COMPENSATION FOR

SALES PROFESSIONALS

STATISTICS CASE STUDY:

By
Puneeth R - PES1PG19MB352
Shreyas Barthi M – PES1PG19MB338
 COMPENSATION FOR SALES PROFESSIONALS

COMPENSATION FOR SALES PROFESSIONALS

A local chapter of sales professionals in greater San Francisco conducted a survey of

its membership to study, if any, relationship between the years of experience and
salary for the individuals employed inside and outside sales positions. The
respondents of the survey were asked to specify one of the three levels of years of
experience: low (1-10 years), medium (11-20) and high (21 or more years). Survey
was conducted on 120 professionals and the data thus obtained was studied and
analysed using various statistics.
1. Summarised data into descriptive statistics.
2. Developed a 95% confidence interval estimate of the mean annual salary for all
salespersons, regardless of years of experience and type of position.
3. Developed a 95% confidence interval estimate of the mean salary for all inside
salespersons.
4. Developed a 95% confidence interval estimate of the mean salary for all
outside salespersons.
5. Used analysis of variance test to test for any significant differences due to
2 position; ignoring years of experience and using .05 level of significance.
6. Used analysis of variance test to test for any significant differences due to
years of experience; ignoring position and using .05 level of significance.
7. Used analysis of variance test at .05 level of significance to test for any
significant differences due to position, years of experience and interaction.

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS

1. DESCRIPTIVE STATISTICS

CHART:

Insights drawn:
1. From the Chart, we can see that the average salary for someone employed in outside
position is considerably more than that of someone employed in inside position.
2. Within sales professionals in inside position, there is not much of difference in average
3
salaries depending on experience level.
3. Within sales professionals in outside position, there seems to be some difference in average
salaries depending on experience level.
4. Overall, average salaries seem to affect salaries and people with medium experience level
seems to get higher salaries, followed by high and low experience levels.

BOX PLOT:

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS

Insights drawn:
1. Seeing box plots for “Inside” and “Outside”, individuals with inside sales positions receive
lower salary compared to those with outside sales position. Hence, position is a significant
factor in salary amount received.
2. Seeing box plots for “Low”, “Medium” and “High”, we can see that there is a lot of overlap.
We cannot see a significant change in average salaries. Hence, overall, we cannot assume
experience level to be a significant factor in salary received.
3. Seeing box plots of “Inside-Low”, Inside-Medium” and “Inside-High”, experience level does
not seem to affect salaries of individuals with inside salse position. There is only a slight
increase in mean salary with increase in experience. We cannot assume experience level to
be a significant factor in salary received for professionals with inside position.
4. Seeing box plots of “Outside-Low”, Outside -Medium” and “Outside -High”, Professionals
with outside sales position and medium experience receive comparatively higher salary. The
differences in salaries are considerable. Hence, for a professional with outside position,
experience is a significant factor in salary received.
5. Seeing the box plot of “Outside-High”, there are 3 individuals with salaries falling outside
the interquartile range. These 3 can be considered as outliers.

2. 95% confidence interval estimate of the mean annual salary for all
salespersons, regardless of years of experience and type of position.
N Mean Std Dev Std Err Minimum Maximum
120 64925.5 10838.7 989.4 48621.0 88730.0
4

DF t Value Pr > |t|
Mean 95% CL Mean Std Dev 95% CL Std Dev
119 65.62 <.0001
64925.5 62966.3 66884.6 10838.7 9619.2 12415.0

Distribution of VAR1
With 95% Confidence Interval for Mean

Normal
Kernel
20

15
Percent

10

0
95% Confidence

40000 60000 80000 100000

Salary ($)

Inference:
95 % Confidence Interval estimate for mean annual salary for all salespersons

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS
 (62966.3, 66884.6)

3. 95% confidence interval estimate of the mean salary for all inside
salespersons.
N Mean Std Dev Std Err Minimum Maximum
6 56020. 3589.8 463.4 48621.0 64562.0
0 5

95% CL Std DF t Value Pr > |t|

Mean 95% CL Mean Std Dev Dev 59 120.88 <.0001
56020.5 55093.2 56947.9 3589.8 3042.9 4378.4

