We collaborate with a retailer operating 52 stores in the UK. The retailer employs salesworkers whose main task is to sell the firm's products in the stores. In an RCT, we implement two new compensation systems 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 reset every month, whereas the second is reset only at the end of the year, leading to increased levels of commissions over time:
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 monthly targets and it becomes steeper once a target is reached.
Treatment B: Salesworkers' monthly compensation depends on their accumulated revenue up to (and including) that month. The corresponding compensation scheme is piecewise linear; it has kinks at two pre-specified yearly 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. The discontinuity in the commission rate between the end of one month and the start of the next in the monthly scheme (which is absent in the yearly scheme) will also allow us to study gaming effects. We further study heterogeneous treatment effects with respect to workers’ pre-treatment performance (high- vs. low-performers) and tenure. Finally, we conduct employee surveys to measure employee attitudes. In particular, we explore heterogeneous treatment effects with respect to time preferences (as elicited by a survey).