Some associate pay-for-performance (PFP) with their most recent annual review; others with incentives for healthcare providers. The underlying concept is to affix tangible results to financial benefits. It has broad appeal because it is a direct link between product/service performance and the amount of funds allocated towards it. Unfortunately, organizations often get stuck in how to manage the complexity and accuracy of a business model based on PFP.
For Google’s advertising platform, PFP is straightforward: clicks = cash. Less straightforward is how an energy company might incentivize their plans by reimbursing customers for downtime. Recently, one of the largest energy storage companies in the world engaged with Agiloft to address this specific need.
The company had previously implemented Agiloft’s Help Desk platform. After noticing a marked improvement in efficiency across the company, it decided to extend the ticketing protocol to its PFP measurement. Ticket creation would signal the start of a downtime period, for which the customer would be reimbursed. Sometimes, the ticket was associated with a site that wasn’t online yet. The system then needed to determine retroactively when the ticket was initiated, and automatically reduce the count by the number of days the site was not listed as operational. For financial reasons, downtime tracking was broken down by quarter. The intelligent Agiloft solution had to compensate for a non-traditional definition of a quarter (say, mid-August to November 4) and report downtimes based on the model.
The Agiloft team created distinct but linked functionalities based on field sites and calendar quarters. When a ticket closed, the end date for the downtime automatically tallied, inclusive of the site bring-up date and respective of the quarter when it initiated. Each time the energy provider hit a new quarter, the system created a new record for its more than 100 field locations.
While PFP makes sense for many businesses, some have never considered it based simply on the complexity of execution. Whatever mechanism is in place to track performance needs to be 100% accurate, highly automated, and easy to report out; otherwise, the company and customers will lose value unnecessarily. The good news is that with the right business model and a customizable solution like Agiloft, pay-for-performance can deliver significant payoff.