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Comment by JumpCrisscross | Hacker News Reader

The article mis-interprets Ariely's study.

Fog Creek asserts that the study shows a negative relationship between commission and performance. This relationship was found - for very large rewards. Small rewards increase performance when compared to no reward.

Here is the original paper: http://m.pss.sagepub.com/content/15/11/787.short.

In a follow-up study, he showed that effort increases with reward almost as predicted, but error rate increases exponentially: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-937X.2009..... The effect is also variable depending on whether it is a primarily intellectual or mechanical task.

I'm not making a ruling on commissions here, just saying the Ariely quote corroborates Fog Creek's null hypothesis.

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I linked to the video where Ariely talks about the U-shaped effect (that is small rewards increase, but large ones decrease, performance). I mentioned him to demonstrate that there was some evidence for the notion, not to say that he entirely makes the case I'm arguing for. Given the thousands of ways commissions can go wrong, I'm asking whether any small increase in benefit is ever outweighed by the problems.

I think it would be fine if it added a note in parenthesis clarifying that. The question you have posed, whether the small benefit outweighs the many risks, is a valid one, but one that needs to have the premise of the small benefit established.

I suppose, in a purely theoretical discussion corner-stoned by Ariely's research, the question becomes whether sales is a more mechanical or creative task. I would argue that in a split sales/customer service environment it could very well become the former. Whether that is desirable is dependent upon one's business model.

Absolutes are probably not the answer - there will be models, e.g. Groupon or real estate, where sales commissions may be well worth it. Businesses that depend on relationships, however, may want to re-think a system that encourages maximising the rewarded variable at the expense of all others. Bringing light to the assumption that salespeople require commission, though, is a nice place to start - thanks for that.

Good point. I'll try to add a little qualifier.

I would say that sales is definitely a creative task (but you're right that's the important question w/r/t Ariely). There is a rote aspect to working the phones, or keeping records, but sales is a performance skill that requires a lot of thought about strategy, rhetoric, timing, etc. etc. By no means is it rocket science (I wrote a bit about that here: http://www.fogcreek.com/guide/The-most-basic-things-your-com...), but there is a lot to consider and get good at.

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