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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. 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.
    2. 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.
    3. Kräkel, Matthias, 2018. "Empowerment and the Dark Side of Delegation," IZA Discussion Papers 11289, Institute of Labor Economics (IZA).
    4. Arnold, Markus C. & Artz, Martin & Tafkov, Ivo D., 2024. "The effect of target transparency on managers’ target setting decisions," Accounting, Organizations and Society, Elsevier, vol. 112(C).
    5. 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.
    6. Kräkel, Matthias, 2021. "On the delegation of authority," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 965-981.
    7. 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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