Sourcing Blogs: 360VendorManagement

July 2nd, 2008 at 03:16pm David Bush - Iasta

Outsourcing Contract Incentives: What is a Pound of Carrots Worth?

Many companies offer incentives to their vendors for exceeding performance targets, but the question is, “do outsourcing contract incentives actually motivate vendors to deliver better or faster results?” Here are a few tips that may help make the most of vendor incentives: don’t give rewards for just “showing up,” use clearly defined metrics and be sure they make sense, never offer unlimited payments, don’t use incentives that could jeopardize quality, use graduated incentives or penalty/credit earn-backs, understand incentives’ potential and track reward payments. Take the poll survey and see if other people experience performance improvements from vendor incentives.

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Entry Filed under: General