Based on research by Wagner Kamakura  and Danny P. Claro

• In retail, having a sales force that uses best practices can be the difference between survival or failure.
• Researchers created a formula to assess which workers might have valuable hidden skills they can share with their coworkers.
• By accounting for both known and unknowable factors, managers can identify salespeople with traits that work best in different types of sales.

When you’re a manager, decisions barrage you each day. What product works? Which store layout entices? How will you balance the budget? Many of these decisions ultimately hinge on one factor: the skills of your sales force.

Often, when managers evaluate their salespeople they contend with invisible factors that may not show up in commissions or name-tagged sales rosters — intangibles such as product placement, season or simply a store’s surrounding population. This makes it hard to fully evaluate a salesperson, or to spot which workers can teach valuable skills to their peers and improve the whole team.

But what if you could plug a few variables into a statistical model to spot your best sellers? You could then ask the star salespeople to teach coworkers some of their secrets. New research by Rice Business professor Wagner A. Kamakura and colleague Danny P. Claro of Brazil’s Insper Education and Research Institute offers a technique for doing this. Blending statistical methods that incorporate both known and unknown factors, Kamakura and Claro developed a practical tool that, for the first time, allows managers to identify staffers with key hidden skills.

To test their model, the researchers analyzed store data from 35 cosmetic and healthcare retail franchises in four South American markets. These particular stores were ideal to test the model because their salespeople were individually responsible for each transaction from the moment a customer entered a store to the time of purchase. The salespeople were also required to have detailed knowledge of products throughout each store.

Breaking down the product lines into 11 specific categories, and accounting for predictors such as commission, product display, time of year and market potential, Kamakura and Claro documented and compared each salesperson’s performance across products and over time.

They then organized members of the salesforce by strengths and weaknesses, spotlighting those workers who used best practices in a certain area and those who might benefit from that savvy. The resulting insight allowed managers to name team members as either growth advisors or learners. Thanks to the model’s detail, Kamakura and Claro note, managers can spot a salesperson who excels in one category but has room to learn, rather than seeing that worker averaged into a single, middle-of-the-pack ranking.

If a salesperson is, for example, a sales savant but lags in customer service, managers can use that insight to help the worker improve individually, while at the same time strategizing for the store’s overall success. Put into practice, the model also allows managers to identify team members who excel at selling one specific product category — and encourage them to share their secrets and methods with coworkers.

It might seem that teaching one employee to sell one more set of earbuds or one more lawn chair makes little difference. But applied consistently over time, such personalized product-specific improvement can change the face of a salesforce — and in the end, a whole business. A good manager uses all the tools available. Kamakura and Claro’s model makes it possible for every employee on a sales team to be a potential coach for the rest.

Wagner A. Kamakura was the Jesse H. Jones Professor of Marketing at Jones Graduate School of Business at Rice University.

To learn more, please see: Claro, D. P. & Kamakura, W. A. (2017). Identifying sales performance gaps with internal benchmarking. Journal of Retailing, 93(4), 401-419.

Rice University, which has the No. 1 graduate entrepreneurship program in the U.S., will now offer an undergraduate minor in entrepreneurship.

The program, administered by the university’s Liu Idea Lab for Innovation and Entrepreneurship (Lilie) and jointly offered through Rice’s Jones Graduate School of Business and Brown School of Engineering, provides students with a pathway to pursue rigorous and interdisciplinary study in the field of innovation and entrepreneurship. It enables students to understand the theory and frameworks behind different disciplinary aspects of entrepreneurship and how to apply these theories to develop and scale innovative solutions to societal problems.

“Entrepreneurship and the creation of new businesses and industries are critical to Houston and Texas’ future prosperity and quality of life,” said Yael Hochberg, the Ralph S. O’Connor Professor in Entrepreneurship and Professor of Finance at Rice Business, who leads Lilie. “Rice students continuously seek to lead change and build organizations that can have real impact on our world. In today’s new and uncertain world, the skills and frameworks taught in the new minor are particularly important.”

The minor’s curriculum helps students develop professional skills that are valuable beyond the confines of entrepreneurship, administrators said, such as the ability to identify critical problems or market opportunities and to develop validated solutions to meet these needs; design solutions that are sustainable, inclusive and equitable; embrace empathy to better understand customers, users, clients and team members; and excel in interdisciplinary teams and in communicating messaging across departments, organizations and industries.

Lilie, which was founded in 2015, is a cross-disciplinary initiative to provide students with skills and knowledge to succeed in a world where entrepreneurial capabilities are increasingly critical for meaningful and influential careers. Lilie’s inception expanded the entrepreneurial offerings at Rice Business, creating opportunities for both undergraduate and non-MBA graduate students. Lilie features a coworking space, graduate and undergraduate entrepreneurship courses, and a variety of cocurricular activities and resources dedicated to supporting Rice students in entrepreneurial endeavors.

