Outcome Based Pricing, HR To Play A Mission Critical Role
Sign in
  • BLOG
  • Editor's Picks
  • |
  • Technology
  • |
  • Entrepreneurship
  • |
  • Business
  • |
  • Finance
  • |
  • Career
  • |
  • New India
  • |
  • Entertainment
  • |
  • Others

    • Outcome based pricing, HR to play a mission critical role

    Sreekumar J

    Business Analyst
    Transition from hourly billing to outcome based pricing is going to be a reality in Knowledge Industry, very soon. We would probably have considered this as the offspring of cloud computing and software as a service. This new thought has the potential to impose powerful changes in the way projects are managed, customers are serviced and to a great extent, workforce management.

    For the last two decades, billing customers per resource per hour for a project has been considered as a standard practice. A vendor usually responsible for technology and stay away from collective ownership and customer has to suffer scope creep, delay in project execution, cost escalation and non-realization of ROI.

    Over a period of time, due to changes in economic environment, technology trends and budget constraints, customers started exploring newer approaches for billing.

    Today, more and more customers demand service providers to come up with value based pricing and consistently looking at tangible outcomes beyond technology and staffing.

     
    How best the Knowledge Industry can unlearn and re-energize is something to wait and watch.

    Even though many innovations happened around IT, ITeS, KPO and knowledge workers, organizations are not so eager to change practices and we can observe that


    1. Most organizations follow “confidential” remarks while doing employee appraisal

    2. Most organizations keep salary as the most “confidential” information

    3. Most organizations (except public limited) keep P & L as “confidential” to employees other than senior leadership

    4. Most organizations keep non-performance as “confidential” except while doing layoff


    • Do we really require this much confidentiality?

    • Are we not confident to run our business by inculcating a culture of trust and ownership?

    • Why should we chase complex processes and systems, stay opaque and eventually end up at overheads?

    • Do we require numerous checks and balances to control people from on-boarding to exit, just to maintain average productivity?


    When an organization treats most of its transactions as 'confidential', employees, customers and prospects also tend to follow this. Net result could be a murky employee - customer - employer interaction zone and this many times offshoot inconsistent performance and below average value generation.

    People with right information can act as the 'competitive advantage'. Basic philosophy behind this is that people with access to information can innovate, act efficiently, and take right decisions at the right time and certainly all these activities help us to add more value to the business.

    HR can act as a catalyst here and help business to achieve outcome based pricing

    1. Consider employees as partners and do not just hire resources
    2. Keep salary information public inside the company and go with value based compensation
    3. Publish P&L in public domain inside company and let employees know, whether the company is making profit or loss. This could help employees to put an extra effort to make their firm, viable.
    4. Share the performance and nonperformance in public domain inside company. Sometimes, peers can help each other to improve performance
    5. Stay away from unnecessary controls (human being by instinct do not like to be controlled) as this can lead to complex processes, checks and balances around and further human intervention to monitor whether controls are in place.

    What is your take?


    prevnew
    start_blog_img