How sales manager experience and historical data trends affect decision making

The purpose of this study is to examine how trends in historical data influence two types of predictive judgments: territory selection and salesperson hiring. Sales managers are confronted frequently with decisions that explicitly or implicitly involve forecasting with limited information. In doing so, they conceptualize how the magnitude of these trend effects may be affected by the experience managers have in making these types of judgments. Study 1 provides evidence of a curvilinear relationship between experience and reliance on the trend data whereby the sales territory selections of novice sales managers exhibited greater susceptibility to informational trends than did the evaluations of naïve and expert decision-makers. A benchmark analysis in Study 2 further revealed that the salesperson selections made by novice and expert sales managers were equally biased, albeit in opposite directions, with novices overweighting and experts underweighting historical performance trends. Implications of these findings are discussed, as are avenues for future research.

The authors employ an online experimental design methodology of practicing managers. For Study 1, they use regression, whereas Study 2 uses a deterministic process to develop a priori predictive benchmark forecasts. Ordinary least squares is then used to estimate manager’s decisions, which are then compared to the predictive forecasts to determine accuracy.

Study 1 provides evidence of a curvilinear relationship between experience and reliance on the trend data whereby the sales territory selections of novice sales managers exhibited greater susceptibility to informational trends than did the evaluations of naïve and expert decision-makers. A benchmark analysis in Study 2 further revealed that the salesperson selections made by novice and expert sales managers were equally biased, albeit in opposite directions, with novices overweighting and experts underweighting historical performance trends.

The present inquiry is the first to provide insights into an important issue that has been the subject of equivocal findings, namely, whether experience in a judgmental domain exerts a facilitating or debilitating effect on sales manager decision-making. In this regard, some research supports the intuition that experience in making a particular type of decision can insulate managers from judgmental bias and, in doing so, improve decision quality (see Shanteau, [1992a] for a summary). In contrast, other work provides a more pessimistic view by demonstrating that the quality of decision-making is either unaffected by or can erode with additional experience (Hutchinson et al., 2010). To help reconcile these conflicting findings, the authors presented and tested a theoretical framework conceptualizing how trends may influence predictive judgments across three levels of decision-maker experience.