But if you mean generically a system whereby people pay and/or agree to place their recruits into an overall system or pattern to build people up compensation levels, this is commonplace. In the company I burned out with, they had a fad going around called the “RHINO System” (I don’t even remember what it stood for) and another called the PowerPlay. The concept was that if you joined that line of people, you not only agreed to be “placed” wherever they decided, you agreed to have YOUR first however-many recruits placed, even if that meant they weren’t even under you. The object was to push people up the compensation plan by placing or “stacking” sales associates into the required spots to move people up the plan–and the result, to answer your question about whether it “works” is that you get a lot of people with high pin levels and NO volume to earn the bonuses those pin levels designate. It doesn’t matter if you’re a Super-Pooh-Bah-Direct-Platinum-Emerald-Zircon if nobody’s moving any product and the override commission is a percentage of ZERO, does it? Of course, for the person at the TOP it DOES matter, because they’ve got so many in their downline that the added bonus they’ll earn because they have umpteen of THOSE whatever-titled pin folks in THEIR line will boost their overrides on everything…and of course, as we discuss here over and over, this puts a lot of people there to be shorn via tapes/seminars/co-op ads etc.
etc.

Actually, it is even more insidious than that–not only does it result in counter-productive activity-without-sales, it builds a culture of treating everyone, even one’s friends and family who the newbie might have a sincere desire to “help” with the business, like poker chips and cogs in a bigger machine–so IF the business is “built on relationships” like they tout, what kind of relationship is it if you say “Hey, Cousin Bob! Because I love you, like you, respect your business acumen, and believe in your success, I want you to join me in this business, and by the way, you’ll be ‘placed’ under this total stranger in another state so hail and farewell and good luck, because that way when and if I move up the pile, they’ll put THEIR uncles and cousins and sisters and friends under ME, and eventually under YOU, and we’ll all get to be in the magazine as having been promoted and we’ll all get a big bonus….if anyone does anything, of course, but meanwhile, our egos will be huge because of our ‘accomplishment’ of achieving the pin level! Ready? Let’s GO!”

Argh. These systems are one of those rare moments in the scam when they ENJOY and take PRIDE in treating people like things and REVEL in using them to fulfil other goals.

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