Financial Incentives - Commission 1.4.4
Commission - based on the percentage of business generated by an employee such as a salesperson. Commission is a payment made to employees based on the value of sales achieved. KEY FEATURES An incentive to increase worker productivity Knowing that extra effort means more pay can motivate Depends on selling price of product ADVANTAGES Enables high performing sales people to earn huge amounts. The payroll cost is related to the value of business achieved rather than just the amount produced. Increased sales due to it being a motivator DISADVANTAGES No incentive to build relations with customers Income can be unreliable, especially in a recession May lose customers if employees are using aggressive sales techniques in order to secure commission which damages the business' reputation