Current Research
Description
Professor Chung models the effect of incentive compensation to study its impact on the sales force. Using data from a Fortune 500 company, he has developed a dynamic structural model of sales force response to a bonus-based compensation plan and examined how various components of the plan affect the performance of sales agents. While bonuses enhance productivity across all segments, strong and weak performers exhibit differences. The best sales people can sustain their high levels of productivity even after attaining their quotas with the incentive of overachievement commissions, and weaker performers can be kept on track toward annual quotas with the incentive of quarterly bonuses.
Professor Chung also studies the impact of unconditional incentives, such as recognition and awards. Further, he is examining how framing a compensation plan can have different outcomes in sales force performance. He finds, in the short run, that the more vicious the incentive plan is, the more immediate the impact on performance. However, there are more negative effects in performance in the long-run. Recognition and rewards, on the other hand, have limited impact in the short-run but produce significant improvement in performance in the long-run.
Professor Chung is expanding his research to include cultural factors by investigating the effect of local and global incentives in businesses in Asia and Latin America.