s senior management will approve the approach, in part
because that approach has been used in the past. Sadly, no one will be too surprised by the delay.
If no distinction exists between the monetary reward for doing good work or for poor work (the reality in many IT departments), there is going to be little incentive to strive for higher project quality or to meet tight delivery dates. An argument can be raised that good people will, regardless of monetary considerations, strive for higher quality work. While that assumption has merit, it does not seem to work quite that way in the real world of IT project development and delivery.
TYING MONETARY REWARDS TO PROJECT
PERFORMANCE
Given that people pay attention to what they are rewarded for, it follows that changing the compensation system would change the focus of those working on the project. If the focus on the improved delivery of higher quality IT development projects can be sharpened, it is reasonable to believe that the results will be improved. No one could successfully dispute the contention that the level of IT
delivery of projects needs to improve in many organizations. Developing a different compensation approach and giving it a fair trial is worth serious consideration.
Why doesn’
t the argument that compensation incentives aside, good people will strive to do good work pertain to IT project development? The answers can be found in several project development circumstances. First, most IT project efforts consist of a team of people. To assume that all the people on the team are going to be well-motivated and highly interested in striving to produce high-quality work would be unrealistic.
Second, too often at least some of the IT project team members will have to deal with a dual set of responsibilities. Where team members are assigned to the project, but are also expected to continue their normal duties (or at least some aspects of their normal duties) during the life of the project, problems are certain to arise.
Dealing with those other duties, because the reality is that handling those duties is what their performance is going to be judged upon, is likely to remain their first priority. That situation is often reinforced by subtle or overt signals from the employees’
manager. The message often is that the work on the IT development project carries less importance than other duties.
Finally, IT projects often come to rely upon several key people to bring them to completion. It is not unusual to see projects where, part way through the effort, one or two of those key people decide to leave the project and as a result, difficulties quickly mount. The issue for those people is often that the project is clearly in trouble and now is the time to move on. That circumstance, coupled with a likely more attractive salary offer from someone else, is often enough to encourage a search for new opportunities. Now, the situation is that an IT project in difficulty has to struggle to find new leadership.
So what happens is that the organization has a disrupted IT project team. In addition, the project team members understand that the outcome of the project, well done or not, is not going to have any particular effect on their compensation. It will also be understood that a poorly done IT project is probably not going to have an adverse effect on any career opportunities in the future. Understanding that scenario, it may be a bit easier to understand one of the causes of IT project failure.
A key component in IT project development success is that of focus. To succeed at project development a strong focus has to be brought to bear and it has to be maintained throughout the life of the project. Because focus is a key component in project success and because, as has been shown, project teams tend to be structured with a limited focus on the project, it follows that a sharpened focus, maintained throughout the project, will bring increased rewards. When a clear, substantial system of financial rewards is in place and is tied to the delivery of high-quality IT projects, the focus on those projects is going to improve. If the potential rewards are sufficiently attractive, that improvement in focus can be dramatic.
COMPENSATION PLAN GUIDELINES
To make the process of increasing financial incentives for increased IT project delivery quality a practical approach, a specific set of criteria must be tied to the process. In addition, the administration of the process must be seen as being fair and consistent. Items that must be in place prior to beginning the implementation plan include:
1. A method that can be used to objectively and consistently measure the results of the particular project compared to the original project specifications.
Where an incentive plan is to be used, there will have to be a high level of precision in the development of the project budget and corresponding time frames. The goal here has to be to come away with realistic estimates. As the compensation incentive plan gains favor, there could be a tendency to “pad”
project estimates and time frames. What is likely to occur is an attempt to enhance the probability of project success and, as a result, increase the chance for additional income, by building in longer time estimates than would be considered reasonable.
One way to counter the padding of estimates is to have them reviewed by a competent, uninvolved third party. Understanding that such a person is going to review the project estimates will help reduce the tendency to pad the estimates. In any event, the use of a third party will provide sound benefits in coming to reasonable project time estimates.
The idea relative to project estimates is that they should be realistic, yet they should, in order to be met, require the project team members to increase their effort. A part of the process is going to be evolutionary, in that as projects are developed under the system, empirical data can be gathered to assist in developing a more precise set of estimating guidelines in the future.
Care will need to be taken to make certain not to allow an environment to be built where anyone — employees or management — feels that the other group comes away with an unfair advantage.
One of the ancillary benefits to be found in the project development compensation approach will be that, because an increased emphasis is going to have to be placed on the development of project estimates, over time that process is going to become much more precise. When people understand the relationship between sound project estimates and their additional compensation, they are going to be very careful about the estimates they develop. In addition, they are going to look for tools and techniques that will strengthen the estimating processes. As a result, confidence in the ability of IT to accurately size projects early in the development cycle is going to grow.
2. The development of a scale for additional compensation, based on agreed-upon performance for each project. At the onset, one of the criteria with regard to the topic of compensation should be to recognize the importance of flexibility. Until some experience has been gained, whatever is decided about compensation should be seen as being subject to change.
A key issue is that the compensation plan should be sufficiently generous (within the framework of a high level of performance) to make the plan attractive to the participants. The purpose of the plan is to drive for improvement in reducing the time required to deliver IT projects and, at the same time, to improve the quality of those projects. In reality, that goal would no doubt be seen as all but impossible in many organizations. When significant rewards can be obtained for meeting those goals, the probability of realizing those goals is going to greatly increase.
AN EXAMPLE OF AN IT PROJECT COMPENSATION
APPROACH
One example of the structuring of a compensation plan might be as follows.
1. A medium-sized project is estimated to require 14 months of effort, a total staffing level (from all areas, IT, and business sections) of 18 people, and a total budget of 3 1/2 million dollars. In addition, as a reasonable precaution, this project carries a contingency fund of ten percent, or $300,000.
2. Each member of the project team is assured, provided all conditions of the incentive program are met, a bonus of $7500. Those goals include: a. Meeting the 14- month timeframe to complete the project. Meeting the timeframe precludes the shifting of any part of the original project into a follow-on phase.
b. Total project expense cannot, if the incentive rules are to be met, exceed the estimate of 3 1/2 million dollars.
c. The quality of the project must meet the established and agreed- upon quality standards that were set at the beginning of the project.
It will be understood, as a part of the original agreement with the project team, that determination of the success of the project will be made by an independent third party. That determination will be based on the agreed- upon project time, function, and quality criteria of the project that were established at the onset of the project.