Distribution of VAR1
With 95% Confidence Interval for Mean
Normal
Kernel
30

20
Percent

5 10

0
95% Confidence

45000 50000 55000 60000 65000 70000

Salary ($)

Inference:
95 % Confidence Interval estimate for mean annual salary for Inside salespersons
 (55093.2, 56947.9)

4. 95% confidence interval estimate of the mean salary for all outside
salespersons.
N Mean Std Dev Std Err Minimum Maximum
60 73830.4 7923.0 1022.8 60259.0 88730.0

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS

95% CL Std DF t Value Pr > |t|

Mean 95% CL Mean Std Dev Dev
59 72.18 <.0001
73830.4 71783.7 75877.2 7923.0 6715.8 9663.3

Distribution of VAR1
With 95% Confidence Interval for Mean

Normal
Kernel
30

20
Percent

10

0
95% Confidence

50000 60000 70000 80000 90000 100000

Salary ($)

Inference:
95 % Confidence Interval estimate for mean annual salary for Outside salespersons
 (71783.7, 75877.2)
6

5. Analysis of variance test to test for any significant differences due to

position; ignoring years of experience and using .05 level of
significance.
Hypothesis: Average salary of professionals working in Inside and Outside positions are same.

Results:

Class Level Information Number of Observations Read 120

Class Levels Values
Number of Observations Used 120
Position 2 Inside Outside
Source DF Sum of Squares Mean Square F Value Pr > F
Model 1 9515793950 9515793950 251.54 <.0001
Error 118 4463949042 37830077
Corrected Total 119 13979742992

Source DF Anova SS Mean Square F Value Pr > F

Position 1 9515793950 9515793950 251.54 <.0001

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS
Distribution of VAR1
90000

80000

Salary ($)
70000

60000

50000

Ins ide Outside

Position

VAR1
Level of
Position N Mean Std Dev
Inside 60 56020.5167 3589.82612
Outside 60 73830.4333 7922.96041

Inference:
F-value from ANOVA table = 251.54, F-value from F-distribution table (0.05, 1, 118) = 3.94
Since F-value from ANOVA table is greater than that of F-distribution and Pr < 0.05, we can reject
the hypothesis that Position is not a significant factor affecting salary. Position is a significant
factor affecting salary. Salespersons in Outside positions receive higher salaries. From the box
plot, we can see that average salary for people in Outside position is higher than that of people
in Inside position.

6. Analysis of variance test to test for any significant differences due

7 to years of experience; ignoring position and using .05 level of
significance.
Hypothesis: Mean salary of people with Low, Medium and High experience levels are same.

Results:

Class Level Information

Number of Observations Read 120
Class Levels Values
Number of Observations Used 120
Experience 3 High Low Medium

Source DF Sum of Squares Mean Square F Value Pr > F

Model 2 1668100099 834050050 7.93 0.0006
Error 117 12311642893 105227717
Corrected Total 119 13979742992

Source DF Anova SS Mean Square F Value Pr > F

VAR1
Experience 2
Level of 1668100099 834050050 7.93 0.0006
Experience N Mean Std Dev
High 40 66338.6750 9699.5126
Low 40 59819.6250 6005.0555
Medium 40 68618.1250 13621.3772

Inference:
F-value from ANOVA table = 7.93, F-value from F-distribution table (0.05, 2, 117) = 3.09

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS
Since F-value from ANOVA table is greater than that of F-distribution and Pr<0.05, we can
reject the hypothesis that Experience level is not a significant factor affecting salary.
Experience level is a significant factor. From the box plot, we can see that average salary for
people with medium experience level is comparatively higher, followed by High and Low
experience levels.

7. Analysis of variance test at .05 level of significance to test for any

significant differences due to position, years of experience and
interaction

7.1. 2-way ANOVA to test for significant differences due to Interaction

between Position and Experience Level:
Hypothesis: Average salary of professionals do not change due to interaction between position and
experience level.

