals from their customers in the market. These signals must be translated to the marketing department, and their job is to fulfil all the technical product specifications.’
Another difference that was cited often by the interviewees was the field-orientation of the sales department versus the office/desk-orientation of the marketing department. One of the sales managers noted:
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4.2.2 The collaboration between marketing and sales
All the interviewees of AkzoNobel shared the view that the collaboration between the marketing and sales department could be improved. The different perspective described in the previous sub-paragraph were the result of the different tasks and targets for each department and were causing difficulties in the collaboration between both departments. One of these difficulties was created by the fact that the marketing department was more product/brand-oriented and the sales department was more customer-oriented. One of the sales managers noted:
‘When the marketing department developed a new product, they often say that every customer will use it because it is a better product than the old one. In this case, the marketing department thinks that it is simple for our customers to switch to a new product while we are noticing that some customers do not want to switch to another product.’
Another difficulty in the collaboration between both departments was raised by the field-orientation of the sales department and the market-orientation of the marketing department. A marketing manager mentioned:
‘I was not able to join a sales meeting, because the sales department thought that I had no knowledge about the market and thought my presence was reasonless. The sales department thinks that they have all the knowledge about the market because they have direct contact with the customer.’
Eventually, the different perspectives created a lack of mutual understanding between both departments, especially from sales to marketing. One of the marketing managers noted:
‘The sales people are not seeing the importance of the marketing department and they have no understanding about the value the marketing department could have for them.’
4.2.3 Reward systems
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4.2.3.1 Applicability reward systems
The respondents thought that strategy was playing an important role in the applicability of reward systems. According to a sales manager, it was important to realize in which market the organization or business-unit was located and what kind of strategy was suitable for this market. The sales manager mentioned:
‘In our market, price is not the most important criteria compared to other markets or business units. If you take other business-units within AkzoNobel, price strategy is playing an important role. However, in this market, the specification of the products is most important. An airplane manufacturer as Boeing, Airbus and Bombardier are making the specifications. Subsequently, the R&D and marketing department create a product portfolio that meets the requirements of the manufacturers. Then our task is to sell these product portfolios. In this market, the functions of the sales and marketing department are very clear defined, which could influence the need for collaboration and appropriateness of using reward systems for improving the collaboration between both departments. In other markets, with price tactics and more uncertainty other tools could be perceived as more appropriate.
4.2.3.2 Reward systems as a tool
Reward systems were perceived as useful tools for improving the collaboration between the marketing and sales department. According to one marketing manager:
‘In the classical separation between marketing and sales, you should set-up common targets, which could influence the overarching performance of both departments. By doing this, you could create a mutual understanding between both departments.’
Mutual understanding was also mentioned by one of the sales managers as a possible outcome of rewarding joint goals:
‘I think it could be very interesting to reward shared goals and to bring reward systems closer to each other. That could definitely work, because you can find and understand each other.’ Finally, market share and Earnings before interest, taxes and amortization (hereafter: EBITA) were mentioned by two respondents as targets that could be served as common goals. Both goals could be achieved by performance on the short-term and the long-term, which makes them appropriate for both departments. A respondent of AkzoNobel mentioned:
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4.2.4 Conclusion
Horizontal differentiation with differentiated goals and tasks resulted in different perspectives and mind-sets between the marketing and sales department. These perspectives created difficulties in the collaboration between both departments. Reward systems are used within AkzoNobel for both departments. However, the variable rewards of sales are higher compared to those of marketing. Reward systems were perceived as useful tools for improving the collaboration between both departments. Furthermore, the respondents of AkzoNobel mentioned that strategy was an important factor for determining the applicability of reward systems for improving the collaboration between the marketing and sales department. Finally, goals that could be used for the reward systems of both departments are market share and the EBITA.
4.3 Nuon
Within the business market, Nuon is divided in three segments: MKB, Large and Corporate. These three segments all had their own marketing and sales departments. For this research, we were focused on the large and corporate segment. When we asked the respondents why both department are not merged with each other, they all mentioned that specialism is an important factor. The marketing manager noted:
‘Departments have their own skills and know-how, it is more that we help each other with our skills instead of combining them, because otherwise we lose our expertise.’
