There has been some confusion at the table as to the distinction between hirelings and henchmen, so I feel it is appropriate to lay out in clear language the precise distinction between the two in a place that can be easily found and referred back to. We will start with the shared traits, variables that are true regardless of which category we are talking about. Then we'll cover the unique characteristics of hirelings, then the unique characteristics of henchmen.
Common To Both
Neither henchmen nor hirelings are directly under the control of you, the player. They are NPCs in the traditional sense, and rather than simply being additional character controlled by the Player, the player gives orders which they may or may not follow. In play this is often expedited by having the players move and roll for their respective hired help, but it must be noted that this is a matter of convenience, not procedure. A hireling or henchman that is ordered to do something exceptionally dangerous, or strongly contrary to his interests, may make a Morale or Loyalty test, failing which would result in him refusing to do the thing which was asked of him. Both the treatment of the hired help by their employer and the general conduct of the employer are factors that impact loyalty. An employer who is of opposed alignment to his troops, or regularly asks them to shoulder the greatest risks, and so forth, will expect lower loyalty. A liege who treats his men well, maintains good discipline, and so forth will expect higher loyalty.
Both Henchmen and Hirelings must be ADVERTISED FOR. This is a rule that I missed and will be entering into effect this coming week (With existing hirelings standing, no need to retro-actively make you pay for past missed recruitment). Whether by distributing posters, paying a town crier, or whatever, you need to invest coinage to put out the call for men. This recruitment cost ranges from 100-600GP per week of advertising, and various factors including this investment will determine if there is anyone available and how many answer the call. Because it takes a week for the ads to circulate and pull results, players should indicate at the end of session whether they are putting out advertisements so that the following week the prospective recruits will be available. Advertisments are per-type, so if you need to hire an Alchemist, an engineer, and a group of archers, this will require three separate advertisements.
This new inconvenience does come with an upside, namely that other thing we have been doing incorrectly is how many turn up. Basically, there should be more men-at-arms available than we have previously been distributing. It should be at least possible that 20 or more men answer the call of adventure. We'll explain the weeny turnout thus far as having been an issue of not properly advertising.
Hirelings
Hirelings are paid a monthly wage, and they cover everything from men-at-arms, alchemists, assassins, animal trainers, smiths, sailors, labourers, spies, and others. These people are the staff that make adventuring at scale possible. The monsters of the world are numerous, so you need extra men. At scale these men need their equipment serviced, you'll need armourers and smiths. Establishing a forward operating base outside a dungeon would allow rest and recovery to happen without factoring travel time into each excursion, this would need guards and camp followers. Hirelings is a broad category, but covers all the logistics of running an adventuring operation.
Hirelings are on a fixed wage, but additionally do not progress in level. Sages and alchemists never start to gain levels as wizards or clerics, and men-at-arms do not gain levels as wizards. If you wanted to take an untrained non-fighter and whip them into shape as light or heavy foot, this could be done as a downtime activity, but they would still be 0-level fighters, and never progress to level 1. If you want them to progress in this way, you need to set them up as henchmen, rather than hirelings.
Henchmen
These guys gain experience. You give them a portion of your cut when treasure gets divided, and they level accordingly. While still independent NPCs with loyalty scores, the Henchmen serve two key functions:
1. As your operation expands you will need NCOs, officers, men you can rely upon who are a cut above the rest in terms of competency and ability. The henchmen are the NPCs that keep the wheels of your enterprise turning.
2. Henchmen are a great solution to the problem of death. If your PC dies, and you have nobody to replace him, you're back at level 1, and that can really suck. While this is somewhat ameliorated by the presence of a "Roster" of multiple characters that you may control, choosing session to session which one to level. The benefit of a henchman is that if you are the sort of person to zero in and focus on playing one particular character as often as possible, you can bring along an assistant henchman that doubles as an "insurance policy" against untimely PC death.
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