Strategic Sales Management | Compensation Systems and Control Mechanisms | 50+ MCQ with Answers
1. Which component of compensation provides guaranteed income regardless of performance?
A. Commission
B. Bonus
C. Fixed Pay
D. Incentive Pay
✅ Answer: C. Fixed Pay
2. Which of the following is an example of outcome-based control?
A. Coaching salespeople on sales pitch quality
B. Monitoring daily attendance
C. Measuring revenue generated
D. Observing customer conversations
✅ Answer: C. Measuring revenue generated
3. Variable pay is primarily designed to:
A. Increase employee loyalty
B. Link pay to performance
C. Reduce salary expenses
D. Standardize salaries across roles
✅ Answer: B. Link pay to performance
4. A compensation structure with high fixed pay and low incentives promotes:
A. High risk-taking
B. Strong behavioral control
C. Strong output orientation
D. Sales push behaviour
✅ Answer: B. Strong behavioral control
5. What is the main goal of an incentive plan?
A. Improve job security
B. Drive specific selling behaviors
C. Reduce workload of managers
D. Increase team size
✅ Answer: B. Drive specific selling behaviors
6. Which company’s sales scandal is often cited as a failure of outcome-only control?
A. Coca-Cola
B. Wells Fargo
C. Walmart
D. McDonald’s
✅ Answer: B. Wells Fargo
7. Behavior-based control emphasizes:
A. Sales output
B. Techniques, processes, and professionalism
C. Market share exclusively
D. Reducing incentive payouts
✅ Answer: B. Techniques, processes, and professionalism
8. A pure commission structure generally increases:
A. Managerial oversight
B. Employee risk
C. Behavioral consistency
D. Training costs
✅ Answer: B. Employee risk
9. Output control is best suited when:
A. Selling tasks are highly standardized
B. Quality of customer interaction is critical
C. Sales outcomes are easily measurable
D. Managers want full control over daily work
✅ Answer: C. Sales outcomes are easily measurable
10. Which compensation type most reduces unethical sales behavior?
A. High commissions
B. Balanced scorecard incentives
C. SPIFFs (short-term incentives)
D. Zero variable pay
✅ Answer: B. Balanced scorecard incentives
11. Over-reliance on sales targets may lead to:
A. Higher employee engagement
B. Over-selling and unethical behavior
C. Superior relationship building
D. Less competition in the team
✅ Answer: B. Over-selling and unethical behavior
12. A bonus paid quarterly based on team performance is an example of:
A. Fixed salary
B. Variable team incentive
C. SPIFF payment
D. Base compensation
✅ Answer: B. Variable team incentive
13. Which control mechanism is most difficult to implement?
A. Output control
B. Hybrid control
C. Behavioral control
D. Incentive control
✅ Answer: C. Behavioral Control
14. The primary purpose of control systems in sales is to:
A. Reduce compensation costs
B. Ensure alignment between goals and actions
C. Increase administrative work
D. Eliminate salesperson autonomy
✅ Answer: B. Ensure alignment between goals and actions
15. A system where incentives are tied to both revenue and customer satisfaction represents:
A. Behavior-based incentive
B. Output-only incentive
C. Balanced incentive plan
D. Flat commission plan
✅ Answer: C. Balanced incentive plan
16. What does a "capped incentive plan" mean?
A. A minimum payout is guaranteed
B. Salespeople cannot exceed targets
C. There is a maximum payout limit
D. Commissions are fixed
✅ Answer: C. There is a maximum payout limit
17. Which control mechanism directly monitors how a salesperson works?
A. Outcome control
B. Behavioral control
C. Self-control
D. Market control
✅ Answer: B. Behavioral control
18. A company offering high incentive pay expects salespeople to:
A. Focus on long-term brand building
B. Minimize risk-taking
C. Perform aggressively to push sales
D. Avoid competitive markets
✅ Answer: C. Perform aggressively to push sales
19. Outcome-based control works best when:
A. Market conditions are unpredictable
B. Sales cycles are long and complex
C. Managers cannot observe salesperson behavior
D. Sales work is standardized
✅ Answer: C. Managers cannot observe salesperson behavior
20. Which is a risk associated with high-powered incentives?
A. Decline in output
B. Increased customer loyalty
C. Manipulation of sales reports
D. Low employee motivation
✅ Answer: C. Manipulation of sales reports
21. A compensation system that motivates teamwork is:
A. Pure commission
B. Individual bonus structure
C. Team-based variable pay
D. Uncapped incentives
✅ Answer: C. Team-based variable pay
22. The Wells Fargo scandal primarily illustrates failure in:
A. Behavioral monitoring
B. Payroll design
C. Hiring practices
D. Market strategy
✅ Answer: A. Behavioral monitoring
23. Fixed + Variable pay structures offer:
A. No risk
B. No performance incentives
C. Balanced risk and motivation
D. High unpredictability in salary
✅ Answer: C. Balanced risk and motivation
24. Which of the following is a short-term sales incentive?
A. Annual bonus
B. Retirement benefits
C. Salary increment
D. SPIFF
✅ Answer: D. SPIFF
25. Output control measures success using:
A. Sales calls made
B. CRM log completion
C. Customer relationship quality
D. Sales revenue generated
✅ Answer: D. Sales revenue generated
26. Which control system is best for complex consultative selling?
A. Output control
B. Behavioral control