4.3.1 Different perspective
Because of horizontal differentiation, goals and tasks are also differentiated between departments. The differentiation between the goals and tasks of both departments created different perspectives and mind-sets. The first difference that was cited frequently by the respondents is the field-orientation of the sales department versus the office/desk-field-orientation of the marketing department. A sales manager noted:
‘Marketing is making the propositions for the market behind their desks and sales are the eyes and ears of the organization in the field.’
Another frequently cited difference between both departments is the customer-orientation of the sales department versus the product/brand-orientation of the marketing department.
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Finally, two important differences that were mentioned by the respondents of Nuon is the short-term orientation of the sales department versus the long-short-term orientation of the marketing department and the result-orientation of the sales department versus the process-orientation of the marketing department. A marketing manager mentioned:
‘The sales department is action, ad-hoc, and result-oriented, while marketing has a strategic vision concerning the positioning of a product for the long-term.’
4.3.2 The collaboration between marketing and sales
According to the respondents of Nuon, the collaboration between the marketing and sales department could be improved. The differences that were discussed in the previous sub-paragraph formed difficulties for the collaboration between both departments. One of these difficulties was caused by the customer-orientation of the sales department versus the product-orientation of the marketing department. As a sales manager noted:
‘They marketing department is not interested in what is really going on in the market. We are the soldiers who are coming back from the battlefront to the office. The marketing department should question us about our experiences in the field. They should know all the important aspects about the markets. However, the interest for asking questions is missing.’ Another difficulty was related to the short-term orientation of sales versus the long-term orientation of marketing and the result-orientation of sales versus the process-orientation of marketing. A sales manager mentioned:
‘We think, the next transaction must be converted as soon as possible for the maximum price. However, marketing is more thinking about the brand of the company and is focusing on the retention of the customer. They think that it is important to make the products not too expensive for the generation of money in the short run.’
During the interviews with the respondents, the lack of mutual understanding was cited as an important problem. Especially, the sales department saw themselves as more important in the organization. A sales manager mentioned:
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Finally, because both departments were focused on achieving their own targets, they were not willing to share resources with each other. One sales manager of Nuon mentioned:
‘If we are doing marketing tasks, capacity issues will emerge because we are not able to achieve our own targets. We do not have extra time to fulfil these tasks because we are evaluated on sales targets instead of marketing targets.’
4.3.3 Reward systems
Nuon used reward systems with variable rewards for their sales department. These rewards systems were built up on monetary rewards and the more they sold, the higher this reward would be. Some marketers have also received variable rewards for their performance. However, these rewards were substantially smaller than those of sales.
4.3.3.2 Applicability of reward systems
According to the respondent of AkzoNobel, certain factors played an important role in the applicability of reward systems. According to a sales manager, corporate culture was playing an important role in the applicability of reward systems:
‘A few years ago, Nuon was an organization that was partially owned by the government. This is the most important reason why reward systems do not fit the culture of this organization. I think that rewards could be useful in improving the collaboration between both departments , but not for Nuon.’
Another factor that was mentioned by respondents as an important factor was the national culture. According to one of the sales managers:
‘I think that national culture is an important factor. In America, everybody is working with rewards and therefore they are really focused on achieving their own targets. In the Netherlands we are thinking: Why should we use reward systems this? It does not make any sense, because it is your job and you get a salary so it is clear that you always try to accomplish your tasks in the best possible way.’
4.3.3.1 Reward systems as a tool
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The other respondents thought that reward systems could improve the collaboration in a way that it creates a common language between departments and the will to share resources with each other for achieving common goals. A sales manager was mentioned:
'I think that rewards system could help to improve the collaboration, 100%. After a while, both departments are speaking the same language and they find common things important. When both departments have common targets and rewards, they are suddenly interested in each other and try to collaborate for the achievement of common goals by sharing resources in the form of knowledge.’
Furthermore, reward systems could be used for improving the collaboration between the marketing and sales department by increasing the mutual understanding between both departments. One of the marketing managers mentioned:
‘When you have common targets and rewards, you are starting to communicate with each other. Communication is very important because through communication you understand each other and create a mutual understanding.’
Finally, the Net Promoter Score (hereafter: NPS) was mentioned by the respondents as possible goal for common rewards. According the respondents of Nuon, the NPS could combine the retention and acquisition of customers in the long run and short run. A marketing manager mentioned:
‘A few years ago, the NPS was really a marketing tool. Now, the NPS is already in the KPI’s of the marketing and sales department to bridge the long-term and short-term orientations. Therefore, it could be used for rewarding both departments, because it is already a common goal.’
