Question

Your salary is a combination of basic salary + commission. Commission is based on whether the company and investors achieve the desired return. Is this a problem? Critically analyse the highlighted statement to include any ethical considerations. Plus, develop a new policy framework for the company. What recommendation will you make?

Answer 1

Yes there is a problem in this from an ethical standpoint.This is because there can be many situations in which I perform very well, also adding value to the company, but the company is in red overall.Ethically this is wrong, as I would be penalised in this case(by being given a lower salary) due to someone else's non-performance, which should not be the case.However, from the company's perspective, it can be said that the company probably uses it to drive the employees to achieve the desired results.

I would suggest a change in policy for the company to include commission in the basic salary based on the performance of the individual independently. There should be a system to assess the value addition to the company directly and indirectly and the commission should be based on that. There should also be a component of commission based on the individual's goals and achievement of those goals which are linked to the desired returns directly.

Hence the overall salary should be a summation of: Basic salary+direct/indirect value addition to the company+ performance of goals directly linked to achieving the desired results.