A unique form of compensation that is not based on hours worked or a set yearly salary, but rather on an employee’s revenue output.

Commission is a variable compensation system where an employee's earnings are directly tied to their performance, specifically the value of sales or revenue they generate. This payment structure is distinct from a fixed salary or hourly wage, as it is not based on time worked but on tangible output. It is designed to incentivize employees, particularly in sales roles, to maximize their productivity and contribution to the company's revenue. The compensation is typically calculated as a percentage of the sales amount.

B. Profit: Profit is a company-wide financial metric (revenue minus costs). While profit-sharing is a compensation type, it's based on collective success, not an individual's direct revenue output.

C. Assignment: An assignment refers to a specific task, duty, or project allocated to an employee; it is not a form of financial compensation.

D. Authority: Authority denotes the power or right an individual holds within an organizational structure to make decisions and direct others; it is unrelated to payment methods.

1. Gerhart, B., & Milkovich, G. T. (1992). Employee Compensation: Research and Practice. In M. D. Dunnette & L. M. Hough (Eds.), Handbook of Industrial and Organizational Psychology (Vol. 3, pp. 481–569). Consulting Psychologists Press. In Section "Pay for Performance," the authors describe commission as a classic individual incentive plan where "earnings are a direct function of sales volume" (p. 520).

2. Joseph, K., & Thevaranjan, A. (1998). Monitoring and Incentives in Sales Organizations: An Agency-Theoretic Perspective. Marketing Science, 17(2), 107–123. The paper extensively discusses commission as a primary incentive contract for salespeople, stating, "In a commission contract, the salesperson's compensation is a percentage of the revenue generated" (p. 108). https://doi.org/10.1287/mksc.17.2.107

3. MIT OpenCourseWare. (2009). 15.812 Marketing Management, Fall 2009. Lecture Notes, "Lecture 18: Sales Force Management." The notes detail compensation plans, identifying straight commission as a plan where salespeople are "paid only for what they sell," directly linking their pay to sales revenue.