4.3.4 Conclusion
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4.4 Overview results
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5. Discussion
In this section, the results of the within case studies are compared with each other and the striking similarities and differences will be discussed. In all the organizations, there is a clear differentiation between the marketing and sales department. According to the respondents of the organizations, the reasons for horizontal differentiation are: specialization and span of control. This corresponds with literature of Child (2008) and Jones (2010) in which they were seen as driving forces. The horizontal differentiation was causing differences between the marketing and sales departments, which created a sub-unit orientation. The different perspectives and mind-sets that are mentioned the most by the respondent is the long-term orientation of the marketing department versus the short-term orientation of the sales department followed by the product/brand-orientation of the marketing department versus the customer-orientation of the sales department. In the existing literature, Hogg & Terry (2000) and Homburg, Jensen & Krohme (2008) underlines that these differences are the most important between the marketing and sales department.
In the three examined organizations, the collaboration between the marketing and sales department could be improved and in the case of Nimag should be improved. In all cases, the different perspectives of both departments disturbed the collaboration between the marketing and sales departments. These findings are confirmed by Rouzies, Anderson, Kohli, Michaels, Weitz and Zoltners (2005), which stated that the differences between both departments makes it difficult for people from sales and marketing to understand and appreciate each other. For Nimag, the problems between the two departments are related to decision-making. For both departments, it is unclear who is responsible for the common tasks and who is making the decisions. These problems are due to the lack of a common vision between both departments. At Nuon, the findings show that both departments are not willing to share resources, because both departments were focused on the achievement of their own targets instead of helping other departments. The different perspectives of both departments in AkzoNobel and Nuon, creates a lack of mutual understanding between both departments, especially from sales to marketing. Malshe (2010) confirm this finding, and points out that sales people continuously harbor prejudice, are disrespectful and distrust marketers.
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examined organizations used rewards systems for rewarding common goals of the marketing and sales department. In this case, it means that we have asked the perception of the respondents concerning the use of reward systems for improving the collaboration between the marketing and sales department.
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too large for having personal control, which is resulting in more impersonal controls (Chenhall, 2003). This could be an explanation for the different conceptions regarding reward system between Nimag and the other two organizations. The third factor is the structure of the organization. Several authors mention the differentiation and integration structure of Lawrence and Lorsch (1967) when they discuss organizational structure. The choice of one of these structures is depending on the uncertainty in the environment of the organization (Burns & Stalker, 1961). Differentiated organizations that are in an uncertain environment are facing integration problems, which require sophisticated liaison mechanism, while differentiated organizations that are in an certain environment can use more rules and procedures in the form of reward systems (Chenhall, 2003). This could be the reason that the respondents of Nimag mentioned this as an important factor, because they are located in a more complex and uncertain market compared to the other two organizations. This could make formal procedures in the form of reward systems less applicable. The fourth contextual factor that the respondents of Nimag and Nuon where mentioned is the influence of national culture (Dutch culture). According to several authors, differences in national culture are influencing reward systems (Budhwara & Sparrow, 2002; Jansen, Van der Stede & Merchant, 2009). Jansen, Van der Stede & Merchant (2009) investigated the differences between the reward systems used in the US and those used in The Netherlands. According to them, The Netherlands is characterized by a feminine culture, which refers to the preference for relationship and quality of life instead of competitiveness, achievement and material success (Hofsede, 1984; Communal & Brewster, 2004; Jansen, Van der Stede & Merchant, 2009). The feminine culture of the Netherlands is resulting in that organizations are less willing to give their managers and/or employees a reward (Jansen, Van der Stede& Merchant, 2009). This could be the reason for the different opinions concerning national culture as an important factor between AkzoNobel and the other two organizations. Because the respondents of AkzoNobel are working in different parts of the world, other cultures could have influenced their opinions about reward systems.
