Pay for Performance, or Incentive Compensation, often results in disincentive and
performance decrease. A quick literature survey will unveil far more articles and
studies on the ways that incentive compensation fails than on ways it succeeds. One
of the more difficult areas to apply pay for performance is business development in
the government market place. The reason is simple - winning government contracts requires
a team effort over an extended period of time. The length of time from identification
of a new business opportunity to award of contract can be several years. This means
that the team that brought in the win may have a variety of participants and may totally
change all personnel in the procurement process.
If incentive compensation is awarded in a manner that the team participants do not perceive
as equitable the result is disincentivized employees. This does not mean that elimination of
incentive compensation for business development efforts is a solution. The practice of pay
for performance is far too wide spread in American business to deny employees a benefit
they see as an entitlement. Rather, firms must devise business development incentives that
recognize the team effort and the lengthy government procurement process. Individuals who
consistently demonstrate effective business development leadership are more effectively awarded
by promotions, titles, and salary increases with expanded responsibilities (and, of course,
incentive compensation).
Within the context of your firm's compensation system, creatively devise a pay for performance
program that deals with the time span of government procurement and the numerous individual
efforts required to produce a winning effort. Simple systems, with metrics that are easily understood
and transparent to employees are likely to be more effective than complex scoring systems or algorithms
that only management really understands. In summary - reward the team for their effort over a
long procurement cycle using a simple straightforward system.
If you would like to explore how your firm's business development performance might be improved,
call or send an e-mail.
