A commission structure is a system that outlines how sales representatives earn compensation based on their sales performance. It typically includes a percentage of sales made, bonuses for reaching targets, or a combination of both. This structure incentivizes employees to increase their sales, aligning their interests with the company's goals. Different types of commission structures exist, such as straight commission, where earnings come solely from sales, and base salary plus commission, which provides a fixed salary along with commission. Companies choose a structure that best fits their business model and motivates their sales team effectively.