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Hiring Strategy Analysis
A technology startup is hiring for a competitive sales role. The company cannot easily determine a candidate's true sales ability from their resume or a short interview. To solve this, the company decides to offer all new salespeople one of two compensation packages:
- Package 1: A high, guaranteed base salary with a very small commission on sales.
- Package 2: A low base salary but a very high commission on every sale made.
Analyze why offering these two distinct packages is an effective strategy for the company to distinguish between high-ability and low-ability salespeople. In your analysis, explain which package each type of salesperson is likely to choose and the reasoning behind their choice.
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