Performance-linked compensation is only as useful as the success criteria and feedback used to measure it.
What to expect
- 01
Define success before agreeing fees
Set clear project objectives, indicators and budget limits before choosing the structure of variable compensation.
- 02
Balance incentives and risk
Bonus, malus and the size of the variable share influence behaviour and commercial risk. There is no single model that fits every project.
- 03
Use structured feedback where metrics are weak
Surveys can capture quality and progress when financial indicators cannot isolate the provider’s contribution. Include internal and external project participants.
- 04
Treat feedback as an early warning system
Regular feedback can reveal conflicting goals and delivery problems while there is still time to adjust the project.
About the author
As co-founder of apadua, I focus on how procurement can strengthen its contribution to the business. In this article, I explore how clear success criteria and project feedback can support performance-linked compensation.
Co-author: Adrienne Bohlmann