Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams
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.
We thank Youssef Benzarti, Clement de Chaisemartin, Alex Rees-Jones, Alisa Tazhitdinova, Gonzalo Vasquez, and participants at the 2019 Trans-Pacific Labor Seminar (Tokyo) for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.