Results:
Class Level Information
Class Levels Values
Position 2 Inside Outside
Experience 3 High Low Medium

Number of Observations Read 120

Number of Observations Used 120
8

Sum of
Source DF Squares Mean Square F Value Pr > F
Model 5 12535960234 2507192047 197.97 <.0001
Error 114 1443782758 12664761
Corrected Total 119 13979742992

Source DF Anova SS Mean Square F Value Pr > F

Position 1 9515793950 9515793950 751.36 <.0001
Experience 2 1668100099 834050050 65.86 <.0001
Position*Experience 2 1352066184 676033092 53.38 <.0001

Inference:
All the F-values due to interactions are high and all Pr<0.05. Hence, significant effects are there due
to position, experience and their interaction. Now we have to check the effect of this interaction
playing on salaries due to experience level within each position.

7.2. ANOVA for professionals in outside positions for significant differences

in salary due to years of experience:
Hypothesis: Average salary of professionals with Low, medium and high experience levels are same
within people in Outside position.

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS

Results:
Class Level Information Number of Observations Read 60
Class Levels Values Number of Observations Used 60
Experience 3 High Low Medium

Source DF Sum of Squares Mean Square F Value Pr > F

Model 2 2957881402 1478940701 113.04 <.0001
Error 57 745743397 13083217
Corrected Total 59 3703624799

Distribution of VAR1
90000 F 113.04
Prob > F <.0001

85000

80000
Salary ($)

75000

70000

65000

60000

High Lo w Medium
Experience

VAR1
Level of Experience N Mean Std Dev

9 High 20 75254.9000 3830.77440

Low 20 64607.9000 3556.45644
Medium 20 81628.5000 3453.46746

Inference:
F-value from ANOVA table = 113.04, F-value from F-distribution table (0.05, 2, 57) = 2.37
Since F-value from ANOVA table is greater than that of F-distribution and Pr<0.05, we can reject the
hypothesis that Experience level is not a significant factor affecting salary, when position is
“Outside”. Experience level is a significant factor affecting salary for sales professionals working in
Outside position. From the box-plot, Individuals with medium experience level receives
comparatively higher salaries followed by people with high and average experience levels.

7.3. ANOVA for professionals in INSIDE positions for significant differences

in salary due to years of experience:
Hypothesis: Average salary of professionals with Low, medium and high experience levels are same
within people in Outside position.

Results:
Class Level Information Number of Observations Read 60
Class Levels Values Number of Observations Used 60

Experience 3 High Low Medium

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS
Sum of
Source DF Squares Mean Square F Value Pr > F
Model 2 62284881.7 31142440.9 2.54 0.0875
Error 57 698039361.3 12246304.6
Corrected Total 59 760324243.0

Source DF Anova SS Mean Square F Value Pr > F

Experience 2 62284881.73 31142440.87 2.54 0.0875

Distribution of VAR1
65000 F 2.54
Prob > F 0.0875

60000
Salary ($)

55000

50000

High Low Medium

Experience

VAR1
Level of
Experience N Mean Std Dev
High 20 57422.4500 3327.37201
Low 20 55031.3500 3619.71641
10
Medium 20 55607.7500 3544.73728

Inference:
Since Pr > 0.05, we can accept the hypothesis that Experience level is not a significant factor
affecting salary, when position is “Inside”. Experience level is not a significant factor affecting
salary for sales professionals working in Inside position.

7.4. ANOVA to test for any Significant Differences due to Experience Level and
Position together:
Hypothesis: Average salary of professionals with following combinations are same: Outside-low,
Outside-medium, Outside-high, Inside-low, Inside-medium and Inside-high.
Results:
Class Level Information
Number of Observations Read 120
Class Levels Values
Number of Observations Used 120
Position 2 Inside Outside
Experience 3 High Low Medium

Source DF Sum of Squares Mean Square F Value Pr > F

Model 5 12535960234 2507192047 197.97 <.0001
Error 114 1443782758 12664761
Corrected Total 119 13979742992 Inference:
Source DF Anova SS Mean Square F Value Pr > F
Position*Experience 5 12535960234 2507192047 197.97 <.0001

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS
F-value from ANOVA table = 197.97
F-value from F-distribution table (0.05, 5, 114) = 2.19
Since F-value from ANOVA table is greater than that of F-distribution and Pr < 0.05, we can reject
the hypothesis that Experience level and position are not a significant factor affecting salary.
Experience level and Position are significant factors affecting salary. From the box plot we can see
a significant difference in trends of average salaries between experience levels as well as a general
shift in average salaries between positions.

