Trying to figure out the best mix of extrinsic motivators (i.e. money) is a tough one. Much like any deal you may enter into, you want to feel like you are getting a good deal. And, when the deal involves compensation, that “good deal” applies whether you are the employer or the employee.
I think that offering a bonus or commission system to employees can be beneficial to employees and the company if done correctly. As the article “Sins of Commission: Be Care What You Pay For, You May Get It” states, you need to determine the right balance when it comes to extrinsic motivators like bonuses and commission.
Two of the biggest problems that arise from bonus and commission systems are:
- The system rewards the wrong type of behavior—such as rewarding only top line review rather than focusing on customer loyalty/persistency and top line growth
- The system is too complicated for individuals to completely understand what is expected of them
Commission/bonus systems can be beneficial to both employers and employees. I believe that the best course of action is to develop a system that is 1) simple and 2) rewards the behaviors that align with company values and mission.