Do agents game their agents’ behavior? Evidence from sales managers

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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 micro-data 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.

Original languageEnglish (US)
Pages (from-to)863-890
Number of pages28
JournalJournal of Labor Economics
Volume33
Issue number4
DOIs
StatePublished - Oct 1 2015

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