I need some advice regarding a signing bonus

Discussion in 'Growing and Managing a Business' started by winencosmogirl, Aug 29, 2011.

  1. winencosmogirl

    winencosmogirl
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    I am in the process of hiring many reps for the sales industry. My dilemma is with one candidate in particular. The candidate has a proven track record. I feel that this person would be a great addition to my sales force. My company is in the start up phase--which means not a lot of cash flow. Now with that said is it the norm for a sales rep to demand a $2,000 signing bonus for a sales rep agreement? This is a comission position and I am not reimbursing for expenses. But will consider reimbursement for some if they are submitted in advance.

    I understand that their is a transition period for reps. I offered the candidate a draw verse commission for the first three months. The person refused and is demanding a lump sum up front. Now I am OK with a small advance and once the person shows productivity then giving the rest of the signing bonus. My concern is oof this the norm considering the economy and that this is a start up company. My other concern is what if the candidate takes the money and I never hear from them again. Yes their will be a legal agreement but that does not reassure me that the person does not take me for a ride. Do I pass on this candidate?

    Sorry for being all over the place with this but I need some much needed advice from someone.

    Thank you in advance.
    Winencosmogirl:p:p
     
  2. Mountain Man

    Mountain Man
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    The demand for compensation is concerning to me. Is he really that good? If he is he can easily make it thru his comission. I am not familiar with sales reps and how they work. It sounds a little over the top to me. I can see a moving allowance I like your idea of letting him choose (draw or comission). I would not ever consider an up front bonus. If you feel he is worth it offer it but only after 6 month or a year. You say he has a proven track record, have you checked his references?
     
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  3. winencosmogirl

    winencosmogirl
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    The reference was from a third party CEO. I am contacting him today. I am also asking for three contactable work references. I have her resume and on paper this candidate is exceptional. I also had a face to face interview with the candidate. I was quite impressed with the person and the capability shown. I also asked behavioral questions at the interview. Not what would you do but but what have you done? Which are great questions to help determine the capability of the rep.

    This person has the medical background needed and not only can they get in the door but I determined that they can close a sale. It is hard to find someone who can actually close the sale. BUT the lump sum signing bonus has thrown me for a curve! Especially when I feel that the commission verse draw was a fair offer. I feel the same that they would make this money in the first month if they are truly capable. My gut says to pass on the rep candidate but if I am wrong I could be loosing a future asset to my sales force and being in the start up phase I would want 27 reps or a rep firm just like this one with the exception of paying out two-thousand dollars to each one to sign on! LOL
     
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  4. Fergal

    Fergal
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    Has the potential employee explained why they want that payment up front, perhaps they have some legitimate reason for it? If they haven't given you a reason, I'd suggest asking them for one because it should give you a good insight as to why they are interested in the job.

    I'd share your concerns re being reluctant, if it is normal in your industry to pay via commission, I'm not sure that you should make an exception for this candidate. I'd be more inclined to offer a $2,000 bonus based on the achievement of some pre-agreed targets, than to offer the payment up front. That way you would be paying based on results achieved and not based on what the potential candidate says they can do.

    Good luck with it and please do let us know what you decide.
     
  5. winencosmogirl

    winencosmogirl
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    @ Fergal and Mountain man. Thank you both for your advice.

    Since the company is in the start up phase the cash flow is an issue. I originally offered a commission verse draw for 120 days and the candidate counter offered with the $2000 sign on bonus in one lump sum.

    With your advice in mind--I finally came to a final determination and chose to develop a few incentive programs for Reps just in case I encounter a similar situation. I have 27 reps and a few Rep firms to hire.

    I drafted a letter informing the candidate that I am not offering a sign on bonus for the position and do not want to start a precedent. I did however offer the candidate a higher commission for 120 days as a transition period for the rep to cover any extra costs that they may incur. I also informed them that the company would undertake the expense of doing an extensive mailing in their territory and would turn over all leads to them. I mentioned that we can revisit expanding their territory in 120 days based on productivity. I also wrote a few sentences asking them to take their time and please consider the offer. It would be nice to have them on board and if they choose that our company would not be a good fit then I wished them the best.
    So now I am awaiting a response.
     
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  6. Fergal

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    Thanks for the update winencosmogirl, that sounds like a great approach, I do like the idea of offering a higher commission in the first 120 days. Hopefully the person concerned will go for it.
     

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