How do firms value sales career paths?

Abstract

Sales employees can build their careers across industries, firms, and occupations. Yet it is unclear how their sales career paths affect their compensation. To assess the value of their experience, we examine the paychecks drawn by nearly 25,000 sales employees over 22 years. Consistent with our arguments, we find that firms place greater value on sales managers' experience than salespeople’s, reflecting the multiplier effect attributed to managers. In particular, sales occupation experience seems to be the most salient type of experience for both groups, as it is fungible across industries and firms. We uncover two distinct paths in sales organizations: the salesperson’s career path rewarding sales experience and another path providing promotional prospects in sales. Analyses indicate that most newly promoted sales managers have no sales experience and move laterally from other managerial positions. Implications of our findings for research and sales-compensation practice are discussed.