- Commission-based revenue. I won’t spend a lot of time on this because I hope the misalignment is obvious. Rates go up, we make more money. If the No. 1 thing employers look to us to do isn’t to control costs, I don’t know what it is. Through this form of compensation, we get a hefty raise when we fail to control costs. The problem with this model is obvious.
- Fee-based revenue. This is a baby step in the right direction. It removes the misalignment of incentives, but does nothing to benefit me as I bring benefits to the client.
- Performance-based compensation. Why is this not the industry norm? First and foremost, I think few consultants have confidence in their ability to actually lower costs. I did a horrible job of delivering on this the first 15 years of my career. I was amazed I was still in business — and thriving. In what other industry can I deliver bad news, year after year, and get more money the worse news I deliver?
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