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Is it Immoral to Terminate Commissions "Just Because"?
In a down economy agent commissions are targeted

Do agents stick up for one another or is it "every agent for himself"?

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By Dan Baldwin, 9/22/9

Should "morality" enter into the decision criteria when a carrier elects to terminate an under performing agent?

Is "charity" or "forgiveness" ever a sound business decision?

If a carrier or master agent finds a way to stop paying agent commissions to an agent or sub-agent because of under performance or some other real or imagined contract issue, should the carrier or master agent consider the "morality" of terminating the payment of agent commissions?

In today's "Great Recession" everyone's going a little hungry. Is is "moral" that a provider should completely cut off an agent's commissions if the carrier can legally do so to increase the carrier's profit to the carrier's shareholders?

Will the provider save money in the short run but loose it in the long run if their decision to cut off an agent is deemed "immoral"?

Does one agent care if another agent gets cut off or is it simply the survival of the fittest with "every agent for themselves"?

In today's social business environment where everyone is everyone else's (LinkedIn, FB, Twitter, etc.) "friend" does it make economic sense to tell an agent, "Nothing personal but we've made a business decision to stop sending you the money you use to feed your kids?" Won't word of such "cruelty" get around? Does it matter?

On the other hand is it fair for one agent who's spending more in overhead (and generating a smaller profit) because they're doing what they need to to make their carrier volume commitments to get paid the same as an agent that has no overhead because they are no longer actively selling? Should not the carrier have the right to move their money to the agent that's producing? Isn't that more fair?

What are your thoughts?

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I don't pose these questions out of the blue. Many TA members know I've been writing about the perils involved in avoiding commission conflicts since TA started back in 1995. (Click here to read an article I wrote in 2001 about subagents staying out of commission trouble with master agents.)

The subject is topical now because the industry is in the midst of the "Great Recession" and carriers and resellers are looking for every way possible to save enough money to survive the storm. But at what cost?

The picture to the left is of an agent named Shawn Clancy, who many recent trade show visitors know is not pleased with the way XO has handled his agent agreement.

Shawn's response to XO's decision with regard to his commission payments is to wear this shirt to the various agent trade shows.

I've talked to Shawn about his commission challenge and Shawn asks a simple question (which I paraphrase), "Is it morally defensible to terminate an agent's commissions just because a carrier can?" By posing his question I am drawn to the conclusion that Shawn thinks it's immoral.

Shawn's not a kook. He's a subagent with a family and bills just like me. If a carrier treats Shawn this way what's to keep the carrier from treating me this way?

Now it's not my intention to simply pose all these questions and not share my opinion. I'm not publishing my opinion just yet because I'm more interested in learning the opinions of fellow TA members (and because I've previously published my opinions on these matters.)

So I'm off to the 2009 Miami Beach Channel Partners show. To discover what my fellow peers think on this issue. When I return I'll share what I've learned as well as what I think.

But what do you think?