APPENDIX
SalesSalary.xlsx data
Observatio Salary Positio Experienc Observatio Salary Positio
n ($) n e n ($) n Experience
1 53938 Inside Medium 61 78936 Outside High
2 52694 Inside Medium 62 54282 Inside Medium
3 70515 Outside Low 63 78850 Outside Medium
4 52031 Inside Medium 64 54592 Inside High
5 62283 Outside Low 65 56461 Inside Low
6 57718 Inside Low 66 74389 Outside High
7 79081 Outside High 67 49422 Inside Low
8 48621 Inside Low 68 86692 Outside Medium
9 72835 Outside High 69 77356 Outside High
10 54768 Inside Medium 70 58055 Inside Medium
11 11 52282 Inside Medium 71 77820 Outside High
12 55632 Inside Low 72 77801 Outside High
13 63856 Outside Low 73 58053 Inside Medium
14 51827 Inside Medium 74 78169 Outside Medium
15 51948 Inside Low 75 68560 Outside Low
16 56588 Inside Medium 76 66320 Outside High
17 68858 Outside Low 77 67237 Outside Low
18 63478 Outside Low 78 62225 Outside Low
19 83846 Outside Medium 79 58866 Inside High
20 59253 Inside High 80 77311 Outside High
21 53464 Inside Low 81 76863 Outside High
22 83176 Outside Medium 82 81750 Outside Medium
23 60949 Inside High 83 58749 Inside High
24 52833 Inside Low 84 52638 Inside Medium
25 72914 Outside High 85 62675 Inside Medium
26 83040 Outside Medium 86 51027 Inside High
27 64288 Outside Low 87 62881 Outside Low
28 64562 Inside High 88 75791 Outside High
29 52644 Inside High 89 61680 Outside Low
30 55959 Inside Low 90 59768 Inside High
31 88730 Outside Medium 91 56568 Inside High
32 77683 Outside Medium 92 82622 Outside Medium
33 56339 Inside High 93 75326 Outside High
34 71345 Outside Low 94 57719 Inside High

Submitted by: Puneeth R and Shreyas Barthi M

 COMPENSATION FOR SALES PROFESSIONALS
35 63799 Inside Low 95 57366 Inside High
36 78074 Outside High 96 57670 Inside Low
37 65546 Outside Low 97 52072 Inside Low
38 59057 Inside Medium 98 68569 Outside High
39 66024 Outside Low 99 81526 Outside Medium
40 59457 Inside High 100 82059 Outside Medium
41 79383 Outside Medium 101 74374 Outside High
42 61128 Outside Low 102 51119 Inside Low
43 54122 Inside Low 103 80696 Outside Medium
44 78710 Outside High 104 56352 Inside Low
45 58814 Inside Low 105 77622 Outside High
46 59276 Inside Low 106 69142 Outside Low
47 75869 Outside Medium 107 67603 Outside High
48 57549 Inside Medium 108 60561 Outside Low
49 76762 Outside Medium 109 51246 Inside Medium
50 60993 Outside Low 110 54891 Inside Low
51 63362 Inside Medium 111 87090 Outside Medium
52 53231 Inside High 112 55482 Inside High
53 62115 Inside High 113 53464 Inside Low
54 56080 Inside Medium 114 58568 Inside Medium
55 53392 Inside Medium 115 58080 Inside High
56 61299 Outside Low 116 78702 Outside Medium
57 53894 Inside High 117 83131 Outside Medium
58 82794 Outside Medium 118 57788 Inside High
12 59 56990 Inside Low 119 53070 Inside Medium
60 77403 Outside High 120 60259 Outside Low

Submitted by: Puneeth R and Shreyas Barthi M