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Problem Statement: Compensation For Sales Professionals

The document presents a study analyzing the relationship between years of experience and salary for sales professionals in inside and outside sales positions. It identifies the factors of position (inside or outside), experience level (low, medium, high), and dependent variable of salary. An initial analysis finds a significant difference in salaries based on both position and experience level through ANOVA testing. Further analysis indicates a significant interaction between experience and position, with medium-experienced outside sales professionals receiving notably higher salaries. The study provides insights but recommends considering additional factors like performance.

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Vikas Singh
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© © All Rights Reserved
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Download as PPTX, PDF, TXT or read online on Scribd
99 views

Problem Statement: Compensation For Sales Professionals

The document presents a study analyzing the relationship between years of experience and salary for sales professionals in inside and outside sales positions. It identifies the factors of position (inside or outside), experience level (low, medium, high), and dependent variable of salary. An initial analysis finds a significant difference in salaries based on both position and experience level through ANOVA testing. Further analysis indicates a significant interaction between experience and position, with medium-experienced outside sales professionals receiving notably higher salaries. The study provides insights but recommends considering additional factors like performance.

Uploaded by

Vikas Singh
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Problem Statement

Compensation for Sales


Professionals
A local chapter of sales professionals
in Sacramento conducted a survey.
Study the relationship, if any,
between the years of experience and
salary for individuals employed as sales
professionals
in inside and outside
sales positions.

Data Given
Salaries of Sales professionals
Corresponding position (i.e.
Inside & Outside)
Corresponding Experience
Levels(High, Medium & Low)

Identifying Factors
1. Position

Inside
Outside

2. Experience

Low
Medium
High

Dependent Variable: Salary

Initial Analysis
First we will try to analyse variance of the
dependent variable with respect to each
factor individually.
1. Analysing the impact on salary of
individuals with respect to their positions.
2. Analysing the impact on salary of
individuals with respect to their
Experience levels.

Analysing the impact on salary of individuals with respect to their positions.

Null Hypothesis: There is no


difference in the salaries of the
ndividuals with respect to their
corresponding positions.
Ho : ui=uo
Alternative Hypothesis: There is
difference in the salaries of the
ndividuals with respect to their
corresponding positions.

Box Plot

Analysing the impact on salary of


individuals with respect to their
positions.
Anova: Single Factor

SUMMARY
Groups

Count

Sum

Average

Variance

inside

60 1861231 31020.51667 12886851.58

outside

60 2929826 48830.43333 62773301.67

ANOVA
Source of Variation

SS

Between Groups

9515793950

Within Groups

4463949042

Total

13979742992

df

MS
1

P-value

9515793950 251.5404355

F crit

4.96486E-31 3.921478088

118 37830076.62

119

Inference

F Tabulated value: 251.5404355


F Critical Value: 3.921478088
From above, with 95 % confidence we can
say that we have enough evidence to
reject Null Hypothesis.
Since, F Tabulated Value > F Critical
Value.
Hence, There is difference in salaries of
the individuals with respect to their
corresponding positions.

Analysing the impact on salary


of individuals with respect to
their Experience Levels.
Null Hypothesis: There is no difference in
the salaries of the individuals with respect
to their corresponding experience levels.
Alternative Hypothesis: There is
difference in the salaries of the individuals
with respect to their corresponding
experience levels.

Analysing the impact on salary


of individuals with respect to
their experience Levels.
Anova: Single Factor

SUMMARY
Groups

Count

Sum

Average

Variance

High

40 1653547

41338.675

94080544.43

Medium

40 1744725

43618.125

185541915.5

Low

40 1392785

34819.625

36060691.16

MS
834050049.7

F
7.926144111

117

105227717

ANOVA
Source of Variation
Between Groups
Within Groups

SS
1668100099
12311642893

df

P-value
0.000591268

F crit
3.073762904

Inference
F Tabulated value: 7.926144111
F Critical Value: 3.073762904
From above, with 95 % confidence we can
say that we have enough evidence to reject
Null Hypothesis.
Since, F Tabulated Value > F Critical Value.
Hence, There is difference in salaries of the
individuals with respect to their
corresponding experience levels.

Analysing the impact on salary of


individuals with respect to their
Positions and experience Levels.


