May 3, 2022

Ever Get Stiffed On Commisions?

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Partner at Hirewell. #3 Ranked Sarcastic Commenter on LinkedIn.

Episode Highlights

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Ever close a deal and never see a dime from it because you were on your way out?

Our data shows that 60% of salespeople or recruiters have. And another 24% worry it could.

When it happens, people talk. Word gets out. Is that really the “retention strategy” you want to be known for?

Jeff Smith and James Hornick discuss the ethics of it (or lack of) in the next The 10 Minute Talent Rant, “Ever Get Stiffed On Commissions?”

Partner at Hirewell. #3 Ranked Sarcastic Commenter on LinkedIn.

Episode Transcript

The 10 Minute Talent Rant is live. I’m James Hornick joined by Jeff Smith, we are on the clock. The 10 Minute Talent Rant is our ongoing series where we break down things that are broken in the talent acquisition and hiring space, maybe even pitch a solution or two. Before we dig in, all of our content can be found on talentinsights.hirewell.com.

This week’s topic: ever get stiffed on commissions? Did you ever get stiffed on commissions, Jeff? Yeah. Okay. There we go. Good, good lead into this. We’re going to define it but- yeah. In my mind, yes. But if you talked to the other party is probably like, no, this is totally fair. Yeah. How this came up, okay. So multiple people in our sales recruiting org have been having conversations with salespeople recently,

really concerned about making a move. Mostly because they’re pretty sure they’re going to get stiffed on their commissions if they do. Meaning like they leave, they close something, it’s been sold, if they leave in the next month or so they’re just going to see $0 out of that. It’s happened to them before or it’s happened to people to know before.

Now you might be thinking out there, oh, that sounds like a great retention strategy. Right, right. I be more and more and maybe it’s through advice, but just, I mean, candidates are becoming more and more savvy by the day. They’re just, they’re digging into their next firm and a little bit more detail and that there’s really nothing else to glean from it.

We’re hearing sales professionals or more generally, people who make a majority of their role or their finances off commission, they’re talking to the networks, alumni, people that have already worked at that organization about how they separated. Did they get paid off? What did they have to do?

I also think that they’re bringing it up in interviews in ways that I think are throwing interviewers off a little bit. I.e. Tell me a little bit about the last person that left and how you specifically paid out their commissions? It’s a very abrupt question. Yeah. It’s an important question. I guess we should also say too, we’re talking to the places that are not

complete jerks and do pay out. I’m not going to try to convince- if you’re the kind of firm that just loves stiffing people at the end like you’re probably not watching the show or do anything we’d say anyway. But if you aren’t, if you are the type of place that’s on the up and up, there’s things you should still know.

Like I also, we ran some data. I did a quick poll on this too, just because I didn’t know how big of an issue this was. Like we’d making a mountain out of a molehill or whatever. So the question was asked, “Have you ever left a job and not get paid on commissions is a factor into your job change?” Yes, top of mind when moving was 60% of people. It’s happened to them before and they worry about it.

No, it’s not a concern, 16%. No, it hasn’t happened to me before, but I worry about it, another 24%. So basically 84% of people out there in sales, it is something they think about when they’re leaving their job because they think it could happen to them. Yeah, no when I saw the numbers I was very surprised at how high it was.

The other thing that came up a lot, which we actually both agree is a little bit different scenario is like the whole bonus thing that’s in this tangentially. So like everyone’s bonus is laid out. The metrics are set upon the date in which it is accomplished is set upon. It’s a retention strategy.

It’s okay for employers to have retention strategies. It’s a known, known. I don’t have a beef with it. I didn’t think you did either. No, it’s on the up and up because it’s clearly laid on defined. Whereas what we’re seeing with like people not getting paid commissions, it’s not really clearly that defined and it’s a big surprise,

gotcha once you’re already gone. So anyway. Yeah. And with commissions, the transactions done. Like you secured the business, like you should rightfully get what you’re owed. Yeah. This also hits close to home too because it’s not just salespeople, it’s recruiters, it’s people in agency recruiting. It happens a lot. And now a lot of our own staff had this happen to them previously, which is also why we want to talk about it.

So why don’t we get into- like Jeff, why do companies do this? What are the- really the reasons why people stiff people and companies stiff people on commissions? Yeah, so we’ve got three. Number one is, it’s by design. No commission by design. It’s literally part of the business model.

Because we’ve been in recruiting we know it well, but I suspect that sales organizations behave similarly. We crowdsource this in the content meeting and one of our team members, came from a off the shelf, big name brand competitor. And there’s no visibility to it.

