Services that focus on value creation rather than volume need a new approach to incentivisation.
The traditional model of billed hours should no longer be the default option and, indeed, is often incompatible with the different ways of working we are now seeing.
Current model typically used within the industry where reward is based on the amount of time (input) provided by the consultant to the client project.
This model does not take into account the impact the consultant makes to the delivery of the client outcome.
As the scope of work is unknown, and outcomes uncertain, the relationship is mainly built on trust, or a demonstrable track record of success.
Based on the delivery of specific outputs along the asset lifecycle where the reward is measured through achieving milestones or delivery of products.
It works well where those products are relatively standard and past experience of delivery is a useful yardstick.
Careful scoping to define the output, however this can be difficult in consultancy where the intellectual effort in solving problems differs greatly.
With different roles and services comes a range of options for reward and selecting the right incentive mechanism is key to making the most of our new partnership.
Within these reward models – which can be combined – incentivisation can take a number of different forms such as financial, repeat business, but also data monetisation.
Raw data, enhanced data, reporting and analytics, process design, and process execution can all be monetised and attributed a value.
With so many issues to consider, a three-step process has been devised to help clients make a decision on the right reward and incentive mechanism.
Determine the appropriate reward model by understanding the complexity and degree of innovation required for projects and programmes.
Consider delivery model, appetite for risk and portfolio size before deciding.
Understand appetite within the market to take on the proposed risk, and if there are possible collaborations between the different players in the value chain.
Ensuring the right model is chosen ultimately means both client and consultant are working together to maximise value. Creating a win-win for all involved.
Browse our case studies and see how new relationships are already delivering for clients in our industry showcase.
