Hitting pay dirt with pay for performance
If you ask a client about compensation for his or her business’s technology partners, no matter what service is being provided, there’s often a disdain for time and material contracts. And that’s because the client is carrying all of the risk. They’re burdened with front-end uncertainty before a single dollar is made on their investment. To a certain degree, the end result is left to chance.
Unfortunately, it’s not rare for an estimate to come out at a price much higher than what was originally promised. Be it time involved or resources required, the equation changed along the way. The service provider didn’t dictate how the project had morphed – nor did they want it to. They simply had to react.
Companies, however, still need to manage their budgets and cash flows. When unexpected costs come into play, expectations change. Because of the uncertainty on both ends, pay for performance is becoming a model form of compensation. It has a much better upside for all involved because it keeps everyone accountable and sets proper expectations – bonuses for exceeding goals, penalties for underachieving.
The key to making pay for performance work is to precisely define what the goals are and how they can be independently measured and verified. If you can't measure it, it’s not a goal or objective to focus on. If it can be measured but doesn't provide incremental value, then it’s probably not worth doing. If it can be measured but doesn’t meet expectations, course adjustments can be made within a predetermined grace period.
Most companies can perform the technology implementation, few can deliver on the business strategy and far fewer yet are measured on the results of their performance for compensation purposes. For the companies that are qualifying their results based on contractual benchmarks, business is booming. These companies think strategically, not tactically.
At NetSphere Strategies, pay for performance is something that we take seriously. Therefore, we look to partner with businesses that treat their service provider as a long-term investment as opposed to a one-off transaction. We’re proud to be in a position to select like-minded clients and not just react to a potential sale opportunity.
If you are looking to form a partnership with a solution-based consultancy firm that prides itself on being accountable and willing to take risks to prove their point, perhaps it’s time to pick up the phone and have that conversation with us.
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