New Compensation Models Emerging....

During the past week, I came across an interesting compensation plan for a producer that I had never come across before. Usually, it is the standard two year non-recoverable draw or declining base salary model, but this one specifically addresses the producer who brings significant BORs to his new employer.

Here's how it works: Let's say the producer has a demonstrated compensation history of say $150,000. He departs his existing firm (Firm A) after two years and begins to roll over previous clients from the firm he worked for previous to Firm A. Call this Firm B. Since his two year non-compete from Firm B is just now expiring after two years, new producer calls on his previous customers from Firm B and learns that he can roll over a significant portion of this business. Hence, his new firm (Firm C) hires him on the basis that he can bring over a significant portion of these Firm B BORs. As such, to mitigate the risk of a high starting base salary, Firm C offers new producer a very low base ($70,000), but promises new producer 100% commissions (dollar for dollar) for any BORs delivered; to be immediately paid upon BOR presentation. At a negotiated compensation level (say $150k) the standard compensation plan takes over.

This is a win-win for both parties as the employer is not on the hook for a large monthly committment from Day One and, if the producer delivers, he/she can quickly get to their previous level of compensation without having to painstakingly build their book of business all over again.

Feel free to give me a call on this compensation plan or any others as firms are getting very creative given the current economic climate.

2008 Salary Survey is now available

Back by popular demand, our 2008 Salary Survey has just been completed and will be sent out to our valued clients and candidates during early January 2009. Just shoot me a quick email at rhoughton@mrfairfax.com and I will be happy to send you the complete analysis. Some high points:

1. Demand for Employee Benefits Producers significantly increased during the second half of 2008;
2. Demand for P&C Producers came to a screeching halt during this period;
3. Clients are looking for producers who can bring a book of business and/or an existing revenue stream AND are willing to pay for this;
4. The demand for CSRs is now almost non-existent compared to just one year ago;
5. The demand for top notch producers in the WDC, VA, MD regions is very strong and will continue to be for 2009;
6. P&C revenues (books of business) are down almost 33% compared to one year ago - very soft market

More on the employment situation later...