Consulting Success Podcast When Performance Pay ACTUALLY Works (And When It Fails)
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Oct 20, 2025 Discover the intriguing dynamics of performance pay in consulting. Learn why trust and prior relationships are vital before implementing it. Explore the potential upside of performance pay and why a balanced approach, mixing base fees with incentivized earnings, is crucial. Understand how to set baselines and the importance of aligning metrics before finalizing agreements. Plus, find out how performance pay can revolutionize team motivation while ensuring both consultants and clients benefit equally.
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Early Equity Stakes Often Lead Nowhere
- Michael Zipursky recounts accepting equity in early clients that turned out worthless because the companies remained private.
- He uses this to warn consultants that early-stage equity is high-risk and often fails to pay off.
Performance Pay Multiplies Consultant Earnings
- Performance pay lets consultants multiply earnings by taking risk tied to outcomes.
- You can convert a typical fee into outsized rewards by sharing in the upside you create.
Don’t Start Performance Pay On First Engagement
- Only consider performance pay after building a prior relationship and trust with the client.
- Avoid starting a performance-pay arrangement on a first engagement because reporting and trust issues can arise.