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Through the aforementioned contextual factors, Nimag perceive reward systems for improving the collaboration between the marketing and sales department as a useless tool. They are seeking the solution in the structure of the organization. A week before the conducted interviews, Nimag restructured the organization and relocated product management from the marketing department to the sales department. In this way, they combine the short-term orientation with the long-term orientation into one department. AkzoNobel and Nuon are aware of the contextual factors but they still think that reward systems could be used in their organization for improving the collaboration between both departments. First of all, according to the respondents of both organizations, reward systems that are based on common tasks and goals are improving the collaboration between both departments, because employees are forced to collaborate for reaching common targets. Elling, Keller & Hansen (2006) underline this argument, they mention that evaluation in the form of a reward system that is based on common tasks is providing a rational for employees to collaborate more with each other and to generate outcomes that supports common goals instead of functional goals. Secondly, according to the respondents of AkzoNobel and Nuon, reward systems are creating a mutual understanding between the sales and marketing department, because both departmens are forced to communicate with each other. It creates a mutual understanding between each other. This finding is confirmed by Chow & Chan (2008), who have mentioned that reward systems based on shared goals promotes mutual understanding and the exchange of ideas. Thirdly, the respondents of Nuon mentioned that both departments are more willing to share knowledge with each other, if there are common goals. Wang & Noe (2010) confirmed this finding, they mentioned that common rewards are stimulating the exchange of resources between departments.
So, the findings of this research showed that reward systems could be useful tools for improving the collaboration between the marketing and sales department, as they create mutual understanding, collective goals and they are willing to share resources. This finding corresponds with the existing literature of Kahn (2001), which is also described in the literature review. According to Kahn (2001), collaboration exists out of the shared resources, mutual understanding and collective goals.
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6. Conclusion
The next section provides the conclusion of this research. In the first paragraph, the research question will be answered based on the main findings of this research. The second paragraph contains the managerial implications. In the third paragraph, the limitations are discussed followed by future research, which is discussed in the last paragraph.
6.1 Main findings
This research is focused on the collaboration between marketing and sales, how this collaboration could be improved by using reward systems based on common goals for both departments and when these systems are perceived as applicable tools. Therefore the main goal of this research is to answering the research question:
‘’How could reward systems be used for improving the collaboration between the marketing and sales department, when they were perceived by organizations as applicable tools?”
We are only able to give a comprehensive answer on the main research question by first answering the two sub questions:
A: When are rewards systems perceived by organizations as an applicable tool in order to improve the collaboration between the marketing and sales department?
B: How could reward systems be used for improving the collaboration between the marketing and sales department?
Reward systems are not applicable in all situations and all organizations for improving the collaboration between the marketing and sales department. Certain contextual factors are influencing the applicability of reward systems. These contextual factors consist of: The size of the company, the structure of the company, the strategy of the company, national culture and the organizational culture. After examine these factors, a decision concerning the applicability of the use of reward systems for improving the collaboration between the marketing and sales department could be made.
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understanding between both departments which is essential in understanding and respecting each other’s mindset.
As a reward system could play an interesting role, the next stop is to find common goals. Market share, Earnings after interest, tax and amortization (EBITA) and Net promoter score (NPS) are goals that could be used for rewarding both departments. These goals could force both departments to bridge the differences till a desired point and to collaborate more with each other. These goals are especially useful for bridging the long-term orientation of the marketing department versus the short-term orientation of the sales department which is the main difference between both departments.
In summary, reward systems could be used to improve the collaboration between the marketing and sales department by rewarding common goals like market share, EBITA and NPS. However, contextual factors are determining the applicability of using reward systems for improving the collaboration between both departments in certain organizations and situations.
6.2 Managerial implications
The managerial implications concerning the use of reward systems for improving the collaboration between the marketing and sales department are based on the findings of this research. First of all, it is important that the contextual factors the organization is facing are examined carefully before a manager make the choice to use a reward system in order to improve the collaboration between both departments. It is important for a manager to check if reward systems are fitting the size, culture, strategy and structure of the company. After examining these factors, managers must decide if reward systems are the appropriated tool for improving the collaboration between both departments. When a reward system appears to be the desired tool, it is important that managers are thinking about collective goals for both departments which will lead to a mutual understanding and the will to share resources.
6.3 Limitations
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organization. They have a clear vision about the use of reward systems and therefore they provide a deeper understanding about the business phenomenon that is examined. Furthermore, HRM managers have an objective view about the relationship between both departments, which makes the information more valid and reliable. Fourth, this research is only conducted in the Netherlands, which means that it is difficult to say something about the impact of national culture compared to other countries. Final, the interviews in Nimag were conducted a week after a reorganization, this could biased the information that was collected for the old situation.
6.4 Future research
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