When Sales Incentives Backfire

HBR IdeaCast

Harvard Business Review

Leadership, Entrepreneurship, Communication, Marketing, Business, Business/management, Management, Business/marketing, Business/entrepreneurship, Innovation, Hbr, Strategy, Economics, Finance, Teams, Harvard

4.4 • 1.9K Ratings

🗓️ 18 March 2025

⏱️ 25 minutes

🔗️ Recording | iTunes | RSS

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Summary

Sales commissions act as a crucial lever to increase revenue and customers. But sometimes those incentives bring unintended consequences. New research identifies eight ways that salespeople across industries cheat or bend the rules to maximize their gain—often at the expense of the company's bottom line and customer loyalty. Huntsman School of Business professor Timothy Gardner and consultant Colin Wong explain these tactics, like sandbagging, falsifying data, and giving excessive discounts to close deals. The researchers also share how company leaders can audit, correct, and monitor an incentive program—and when they should let some practices slide to maintain productivity and motivation. Gardner and Wong are coauthors of the HBR article “How Salespeople Game the System.”

Transcript

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0:00.0	If you like this show, you might like Is Business Broken, a podcast from Boston University
0:06.3	Questrum School of Business. On the show, host Kurt Nickish, who you've heard on this podcast,
0:12.1	asks thorny questions about the role business should play in society. Follow Is Business Broken
0:18.0	wherever you get your podcasts.
0:32.5	Thank you. follow is business broken wherever you get your podcasts. Welcome to the HBR Ideacast from Harvard Business Review.
0:36.6	I'm Kurt Nikish.
0:44.5	Sales incentives are proven winners.
0:47.9	It's pretty simple, really.
0:49.4	Pay your salespeople commissions and bonuses for the things your company wants,
0:54.0	and business and profits go
0:56.1	up. However, when you create a game, you can game the game. Get a monthly commission. Stack your
1:03.9	sales in one month for more money than you'd get spreading them out. Earn a referral bonus on new
1:10.1	accounts?
1:13.7	Well, tell clients to open one and just cancel later.
1:15.4	No harm, no foul.
1:19.8	These schemes can range from the innocuous to the criminal.
1:25.1	Today's guests say that to spot and stop counterproductive sales incentives,
1:28.5	company leaders need to learn to think like salespeople and even develop a quote, immoral imagination. Joining me now are Timothy Gardner,
1:35.9	associate professor at the Huntsman School of Business at Utah State University, and Colin
1:41.1	Wong, a consultant in incentive compensation and sales performance management.
1:46.0	Along with sales executive, Rick Butler, they wrote the HBR article,
1:50.8	How Salespeople Game the System.
	...

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