Commission structures are often complex. In tiered commission structures, the percentage of variable pay changes at different levels of sales performance. Salesperson behaviors may change just prior to commission deadlines, depending on goal achievement. According to the deterrence doctrine, people weight temptation versus consequences before engaging in unethical behaviors. When the difference between tiers is large, it creates a larger temptation. Furthermore, salespeople should frame sales revenue differently depending on whether it leads to a new commission tier. Salespeople are likely to justify and downplay the consequences of gaming behavior that avoids rewards framed as a “loss” compared to gaming behavior intended to achieve a “gain.” Using a sample of professional salespeople participating in an experiment, this research shows that salespeople are more likely to engage in gaming behavior to avoid a loss, particularly when rewards stakes are high and their visibility within the organization is low. These findings demonstrate that commission plan structure has an impact on salesperson behaviors above and beyond the extant paradigm of variable versus fixed compensation.
Game and Punishments: Criminal Justice Lens on Commission Structure Ethics