Page 154 - The UnCaptive Agent

THREE ESSENTIAL FUNCTIONSOF YOUR AGENCY AND HOW TO STAFF THEM 127

Some agencies attempt to make producers independent
contractors to avoid the costs of workers’ compensation
and FICA (as well as employee benefits). As mentioned
earlier, there is simply no way that I have ever discov-
ered that you can legally do that. If you are tempted to
try, please be aware that you are potentially subjecting
yourself to very large fines and penalties.
How should you pay this new producer? The methods
and strategies are endless. They can be paid a salary
plus bonus. They can be paid salary plus commission,
or they can be paid exclusively on commission.
The disadvantage of paying any salesperson with
salary only should be obvious. They don’t have any
incentive to produce results. There is also a disadvantage
in paying salespeople strictly on commission that may
not be immediately apparent. When you ask someone to
work on one hundred percent commission, you’re asking
that employee to take all of the risk in your employment
relationship. What this does is make you an unattractive
employer to the most talented people. In my experience,
if you pay one hundred percent commission, you will
end up with the bottom of the barrel and experience
significant turnover of your sales team.
Some agency owners attempt to mask this one hun-
dred percent commission arrangement by providing for
a draw against commission. While this may be slightly
better than offering commission only, experience shows
that if you have an unsuccessful producer who leaves, you
will never be able to collect the draw you have advanced.
You are paying a salary—but by calling it a draw, you
eliminate your chance to hire the most highly talented
people in a very competitive industry.
Most agencies that find success with producers
end up paying a salary plus commission or bonus to
their producers. The trick with salary is to pay the