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Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams

Author

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  • Kuhn, Peter J.

    (University of California, Santa Barbara)

  • Yu, Lizi

    (University of Queensland)

Abstract

We study the performance of small retail sales teams facing an incentive scheme that includes both a lump sum bonus and multiple accelerators (kinks where the piece rate jumps upward). Consistent with standard labor supply models, we find that the presence of an attainable bonus or kink on a work-day raises mean sales, and that sales are highly bunched at the bonus; inconsistent with those models we find that teams bunch at the kinks instead of avoiding them. Teams' responses to the kinks are consistent with models in which the kinks are perceived as symbolic rewards, and inconsistent with reference point models where kinks induce loss aversion.

Suggested Citation

  • Kuhn, Peter J. & Yu, Lizi, 2021. "Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams," IZA Discussion Papers 14115, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14115
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    More about this item

    Keywords

    teams; bonuses; bunching; accelerators; symbolic rewards; loss aversion;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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