Factor B

Factor A

Factor A

Low

Medium

High

Factor B

Low

Medium

High

Inside

32,718

28,938

34,253

Outside

45,515

58,846

54,081

23,621

27,694

35,949

37,283

58,176

47,835

30,632

27,031

39,562

38,856

58,040

47,914

26,948

29,768

27,644

43,858

63,730

53,074

28,464

27,282

31,339

38,478

52,683

53,710

27,833

26,827

34,457

39,288

54,383

52,403

30,959

31,588

28,231

46,345

50,869

53,936

38,799

34,057

37,115

40,546

51,762

49,389

29,122

32,549

28,894

41,024

57,794

52,356

33,814

38,362

29,592

36,128

53,850

52,820

34,276

31,080

33,866

35,993

61,692

52,801

31,990

28,392

33,749

36,299

53,169

41,320

31,461

29,282

26,027

43,560

56,750

52,311

24,422

33,055

34,768

42,237

57,622

51,863

32,670

33,053

31,568

37,225

56,526

50,791

27,072

27,638

32,719

37,881

57,059

50,326

26,119

37,675

32,366

36,680

55,696

43,569

31,352

26,246

30,482

44,142

62,090

49,374

29,891

33,568

33,080

35,561

53,702

52,622

28,464

28,070

32,788

35,259

58,131

42,603

Test for Difference between the Levels of Factor A


Ho: The mean salaries of the 3 levels
of experience are equal
H1: At least two mean salaries differ
Test for Difference between the Levels of Factor B
Ho: The mean salaries of 2 levels of sales position are equal
H1: At least two mean salaries differ
Test for Interaction between Factors A & B
Ho: Factors A & B do not interact to affect the mean responses
H1: Factors A & B do interact to affect the mean response

ANOVA

Source of Variation

SS

df

MS

P-value

F crit
3.92433

Sample

9515793950

1 9515793950 751.3599

5.32E-52

Columns

1668100099

2 834050049.7 65.85596

9.76E-20 3.075853

Interaction

1352066184

2 676033092.2 53.37906

4.37E-17 3.075853

Within

1443782758

114 12664761.03

Total

13979742992

119

Test for Difference between the Levels of Factor A (Column)


F(tab) = 65.85596
F(Critical) = 3.075853
As F(tab) > F(Critical), Reject the null hypothesis
i.e. There exits a difference between mean salaries of 3 levels of experience.

Test for Difference between the Levels of Factor B (Sample)


F(tab) = 751.359
F(Critical) = 3.92433
As F(tab) > F(Critical), Reject the null hypothesis
i.e. There exits a difference between mean salaries of 2 levels of sales position

Test for Difference between the Levels of Interaction (AB)


F(tab) = 53.37906
F(Critical) = 3.075853
As F(tab) > F(Critical), Reject the null hypothesis
i.e. There is an interaction between experience and sales position.

o check which population means differ

Method 1: LSD

Method 2: Bonferroni

Method 3: Tukey

Multiple Comparisons
Dependent Variable: Data

(I) Exp_Low_Med_High

(J) Exp_Low_Med_High

Mean Difference

Std. Error

Sig.

95% Confidence Interval

(I-J)

Lower Bound

Upper Bound

2.00

-8798.5000*

795.76256

.000

-10688.2094

-6908.7906

3.00

-6519.0500*

795.76256

.000

-8408.7594

-4629.3406

1.00

8798.5000*

795.76256

.000

6908.7906

10688.2094

3.00

2279.4500*

795.76256

.014

389.7406

4169.1594

1.00

6519.0500*

795.76256

.000

4629.3406

8408.7594

2.00

-2279.4500*

795.76256

.014

-4169.1594

-389.7406

2.00

-8798.5000*

795.76256

.000

-10374.8995

-7222.1005

3.00

-6519.0500*

795.76256

.000

-8095.4495

-4942.6505

1.00

8798.5000*

795.76256

.000

7222.1005

10374.8995

3.00

2279.4500*

795.76256

.005

703.0505

3855.8495

1.00

6519.0500*

795.76256

.000

4942.6505

8095.4495

2.00

-2279.4500*

795.76256

.005

-3855.8495

-703.0505

2.00

-8798.5000*

795.76256

.000

-10732.0600

-6864.9400

3.00

-6519.0500*

795.76256

.000

-8452.6100

-4585.4900

1.00

8798.5000*

795.76256

.000

6864.9400

10732.0600

3.00

2279.4500*

795.76256

.015

345.8900

4213.0100

1.00

6519.0500*

795.76256

.000

4585.4900

8452.6100

2.00

-2279.4500*

795.76256

.015

-4213.0100

-345.8900

1.00

Tukey HSD

2.00

3.00

1.00

LSD

2.00

3.00

1.00

Bonferroni

2.00

3.00

Based on observed means.


The error term is Mean Square(Error) = 12664761.034.
*. The mean difference is significant at the .05 level.

Mean Responses Graphical Representation

Low

Medium

High

Inside Sales

30031.3
5

30607.75

32422.45

Outside
Sales

39607.9

56628.5

50254.9

Factor B

Factor A

60000
50000
40000
Inside Sales

30000

Outside Sales
20000
10000
0
Low

Medium

High

INFERENCES ON GIVEN
DATASET
With 95% confidence levels:
The salaries of individuals with low level of experience
does not vary much irrespective of the position.
The salaries of the individuals with high level of
experience also does not vary much irrespective of
the position.
The salaries of individuals with medium level of
experience is strikingly high when the position is
outside than the employees whose position is inside .

MANAGERIAL INSIGHTS
From the given statistics, we can infer that
medium level experienced sales persons working
outside receive comparatively very high salaries.
But, there is possibility of confounding variables
such as performance and organizational role of
the individual in deciding the salary.
The recommendation to the company would be
to take into consideration the performance of the
sales individuals and organizational role of the
individuals and make an analysis.

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