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Do Agents Game Their Agents' Behavior? Evidence from Sales Managers

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  • Alan Benson

Abstract

This paper examines how sales managers, acting as agents of the firm, game the staffing and incentives of their subordinates. Sales managers on a quota's cusp have a unique personal incentive to retain and lower quotas for poor-performing subordinates, allowing one to isolate a manager's interest from the firm's. Using microdata from 244 firms that subscribe to a cloud-based service for processing sales compensation, I estimate that 13%-15% of both quota adjustments and retentions among poor performers are explained by managers' incentives around quotas. Although a minority of poor performers are subsequently terminated or transferred, most are retained indefinitely.

Suggested Citation

  • Alan Benson, 2015. "Do Agents Game Their Agents' Behavior? Evidence from Sales Managers," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 863-890.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/681107
    DOI: 10.1086/681107
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    Cited by:

    1. Richard B. Freeman & Wei Huang & Teng Li, 2019. "Non-linear Incentives, Worker Productivity, and Firm Profits: Evidence from a Quasi-experiment," NBER Working Papers 25507, National Bureau of Economic Research, Inc.
    2. Alan Benson & Danielle Li & Kelly Shue, 2019. "Promotions and the Peter Principle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 2085-2134.
    3. Lamar Pierce & Alex Rees-Jones & Charlotte Blank, 2020. "The Negative Consequences of Loss-Framed Performance Incentives," NBER Working Papers 26619, National Bureau of Economic Research, Inc.
    4. Kräkel, Matthias, 2021. "On the delegation of authority," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 965-981.
    5. Kräkel, Matthias, 2018. "Empowerment and the Dark Side of Delegation," IZA Discussion Papers 11289, Institute of Labor Economics (IZA).
    6. 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).

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