C. Commission-only structure
D. Decentralized control
✅ Answer: B. Behavioral control
27. Variable compensation is NOT suitable when:
A. There is high uncertainty in sales outcomes
B. The company wants consistent employee behavior
C. Salespeople need motivation
D. The product is simple and transactional
✅ Answer: B. The company wants consistent employee behavior
28. A pay mix of 80% fixed and 20% variable is designed to:
A. Encourage aggressive selling
B. Promote process compliance
C. Push high-volume sales
D. Increase pay volatility
✅ Answer: B. Promote process compliance
29. Which form of control requires significant manager training?
A. Outcome control
B. Behavioral control
C. Market control
D. Self-control
✅ Answer: B. Behavioral control
30. SPIFFs are best used for:
A. Long-term strategy
B. Rebranding exercises
C. Short-term sales boosts
D. Manager evaluation
✅ Answer: C. Short-term sales boosts
31. Control mechanisms help reduce:
A. Managerial autonomy
B. Misaligned sales behavior
C. Sales territory size
D. Incentive payouts
✅ Answer: B. Misaligned sales behavior
32. High uncertainty in sales outcomes favors:
A. Fixed salary
B. Pure commission
C. Output-only control
D. Team incentives
✅ Answer: A. Fixed salary
33. Which plan motivates consistent long-term selling behavior?
A. Uncapped commission
B. Balanced scorecard incentives
C. Daily SPIFFs
D. Push-based bonuses
✅ Answer: B. Balanced scorecard incentives
34. Sales governance aims to:
A. Control only compensation
B. Create a structured system for ethical sales behavior
C. Reward only high performers
D. Eliminate the need for supervision
✅ Answer: B. Create a structured system for ethical sales behavior
35. Incentive plans fail when:
A. Incentives are aligned with strategy
B. Reward metrics contradict target behavior
C. Sales cycles are long
D. Sales teams are small
✅ Answer: B. Reward metrics contradict target behavior
36. Which metric supports behavior-based control?
A. Revenue
B. Profit margin
C. Call quality score
D. Units sold
✅ Answer: C. Call quality score
37. A salesforce compensated mostly with commissions is likely to:
A. Be risk-averse
B. Focus on volume over quality
C. Prioritize long-term relationships
D. Require high monitoring
✅ Answer: B. Focus on volume over quality
38. Compensation that includes customer satisfaction metrics discourages:
A. Hard-selling
B. Client service
C. Relationship building
D. Ethical selling
✅ Answer: A. Hard-selling
39. Behavioral control requires:
A. Minimal supervision
B. Extensive monitoring
C. Zero incentives
D. High uncertainty
✅ Answer: B. Extensive monitoring
40. Outcome-based incentives are best when:
A. Sales output is hard to measure
B. The sales process is standardized
C. Salespeople are experienced
D. Managers want full control
✅ Answer: C. Salespeople are experienced
41. A highly capped incentive system reduces:
A. Teamwork
B. Motivation to exceed targets
C. Long-term strategy alignment
D. Monitoring requirements
✅ Answer: B. Motivation to exceed targets
42. Compensation systems must balance:
A. Cost, productivity, and retention
B. Control, ethics, and territory size
C. Incentives, CRM, and branding
D. Pay, HR policy, and recruitment
✅ Answer: A. Cost, productivity, and retention
43. A hybrid control system includes:
A. Only outcome metrics
B. Only behavioral metrics
C. Both behavioral and outcome measures
D. No incentives
✅ Answer: C. Both behavioral and outcome measures
44. High powered incentives are NOT suitable when:
A. Ethical standards are crucial
B. Sales are measurable
C. Sales cycles are short
D. Product is low involvement
✅ Answer: A. Ethical standards are crucial
45. A salary-only compensation system typically results in:
A. Higher sales aggression
B. Lower unethical behavior
C. High incentive manipulation
D. Higher salary risk
✅ Answer: B. Lower unethical behavior
46. Which approach minimizes the risk of system gaming?
A. Volume-based commission
B. Multi-metric balanced scorecard
C. SPIFF payments
D. Uncapped incentives
✅ Answer: B. Multi-metric balanced scorecard
47. What does a 60/40 pay mix imply?
A. 60% incentive, 40% fixed
B. 60% fixed, 40% variable
C. No fixed pay
D. Commissions capped at 40%
✅ Answer: B. 60% fixed, 40% variable
48. Incentives tied only to sales volume may lead to:
A. Quality selling
B. Cross-selling and upselling
C. Quantity over customer needs
D. Better customer relationships
✅ Answer: C. Quantity over customer needs
49. The primary danger of output-only control is:
A. Underreporting sales
B. Overemphasis on short-term numbers
C. Excessive supervision
D. Poor customer experience measurement
✅ Answer: B. Overemphasis on short-term numbers
50. Sales control systems help ensure:
A. Salespeople work independently
B. Ethical and aligned performance
C. Lower salary budgets
D. Minimal manager involvement
✅ Answer: B. Ethical and aligned performance
51. Behavioral control is recommended when:
A. Output is hard to measure
B. Salespeople are highly independent
C. There is no customer interaction
D. Incentives are purely monetary
✅ Answer: A. Output is hard to measure
52. A commission-heavy structure can:
A. Improve long-term customer trust
B. Increase hard-selling behavior
C. Reduce sales effort
D. Improve behavioral consistency
✅ Answer: B. Increase hard-selling behavior
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