Commission (remuneration)

The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold. This is a way for firms to solve the principal–agent problem, by attempting to realign employees’ interests with those of the firm. One of the most common means of attempting to align principal and agent interests is to design a contract with incentives that track agent performance.