Just as we don’t follow the typical consultant methods of engagement, we have created a rather unique method of compensation from clients. We call it value-based compensation because we work with the client to jointly determine a pay structure based a blend of pay-for-service and on the value the client receives.
How does this work? We initially engage a client through a conversation identifying their reason for being in business and how that might look in an ideal state. Then we co-create a plan with the client, determining:
- the goals of the engagement,
- expected outcomes,
- how those goals will be achieved,
- potential value of accomplishing the plan, and how the value will be measured, and
- what we will do to help them achieve these goals.
Once the client agrees with the plan, we perform the work. At the conclusion, or at predetermined checkpoints (for longer engagements), we sit down with the client and evaluate the success and actual value achieved. The value may be based on any combination of factors, such as:
- increased revenue,
- improved productivity, quality, and customer satisfaction,
- reduced waste and errors, and
- better decision-making and team performance.
Based on the value actually received, the client decides how much of the value-based portion to pay us.
On the surface, this seems like a very risky way to run a business. And we are a business – we have financial obligations and aspirations like all businesses. But we base our business model on mutual trust and mutual transparency between our clients and ourselves. Then we deliver on what the client expressly wants, that which truly adds value to them, which forms the basis for the compensation that the client provides us. We believe that we will receive fair and equitable compensation from our clients, and we’re willing to put our money behind our beliefs and trust.
Of course, if you want, we can write a typical fixed fee proposal…