Compensation for bringing work to the company 11

[Robbiee]

Hello all,
You were invited to join a firm and you know that you will bring work to this new company. What is a reasonable compensation for bringing work that you should ask for. The amount of work you might bring is around your annual salary to possibly twice that.
It is my situation and would like to get some ideas from you. Thanks

 

[SNORGY]

That is a can of worms that seldom ends well, even with criteria clearly defined up front. A person hired as an employee might receive a bonus incentive based on a scheme that is tied to the first year's revenue from the new business. Let's say 2%. If the person brings in a $20,000,000.00 TIC project with engineering at 10% of TIC, that would be a $40,000.00 bonus if the project got done in a year.

Following that scheme, let's assume your annual salary is $100,000.00 and you bring in $200,000.00 worth of revenue. Your bonus would be $4,000.00, or approximately (based on a bi-weekly pay period) one (1) gross pay cheque.

If you are brought on as a partner, the percentages go up appreciably, but people aren't in the habit of gifting portions of their company away, so you would probably have to buy your way in. Then you need to make a whole pile of bonus money just to recover your investment.

Based on my experience, treat "new business" bonuses as mere milk-money unless the other guys are serious about a deal sweet enough to be of benefit to you.

 

[Robbiee]

Thanks SNORGY. 2% only! that is discouraging.

 

[JNieman]

They gift you with job security and having work to do when you come in the next day.

<edit> removed sentence due to misreading </edit> Is it expected that you will bring in new work? If so, the employer may already expect it as part of your job, and thus it's already reflected in your salary.

If you do not already have a negotiated compensation based upon sales or project income - I am betting your employer considers that your job and what your current salary already covers.



_________________________________________
NX8.0, Solidworks 2014, AutoCAD, Enovia V5

 

[SNORGY]

I don't favour "new business" bonus schemes for engineering. I believe they have the effect of steering an engineer's mindset away from doing the work well, towards bringing in more work to do in a "status-quo" fashion. Employers who offer these kinds of "new business" bonus schemes sometimes do so to encourage more than a "show me the work" attitude from employees or candidates - it's a motivator that ultimately costs them nothing.

Serious employers reward performance-based bonus schemes that place due consideration on the value of repeat business and high quality work. In other words, "repeat business" is just as good as - or better than - "new business". Employers either value that, or they don't. The ones that don't are the ones that offer the "new business" bonuses.

To me, it is completely perverse - and disturbingly symptomatic of what engineering has degraded to - to base the incremental value of an employee's contribution on new work that hasn't even been done yet. It is, in part, for this reason that I left a management position in a company in which I refused to participate in the discussions concerning year-end bonus allocations unless they were directly tied to performance.

 

[Robbiee]

JNieman,
Job security is a myth. I have seen employers "gift" their employees the pink slip ( layoff) as soon as work started going down.

 

[JNieman]

I mean to say that the work you brought in guarantees there is work they need you to do, and staves off the pink slips for that much longer. Sorry, it was mostly tongue-in-cheek.

_________________________________________
NX8.0, Solidworks 2014, AutoCAD, Enovia V5

 

[ornerynorsk]

The compensation is called salary. If you want a commission, you should be in sales, not engineering. Bonuses are one thing, but expecting a cut of everything you touch is a bit asinine.

It is better to have enough ideas for some of them to be wrong, than to be always right by having no ideas at all.

 

[Robbiee]

ornerynorsk,
Asinine! really! what is, then, the difference between you who does the engineering and the other one who does engineering just like you but also because of his connections brings work to you and keeps you engineering stuff. Salary doesn't change with how much work he brings and bonuses are not guaranteed. A company I previously worked for lost most of its work when a couple key guys left and its staff reduced to the third.

 

[Terratek]

You're either a rainmaker or your not. If you want to bill yourself as a rainmaker, you probably need to bring in more than one to two times your salary. Unless you join a very, very small firm, you are talking about the equivalent of a very short mist - not rain. Continued sales effort would also be required to qualify as a rainmaker. So the real question is; do you want to get involved in sales and business development? If you do, then you should get greater compensation once you have proven yourself as a difference maker in the bottom line.

 

[Robbiee]

Terratek,
that is a good reply. thanks

 

[Triangled]

if I was considering bringing on an engineer for, say 100k, and he said he could bring 1x that or maybe 2x that in work to the company....(did I understand your parameters correctly?)
i'd consider my anticipated margin for that type of work, the probability of actually obtaining that margin especially with a new client, and especially how long it'd take me to complete it and invoice it; i'd wonder about new client's payment schedule and reliability for payment, i'd consider my business prospects for the next year and the current twice per month overhead demand.... and pretty soon 1x to 2x annual salary isn't looking super strong. but if I needed you for my current workload, i'd hire you without the 100k or 200k prospect.

now, if I could turnaround your annual salary in a month....now, you're talking....

 

[moltenmetal]

We give bonuses based on the profitability of the company and performance/responsibility. Sometimes your project is easy and profitable, but sometimes it's your job to take the project nobody wants, or with the tough or difficult customer, and nobody wants to be penalized financially for taking one for the team. In our bonus scheme the profitability of your own jobs matters only a little- what matters most is what we achieve together.

Bringing in work that is unprofitable isn't a help at all. You should never reward revenue only- even in salespeople- or they will simply buy you work with your own money.

I've brought in plenty of work and received no special compensation for it. It's part of every engineer's job to be looking after the business- keeping up with contacts looking for potential work, both external to the company and with former customers.