Wage Transparency and Social Comparison in Sales Force Compensation

• 成果类型: Article
• 署名作者: Long, Xiaoyang; Nasiry, Javad
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; McGill University; Hong Kong University of Science & Technology
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3461
• 发表日期: 2020
• 页码: 5290-5315
• 关键词: Agency theory; sales force compensation; Social comparison; collaboration

摘要

When wages are transparent, sales agents may compare their pay with that of their peers and experience positive or negative feelings if those peers are paid (respectively) less or more. We investigate the implications of such social comparisons on sales agents' effort decisions and their incentives to help or collaborate with each other. We then characterize the firm's optimal sales force compensation scheme and the conditions under which wage transparency benefits the firm. Our results show that the work environment-which includes such aspects as demand uncertainty, correlation across sales territories, and the possibility of help/collaboration-plays a significant role in the firm's compensation and wage transparency decisions. In particular, wage transparency is more likely to benefit the firm when demand uncertainty is low, sales outcomes are positively correlated across different sales territories, and sales agents can collaborate at low cost. We find that, contrary to conventional wisdom, social comparisons need not reduce collaboration among agents. Our study also highlights the importance of providing the right mix of individual and group incentives to elicit the benefits of wage transparency.