Like many professional-service companies, Program Management Co. (PMC), in Exton, Pa., relies on the people who know its product best--its technical staff--to push its environmental and information technology services. Unlike many of his rivals, CEO Jack Newell decided that scientists who act like salespeople should be paid like salespeople and earn a commission.
Twenty senior scientists and engineers compete for annual bonuses tied to new-business targets, billable hours and other goals, such as presenting a certain number of technical papers. The bonuses are paid out twice a year, provided the company meets its overall profitability goal.
At PMC, the typical bonus is 25% of a technical staffer's salary, although one exceptional program director raked in 50% after bringing in an extra $3 million in sales and increasing his billable hours. For the fiscal year ending April 1995, the program's best year, PMC paid out $520,000--or almost 29% of pretax net profits. Sales have grown from $3.6 million to $25.9 million.
Is the plan too generous? "Since we meet our goals and have nearly zero percent turnover among scientists, I'm reluctant to change it," says Newell, who supports the incentive program with sales training and a marketing manager.