We collaborate with a retailer operating 68 stores in Austria, Germany and Switzerland. The retailer employs salesworkers whose main task is to sell the firm's products in the stores. In an RCT, two (new) compensation systems are implemented in half of the firm's stores, respectively, and the company has agreed to keep the treatments in the field for at least four months (i.e., until the end of May). The first system is solely based on workers' individual performance, whereas the second is based on both individual and team performance. The commission systems are designed such that the average commission is about the same across systems (as calibrated with the 2019 revenue distribution).
Treatment A: Salesworkers' monthly compensation depends only on their own revenue in that month. The corresponding compensation scheme is piecewise linear; it has kinks at two pre-specified targets and it becomes steeper once a target is reached.
Treatment B: Salesworkers' monthly compensation depends both on their own revenue in that month and on the total revenue of all workers in their store (with a ratio of about 3 to 1). For each type of revenue (i.e., individual and store revenue), the compensation scheme is piecewise linear; it has kinks at two pre-specified targets and it becomes steeper once a target is reached.
We study how the different compensation systems affect revenues, turnover, conversion rates (i.e., the rate at which customers being served by salesworkers buy the firm's products), and granted discounts. We also study heterogeneous treatment effects with respect to workers’ pre-treatment performance (high- vs. low-performers) and tenure. We further study differences in gaming between treatments. Finally, we conduct employee surveys to measure employee attitudes. In particular, we explore heterogeneous treatment effects with respect to social preferences (as elicited by a survey).