Sins of Commission – Big Paychecks, Lack of Consequences, and Ethical Dilemmas

The essay written by Jeffrey Pfeffer, on the negative affects of commission based compensation systems, is a valid commentary on virtually all sales organizations that employ such a system. Most importantly he addresses the fact that these systems not only detrimentally impact customer service but also cause salespeople to compromise ethics and often legality in the pursuit of hefty commission checks. Unfortunately most of these systems are used in industries where a salesperson’s paycheck can be boosted by skirting corners, living in grey areas, or crossing black lines. I have witnessed the effects of these systems personally. It is a concept known as a “win not lose”, or scoreboard, mentality, where the goal becomes only winning and the final numbers on the scoreboard becomes the sole source of a person’s validation or failure. Often in these situations there is also a total lack of consequences as well which just exacerbates the unethical behaviors. If a business wants to run its sales departments ethically and legally, in my opinion, it needs to distance itself from this type of reward system unfortunately companies often benefit so hugely in the short run from these systems that they garner wide support across upper management, but in the long run these systems create shallow employees and therefore a shallow organization. Shallowness does not bring long-term success.
The scoreboard mentality is a concept most easily explained in the context of sports. Though I often use sports analogies in my comparisons in this instance it provides a clear illustration of the effects of such a situation. For example, a softball game is close and in late innings, a shortstop’s team is winning by one run, there is a runner on second base, and the batter hits a single through the infield that would score the runner. Now that runner must run right by the shortstop, and if that shortstop has an ethical choice; they can violate the rules and interfere with the runner stopping them from scoring thereby most likely ensuring a win, or they can follow the rules and the runner will score and tie the game. Now you couple this with the ability of the shortstop to interfere without being caught and punished, what is there to stop the shortstop from interfering? Only their own internal motivation. Following this if their only internal motivation is to win, or get a higher number on the scoreboard than their competition, the shortstop will interfere with the runner every time. Similarly imagine a mortgage salesperson paid on commission where each additional sale means a huge paycheck increase, and the crucial factor determining the closing of the sale is two points on a credit score. That loan officer is faced with the decision of following the law and losing out on thousands of dollars in commission, or whiting out and changing a credit score, which no one will ever notice and if they do no one will do anything about it because everyone’s paycheck is determined by the closing of this loan, to ensure their commission will come in huge. Too often people make the wrong choice, and as we are experiencing with our own current economy the long term repercussion of such systemic behavior are substantially damaging. Changing a credit score, or interfering with a runner, may seem like small things but they are representative of a break in values, a change in course that snowballs on those involved. The next time the same individuals are presented with similar situations there is a certainty that they will make the wrong choice again, and those small steps will become larger until one finds themselves falsifying entire W2’s or breaking someone’s leg with an unnecessary takeout slide.
Though ethically the choice ultimately comes down to a single individual the organization is responsible for the systems they institute and the effects that they create. Most organizations with ethical problems in the front line loudly spout rhetoric from the top levels about maintaining high ethical standards but the behaviors they show tell a different story. Managers know when someone is engaging in unethical behavior, or "gaming the system" to increase their paychecks, but they do nothing because often it is their top salespeople that are doing so and to punish that person or make them toe the line would be too detrimental to their own sales numbers, and so on up the chain. So the poor behavior is ignored, and often rewarded, just showing all the other salespeople (who undoubtedly know of the shady behavior) what it takes to be “successful” in this organization. They will then imitate the poor behavior (who wouldn’t? if it boosts your paycheck and gets you plaques on your desk and trips to Las Vegas for sales conferences) and like a virus it spreads throughout the whole establishment. Immediate consequences are the only way to combat this behavior. Like when a toddler hits another toddler for example, one must put that child in time out immediately or else they won’t learn that hitting is wrong, and they will do it again. Many companies have punishment procedures in place but the distance between the enforcers is so extreme that they are totally ineffective. If one waits for that same toddler’s father to come home from a business trip two weeks later before they are punished, that child will learn nothing and will adopt the attitude that they can only be punished when daddy is around if he hears about it at all. The lack of punishment, and the reinforcement of undesired behaviors, is crucial to commission systems breeding unethical and illegal behavior in a myriad of industries, and in our own government as well.
The most distressing thing that arose from my own experiences in “win not lose” environments was the total lack of realization of complicitness by the salespeople that were behaving in such ways. Organizations that utilize commission systems do a very good job of hiring those willing to compromise their ethics. Violating the law, or ethical guidelines, becomes so “old hat” for so many it is on par with speeding on the freeway. Living the commission lifestyle is like taking drugs, the high one gets when they are cut that first big check is huge, then every month after that one must get a bigger and bigger number on that check to achieve that original high. One can try and fool themselves into thinking, “I love my job because I help people buy their first homes”, but as soon as those big paychecks get removed, or decrease; one realizes how shallow and unfulfilling their working life has become. This may not be the belief of everyone, but it is mine, and by riding the rollercoaster of working commission in a booming market I experienced the extremely large paychecks, viewed and shared in the behavior compromises, and throughout was incredibly stressed, and ultimately left wanting. The best thing about my experiences was the realization that I personally require more from my career than paycheck, and this realization will drive my decisions for the future.