They always find someone else that wasn’t left. It wasn’t upfront. Glassdoor’s review or reviews highlight this whole thing. I mean it’s- you talk about ridiculous draws, ridiculous thresholds, percentages of revenues are grossly misaligned. So like you’re given this number to attain, which is you’re young,

you’re like okay I can totally do that. It’s impossible. You’re not going to see a dollar of that commission. Yeah. The point here is, it never pays out. That’s the ruse. It’s a pyramid scheme, literally. It’s built to prey on the inexperienced and it perpetuates why folks burn out of sales and recruiting early

and it’s also why better recruiters, better salespeople don’t get up the funnel. Yeah. Secondly, kind of maybe some similar thinking behind that. The second thing I would say, retribution. I mean commission-based sales and commission-based recruiting, it’s an old school boiler room mentality.

And I’m not saying this about everybody, obviously there’s a lot of sales and recruiters that are everything’s on the up and up. But I mean everyone’s had one of these jobs before, right? Like everyone knows kind of the middle- this thinking is so ingrained in culture, you know what I mean, from like the old days as we call it. Which I mean like 20 years, 30 years ago it was just so much more common, but it’s still around.

I mean there’s still companies that make junior level people who are just their first job out of school sign non-compete agreements. And these are people still learning the basis of their craft, but if they go to anything that looks like a competitor, they send them a cease and desist letter and threatened to Sue them.

And it’s just- they want that reputation out because it’s another level of fear they can put into their current staff. So they want their current people to know if you leave us, we’re going to screw you. So don’t leave us. It’s like a $3 billion companies like sending a cease and desist to some kid who made $47,000 a year on like six grand of revenue.

It’s preposterous. I mean, the funny thing is we’ve received some of these like- we’ve hired some of these people and we’ve had companies starting to sue us for a recruiter who, you know- whatever. It’s just idiocy. I mean assholes. They know they’re assholes. Like the system is built upon the idea of retribution. Inexperienced folks get groomed by these types of people to meet- the second they walk away from what’s rightfully theirs

like it starts, the narrative turns into this “Well you didn’t pass like some weird antiquated loyalty test”. It is the literal definition of the old boys club. Yeah. Third reason, greed. Not even just from the company themselves, but a lot of these places we’ve heard have things set up where if someone leaves, the manager gets the cut of the commissions. So the managers, yeah-

get all of it. So the manager loves just getting rid of people because that’s just more money for them when they’re short term thinking and whatnot. So yeah, there’s just a lot of crappy people in sales that love to just give someone the ax, if it means making a quick buck. So anyways. Okay before we get the fixes, as also a sidebar, all these signing bonuses that are circulating throughout the ether right now, especially now, like they’re all because they’re all offsetting the loss of commissions that are perpetuating the problem.

But anyway, for another day. What’s fix number one? First off, if you’re one of the good ones you’re one of the ones who would never stiff anybody on their commissions. The ones that we’re actually talking to out there, you have to make this known. And I want you to realize that this is a genuine concern among a lot of people

you’re going to hire that they’re assuming walking into an interview that every company out there is the same way and going to stiff them. And it’s something they want to know. Like they’re trying to figure out. So I guess this might bleed into the kind of second thing we want to talk to, but make sure whatever your policy is and whatever your track record is, make sure it’s something you actively bring up because if you can kind of dissuade that concern in the minds of people you’re interviewing, you have a more likely chance of being able to hire them.

Yeah. I mean, selling it in the interview process is really valuable. Write it down. Write the policy down. Put it in your employee handbook. I get why it’s not, believe me. I absolutely understand the motivation to not writing it down, keep it in that gray area. I just think that if it’s written down and it’s logical and it makes sense for both parties, like the long wind PR game with alumni and folks who have left the firm who have good things to say far outweighs the, to my point, the six grand that you saved screwing over Johnny

in his first job. Last thing, just make your commission policy, just make the calculation simple. Like it’s, I’ve seen so many that are needlessly complex. It doesn’t have to be advanced calculus. Just make something that anyone can wrap their head around. They’re going to feel more comfortable about it.

They’re going to be far more comfortable that they’re not going to get screwed about it someday. So just make the numbers work in the simplest way possible. Anyways, that’s it. We’re short on clock. That’s a wrap for this week. Thanks for tuning into the 10 Minute Talent Rant, part of the Talent Insights series, which is always available for replay on talentinsights.hirewell.com as well as YouTube, Apple podcasts, Google podcasts, Spotify, and Amazon.

 

Episode 43

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