How and When does Functional Diversity Impact Sales Team Effectiveness: An Abstract

Traditionally, companies have managed salespeople differently than other members of the firm, emphasizing the importance of individual performance. However, practitioner research notes a change in the relationship between individual performance and unit profitability. Specifically, between 2002 and 2012, the impact of individual performance on firm profitability decreased more than 20%; whereas the impact of “employee network” performance increased by more than 20%. As such, firms now rely increasingly on sales teams as opposed to individual sales performance, and an important aspect of the sales team is the composition of the team itself. Yet, our understanding of team composition remains quite limited due to the fact that research on team selling, in general, and sales team composition, in specific, is quite scarce. The focus of this study is therefore to investigate the potential effects of a team’s functional diversity on its effectiveness, the conditional nature of any effects, and the process by which the effects occur. In particular, we examine diversity as a functional capabilities difference and, consistent with the work group diversity literature, expect functional diversity to yield within sales teams both advantages (e.g., better task solving skills due to differences in experience and knowledge) and disadvantages (e.g., decreased team flexibility). The findings suggest that functional diversity positively impacts team effectiveness by building task interdependence among team members, which enhances team effectiveness through both higher levels of team stability and cohesion. However, functional diversity actually reduces team effectiveness by hampering team flexibility, another positive driver of team stability and cohesiveness. The key takeaway rests with the role of team complexity, on which both of these effects depend. Overall, the competing effects of greater task interdependence but lesser team flexibility essentially net each other out when the task is simple (i.e., functional diversity has no net effect on team effectiveness at low levels of task complexity). Under these circumstances, sales managers can make decisions about team composition based on other considerations, such as costs and the complexity of tasks rather than functional diversity. However, when the task is complex, the enhanced value of functional diversity on task interdependence, coupled with the diminished impact of team flexibility, calls for assembling a functionally diverse team.