One of the first things that came to mind for me when it came to the topic of compensation was commission caps. I had a friend who worked in a sales position, and his pay was largely based on commission, however, that commission had a cap that was very easily obtainable. Because of this, whenever he would make enough sales for the month to hit his cap he was strongly disincentivized to continue trying to sell products. At that point, he felt that he would be working for free since he would no longer be getting commissions based on his sales. In my eyes, I always believed that if an employee can sell more than what is expected of them, then they should be able to do so whilst also being properly compensated.
I have another friend who is a car salesman who also works based on commission. His commission however is not capped. So he is constantly on a grind to continuously sell cars as that is his way of making more money. In this sense, he is highly incentivized to always put out a strong effort, and while his wages are higher he also will make the company more money. In comparison to the capped commission where the employee would have time to give less than full effort, knowing there was only so much they can do in a given month. Not only does it limit the amount of compensation for them, but it also limits the amount of productivity an organization can get out of its employees.
