You were recently hired as a sales manager for a successful financial services firm, and you're beginning to question the company's compensation plan. Salespeople are compensated on Salary-plus-commission basis. However, after a salesperson reaches a certain level of sales, commissions can run as high as 20 percent. This high commission rate, which can apply to over 100 different services, may be creating a situation that's not serving your customers well. After only a month on the job, you've received several calls from irate customers complaining that your salespeople are too aggressive and have confused them into buying more financial service products than they need.

You discuss this with one of your top salespeople, and he downplays the issue, stating: "With our compensation system, selling only a few extra service products to each customer can mean the difference between earning $75,000 and $125,000 a year. And selling customers some extra financial services isn't really hurting them at all. In fact, everyone benefits!"

Discussion Questions

1. Is this salesperson acting unethically? Why or why not?

2. Should your company's compensation plan be changed? Why or Why not?

3. How would you revise the compensation plan?