In recent years, Lilie has added a large variety of programs to the entrepreneurial ecosystem at Rice. For example, the annual H. Albert Napier Rice Launch Challenge, established in 2018, allows students to vie for over $65,000 in cash prizes through a series of workshops and three rounds of competition. In addition to the new minor, Lilie also oversees the Rice Business entrepreneurship concentration, which was founded in 1978 by the school’s nationally recognized faculty led by Al Napier and the late Edward Williams. Over the past decade, Rice alumni have created more than 535 businesses and raised more than $7.1 billion in funding, according to the school’s surveys. More than 80% of those companies are still operating.

Rice’s current offerings are universitywide and encompass renowned student- and community-facing efforts. The university is currently working with Houston’s city government and major corporations and organizations, such as the Texas Medical Center and NASA, to define and develop the future of technology and industry innovation in the city. Rice is also developing the Midtown innovation district anchored by the Ion.

For more information, contact Jeff Falk, director of national media relations at Rice, at 713-348-6775 or jfalk@rice.edu.

Follow Rice News and Media Relations via Twitter @RiceUNews.

Follow Rice Entrepreneurship and the Lilie program via Instagram @LiuIdeaLab and on Facebook at www.facebook.com/liuidealab.

Follow the Jones Graduate School of Business via Twitter @Rice_Biz.

Related materials:

Rice Entrepreneurship: http://entrepreneurship.rice.edu

Based on research by Marlon Mooijman (Rice Business), Wilco W. van Dijk (Leiden), Naomi Ellemers (Utrecht), and Eric van Dijk (Leiden)

Key takeaways:

• Controlling critical resources gives power.
• As a person’s power grows, so does their distrust of others — and their use of punishment as a deterrence tool.
• The level of an individual’s power affects punishment decisions, which can then compromise managerial effectiveness.

Parents, bosses, managers: Most have done the same thing — punish someone who breaks the rules. And the person with power usually determines the proper punishment. Evidence also shows that the more powerful a leader grows (e.g., the head of a totalitarian government), the more partial they are to laws and rules.

This correlation between power and punishment led Rice Business professor Marlon Mooijman and colleagues Wilco W. van Dijk and Eric van Dijk of Leiden University and Naomi Ellemers of Utrecht University to wonder: What do leaders hope to achieve with their punishments? Specifically, the researchers wanted to know if an increase in individual power boosted the use of deterrence-style punishment. To find out, they created a model that was tested on nine types of power.

Power overall, the researchers note, is generated by control of critical resources. Usually, this control takes the form of monetary, physical or even social assets. Being in charge of these assets allows those with power (or resources) to impose punishment for infractions, anything from salary cuts to fines to prison sentences. The wielder of power may be a farmer with the right to shoot trespassers in his orchard, or a Saudi prince who can have a journalist murdered.

Like the nature of power itself, the punishments a person in power might brandish vary greatly. Even so, Mooijman and his colleagues write, a powerful person’s punishment strategy usually falls within one of two categories: deterrence or what they term “just-deserts.”

Deterrence punishments try to prevent potential rule breaking by making punishments public or mandatory. Examples include public announcement of mandatory minimum sentencing or a manager scolding an errant staffer in front of the whole office. Punishments can range from humiliation to tangible damages such as firing, community service or jail. Curiously, though, research on power and leadership shows that such common punitive steps aren’t always effective in preventing crime or transgression.

“Just-deserts” punishments take a different approach. This type of punishment simply responds to an offense once it’s committed. Just-deserts punishments don’t attempt to stop anyone else from committing the same offense; they simply castigate the offender for the broken rule. Research shows that most people prefer that offenders in their community receive this type of punishment.

To better understand the effects of the two types of punishment, Mooijman and his colleagues conducted nine experiments that drilled down on the connections between power, deterrence, punishment and distrust.  

First, using a power scale from previous studies that assesses people’s feelings of power in everyday life, they surveyed participants from the U.S., the Netherlands and Western Europe to determine who felt they had more power, and who felt they had less. In the subsequent studies, these participants were exposed to various facets of power such as “a general sense of power” or structural manipulations of power. Participants then were asked to consider a range of manipulated scenarios from tax fraud to academic plagiarism to social dilemmas.

The researchers analyzed the results to correlate power and distrust, distrust and deterrence and power and deterrence. In one study where subjects considered a tax fraud scenario, for example, it was found that participants who felt a stronger sense of power were less trusting of taxpayers than were participants who felt a weaker sense of power.

By combining and analyzing the results of each study, Mooijman and his associates discovered that as an individual’s power increases, that person’s trust in other people declines. This new distrust then propels them to impose public or mandatory punishments meant as deterrents. Overall, the researchers found, there is a clear connection between holding a position of power and supporting deterrence punishments — even though such punishments have been proven to be less effective.

The findings have practical implications for managers, policymakers and other leaders. The main takeaway? Don’t let your success as a manager blind you to effectively managing your subordinates.

As Mooijman and his colleagues’ research shows, with each new step upward in personal power, the likelihood of losing effectiveness grows more acute. And the more closely personal power becomes enmeshed with harsh deterrence efforts, the more likely we are to sabotage our own goals.

So you might want to think twice before calling that low performer on the carpet at the staff meeting — or, for that matter, spanking your children at home.

Mooijman, et al (2015). “Why Leaders Punish: A Power Perspective,” Journal of Personality and Social Psychology.