Dear Cellar

[HungLikeJesus]

I think we need a Dear Abby thread, but, instead of one Abby, the advice could come from many Cellarites.

It could be interesting. What do you think?

[HungLikeJesus]

I'll go first.

Dear Cellar,
An independent engineering consultant that I've worked on a project with for a few years made me this offer: If I refer any new work to him, he'll send 10% of any money he makes from that job back to me as a referral fee. That means, since he makes $150/hr, that I would get $15 for each hour that he works on that project, for doing essentially nothing.

Do you feel that this is ethical?

Signed HLJ

[Cicero]

Originally Posted by HungLikeJesus

I'll go first.

Dear Cellar,
An independent engineering consultant that I've worked on a project with for a few years made me this offer: If I refer any new work to him, he'll send 10% of any money he makes from that job back to me as a referral fee. That means, since he makes $150/hr, that I would get $15 for each hour that he works on that project, for doing essentially nothing.

Do you feel that this is ethical?

Signed HLJ

Dear HLJ,

In the contracting world, not only is this not unethical...it is standard practice and highly beneficial to you. Your world, just optimized. I'm really surprised that you have been referring clients for free...but hey..just do it. You may also do that when you need work from people that are over-loaded and bogged down, or...they hate that client (want to fire their client for personal reasons) but don't want to just give them away. So they give them to someone known for a referral fee. Oh and...this is not illegal if you were wondering. We have an entire dept. based on all the referrals here, so it is someones job to facillitate and keep track of all of them.

Signed,
The Cellar Cicero


ps...I would just wait for the whole job to finish and cut from the net instead of money per hour.

[Elspode]

Originally Posted by HungLikeJesus

I'll go first.

Dear Cellar,
An independent engineering consultant that I've worked on a project with for a few years made me this offer: If I refer any new work to him, he'll send 10% of any money he makes from that job back to me as a referral fee. That means, since he makes $150/hr, that I would get $15 for each hour that he works on that project, for doing essentially nothing.

Do you feel that this is ethical?

Signed HLJ

It isn't unethical, because whoever you refer still has the final decision as to whether or not to hire the guy. A referral is not the same as you having final decision making authority, and channeling business to him in order to get a kickback.

[TheMercenary]

Originally Posted by HungLikeJesus

I'll go first.

Dear Cellar,
An independent engineering consultant that I've worked on a project with for a few years made me this offer: If I refer any new work to him, he'll send 10% of any money he makes from that job back to me as a referral fee. That means, since he makes $150/hr, that I would get $15 for each hour that he works on that project, for doing essentially nothing.

Do you feel that this is ethical?

Signed HLJ

Dear HLJ, You have two situations here. One is about making money anyway that you can at every opportunity, that is not unethical, it is about survival. The other is about using your position in a company for personal gain, on company time, basically manipulating the system behind the scenes, based on business dealings on company time for personal gain. This is blatantly unethical.

Now if you were to deal with referrals outside of company time, based on business dealings off company time, off company property (phones, computers, blackberry's, etc...) then there is no problem.

IMHO there MUST be a clear delineation between what you do and profit from at work for personal gain, and what your work environment is expecting you to do for them on personal time. That includes any and all expectations of monetary reimbursement based upon business dealings with the said previous company on company time.

IMHO, you are walking an ethical and potentially legal tightrope...

[HungLikeJesus]

Originally Posted by TheMercenary

Dear HLJ, You have two situations here. One is about making money anyway that you can at every opportunity, that is not unethical, it is about survival. The other is about using your position in a company for personal gain, on company time, basically manipulating the system behind the scenes, based on business dealings on company time for personal gain. This is blatantly unethical.

Now if you were to deal with referrals outside of company time, based on business dealings off company time, off company property (phones, computers, blackberry's, etc...) then there is no problem.

IMHO there MUST be a clear delineation between what you do and profit from at work for personal gain, and what your work environment is expecting you to do for them on personal time. That includes any and all expectations of monetary reimbursement based upon business dealings with the said previous company on company time.

IMHO, you are walking an ethical and potentially legal tightrope...

M - I agree. However, a certain amount of what I do is considered marketing or networking, and part of that is making contacts, helping people out, etc.

So if Company A calls me and says, "We're looking for a someone who can do XXX permitting," and I say, "Call 'Bob,' I've worked with him in the past and he's always done a good job," I'm helping out Company A, thereby incurring their good will (assuming 'Bob' does a good job) and potentially bringing in future jobs for us. I'm also helping Bob by bringing him work.

In addition, I get paid the same if I work 40 hours per week or 60 hours per week, and I almost always work more than 40 hours per week, so if I spend a few minutes on the above scenario it's not costing the company anything. In other words, there is no clear delineation between company time and personal time.

[Perry Winkle]

Weren't some university Student Loan advisers recently hurt by this sort of thing?

IIRC, they were suggesting certain loan companies over others. Companies that used them as consultants from time to time. It's not exactly the same situation, but it's close enough to make feel iffy about it.

[jester]

Dear Ethical,

If he has to "bid" the job along with others and he gets it, there's should be no problem. What he does with his money is entirely up to him.

[TheMercenary]

Originally Posted by HungLikeJesus

In other words, there is no clear delineation between company time and personal time.

I see your point but I think you have to be careful to document work time and personal time in those situations. I think you might have a hard time if say in the middle of a day you are one minute on the clock and the next minute off the clock, then back on again.

On the referal situation I think that is entirely a different situation. People do that all the time. You just don't want to be in a situation where someone could accuse you of using company contacts for personal ($$$) gain that had not been previously santioned by the company.

[ZenGum]

Ethics? Ithn't it in England, near Thuthics and Middlethics?

[lookout123]

HLJ,

1) although you only have the agreement with him always give people 2 referral choices thus removing the onus from you if the experience is not up to the client's expectations.
2) i would suggest that although you might make less money, ask for a flat referral fee rather than a production related fee. If clients find out you are paid more if the work takes longer they might incorrectly conclude that you are sending them to the guy who works slower just to pad your own pocket - credibility goes up in smoke.

3) i don't believe this is an ethical dilemma at all. If it works for you, then go for it. I personally choose to decline all referral fees and make that clear to my clients because i have found they appreciate that i have a choice but have chosen to only work for them. I work 100% referral myself and it has worked very well. i make very clear to clients that i don't accept pay for anything i do other than my practice - referrals, coaching, corporate HR consulting are all done out of good will. that discussion results in higher profits from increased referrals so it isn't like i'm a saint or anything.

[Clodfobble]

It depends--is he less qualified than other people you might otherwise give the work to?

[busterb]

No, but it makes the Bush folks proud.

[bigw00dy]

Would doing this violate any 'Standards of Integrity' policy's that your current employer has in place?

If so...weigh your options.

[HungLikeJesus]

Dear Cellar,
Thanks for the feedback. I guess there are two different situations: 1) I refer client to "Bob" and Bob pays me a referral fee; 2) I hire or contract with Bob and Bob pays me a fee.

Situation 1 is perfectly normal, legal, etc.

Situation 2 is not.

Is this how you see it?