Academic journal article Journal of Emerging Trends in Economics and Management Sciences

Assessing the Relationship between Sales Quotas and Moral Judgement of Insurance Salespersons: The Moderating Effects of Personal Moral Values, Quota Failure Consequences, and Corporate Ethical Climate

Academic journal article Journal of Emerging Trends in Economics and Management Sciences

Assessing the Relationship between Sales Quotas and Moral Judgement of Insurance Salespersons: The Moderating Effects of Personal Moral Values, Quota Failure Consequences, and Corporate Ethical Climate

Article excerpt

Abstract

There is an increasing call for managers in the Nigerian insurance industry to espouse higher level of ethical behaviour to earn the trust of customers, regulatory agencies, and other stakeholders. Arguably, this will enhance market penetration, increase patronage and higher level of profit. Theoretically however, ethical behaviour can be institutionalized in organizations if the top management support ethical behaviour through punishment and reward (high ethical climate). Other than corporate ethical values, managers' beliefs about the rightness and wrongness of an action in a particular situation could also be a function of his/her personal moral philosophy. With respect to financial services, one aspect of marketing which have been empirically shown to have influence ethical judgement and behaviours of managers is sales quotas. When salespersons are assigned higher sales quotas, which are perceived as difficult, the tendency to engage in unethical behaviour to achieve this target becomes higher. In this study, we assess and extend the theoretical relationship between moral judgement of salespersons and perceived quota difficulty in the insurance industry. The study also explores the moderating effects of salesperson's ethical values (idealism and relativism), corporate ethical climate, and quota failure consequences on the proposed relationship. With a structured questionnaire, data was collected from respondents in the target industry through a multi-stage sampling strategy. Exploratory factor analysis was performed to assess the factorial structure of the measures used in the study, their reliability and validity. Using correlation and regression analysis, the results were presented and discussed with managerial implications for the Nigerian insurance industry.

Keywords: sales quota, moral judgement, self-efficacy, corporate ethical climate, idealism, relativism, insurance industry, Nigeria.

INTRODUCTION

The common slogan that insurance is 'sold and not bought' seems to reflect an implicit instruction to insurance salespersons when sales quota is used as performance evaluation. Based on speculation and insight from the literature, the implicit message being conveyed by such slogan is that 'we are interested in what you sell (quantity) and not the way it is sold'. The use of quantitative volume as a determinant of sales performance evaluation (Douthit, 1976; Darmon, 1997) has become widespread (Good and Stone, 1991; Oyer, 2000; Fang et al. 2004) and commonly used in practice (Weitz, 1981; Peck, 1982). Hence, it is crucial to critically examine the managerial implications it portends for the financial industry, particularly insurance industry, where patronage is strongly dependent on trust and confidence. More so, that the behaviour of salespeople is instrumental to determining the reputation of their organizations and consumers are noted for considering company's reputation when making purchasing decisions (Gilbert, 2003). Understanding how quantitative goal-setting (e.g. sales quota) factors affect salespersons' behaviour is particularly necessary given that goal-setting have some effects on sales behaviours in a paradoxical ways (Shalley, 1995; Rossano and Reardon, 1999). What is sold (quantity) and how it is sold (selling behaviour used to accomplish the sales) represent two extreme points on a continuum, and each has its numerous managerial consequences for the firm (Oliver and Anderson, 1994). When short-term sales goals are emphasised, salesperson might be left with a feeling of do what is necessary and not what is acceptable (Murphy, 2004). The situation is particularly worsened when attractive reward is linked to what is achieved and not how it is achieved1.

While studies have looked at the use of sales quotas in influencing and increasing the performance levels of salespeople (Winer, 1973), and directing some selling behaviours, such as selling products with most quota credit (Schwepker and Good, 1999), the extent to which they affects other critical selling behaviour such as ethical conduct (Schwepker and Good, 1999) has been relatively understudied. …

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