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The Fordyce Letter

Straight Talk for the Recruiting Profession


Articles tagged 'compensation'

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Recruiter Chronicles: Five Years, Five Mistakes – Part 3



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To commemorate the fifth anniversary of my career in recruiting which recently passed, I am sharing with you over the coming weeks the five biggest learning lessons I’ve experienced thus far during my time at the Aureus Group. Last week, I shared the story of an email that got me ‘fired’ from a client. This week, I bring you…

#3: Story of the Botched Salary Negotiation

Jeff's On Call!

Jeff’s On Call!: Revisiting the “Draw” Topic



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Editor’s Note: Jeff has covered this topic for us in the past, but as he has said, it needs to be addressed again, and more thoroughly. You can read his original post here for further information.

In the United States, a “draw” (technically known as a non-recoverable draw against commission) is the most common, yet the most misunderstood way of paying a recruiter.

I’ll show you how to get back most of that draw in a minute.  But first, let’s see how the draw arrangement works legally:

A draw is either a loan (temporarily given) or wages (mandatory “can’t-get-it-back” pay for work) depending on whether the recruiter (employee) is still employed at the end of the pay period (a loan) or not (wages).  This “disappearing salary” feature is designed to comply with the minimum wage laws.

The recruiter is given a fixed amount of money at scheduled intervals (the pay period).  Usually all payroll deductions are taken out, so it’s a net amount. 

Jeff's On Call!

Jeff’s On Call!: Recruiter Compensation



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This post’s inquiry comes from Neil McNulty:

“My thanks to Jeff for his clarification on compensating placement consultants who are employees. I have always been instructed in my 26 years in this business that consultants must be on a fixed base of minimum wage plus commission, or, minimum wage draw against commission…they cannot be 100% straight commission (which most owners would love in order to lower costs), even if the consultants preferred 100% commission. I raised that question because I had an attorney here in VA tell me that as long as the total earnings in commissions, divided by 2,080 (number of working hours in a year), came out to be greater than the minimum wage, we were OK with the law. I told him that we would love that, but that he was incorrect; that for our industry…even if they make $500k in commissions, they still must be receiving either a base of minimum wage, or minimum wage draw against those commissions. Of course, he was not pleased that I questioned his advice because I am not an attorney. Jeff, what are your thoughts on this?

Thanks again, Jeff!”

Hi Neil,

. . . and thanks to you for giving me the opportunity to save so many search businesses out there.

The federal and state wage-and-hour audits, back pay, penalties, and interest awards can be devastating.  Then the government compliance agencies can investigate anything “like or related to a claim.”  Meaning everyone else’s compensation.  So it’s really not clever to avoid the labor laws.

This reply is nasty, but it’s necessary.  So as Grandma Allen would say, “Better a quick pain.”  Read well, Fordyce friends…

Interviews, Weigh In!

When Should Salary Be Discussed?



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In a recent discussion, an unemployed job-seeker shared that she had been on five interviews and was certain that she wasn’t offered a few positions because the salaries they were offering were lower than what she was making at her previous job. She had concluded that the companies were most likely wary of hiring her at a lower wage, for fear that she might leave for a higher paying position once the economy improved. Frustrated, she asked for help on how to approach the delicate topic of compensation for future opportunities.

There were responses coming from all kinds of perspectives for this inquiry:

  • “Remember that salary requirements should never be spoken about in first interviews (provided you know that there will be a 2nd or 3rd round of interviews). Unless the employer brings it up in the first interview, don’t bring it up.”
  • “Start by being honest with yourself, why are you taking a step back? Are you going to bolt when something better comes along. You need to research the position you are applying for and tell them that you are aware of the difference in salary. You need to look at the role and state honestly why you want it and what you could do for them.”
  • “Generally candidates try to deflect discussions about salary and benefits until they have been offered the job and persuaded the interviewers that they are ideal candidate for the job. Smart candidates will do everything to avoid answering direct questions about salary and benefits. Try to bring him back to the parameters which he is looking for and put emphasis on your your suitability for this job.”

This is a tricky topic these days with lots of job-seekers putting themselves up for positions that are a level or two below them simply because they need to make ends meet. There is always the possibility that these candidates will cut and run once things improve, but this is also a very real situation that doesn’t seem to have any one agreed-upon answer.

There are really two issues here: interviewing for positions that are a notch or two below one’s current level, and discussing salary during the interview process. Would you send a candidate to interview for a position that was below his or her current level? How do you advise your candidates on when to discuss salary? Weigh in with your thoughts below.