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The cultural barrier to tying compensation to performance has been such a big issue that it rendered the technology challenges irrelevant. Initially people were concerned that the data being used to measure their performance was inaccurate, or that the measures themselves were wrong. For the most part, a well designed BPM system takes care of that. That still leaves the fact that most people do not want to be measured and compensated on things they do not fully control. Society and politics could be changing that. The outrage aimed at senior executives of the auto companies and financial institutions who were paid well while their companies struggled has created a backlash. Many boards are taking a good hard look at executive compensation. You can bet if the top executives are going to be paid based on performance then they will make sure their management team is measured and paid the same way. This will trickle down from there to department heads, and eventually individual employees. At this point it seems like it is only a matter of time. This brings us to the second challenge: technology. How do you determine performance pay for hundreds if not thousands of employees?

Well, as it turns out the BPM vendor community has been getting ready for this day. The one area of the business that has always been based on a pay-for-performance model is sales. For sales performance management vendors this is a natural extension. They already have fairly complex calculation engines in place to handle incentive compensation for sales people. They need to be able to modify it to work with employees operating under an MBO (management by objectives) approach. While getting an update from one of these vendors just last week it became clear that they have already done this. When companies decide to expand incentive compensation practices to all employees this vendor's products will support their efforts. If they are not already there, you can count on the other sales performance management and comprehensive BPM vendors to follow suit as demand grows. 

So, it looks like everything is in place for BPM to take companies down that last mile of the performance management road. Now all we need is for some organizations to lead the way by taking those painful first steps.

I guess I'd feel better if the CEO had focused on the benefits of the future data integration of the BPM and ERP products, or other synergies rather than just the fact that they had done business together in the past. In another instance, a global multi-billion dollar company spent several months going through a detailed requirements gathering and vendor evaluation process. They selected the solution that best met their needs, but at the last minute there was a personnel change at the top. This new team leader decided to override their recommendation and go with the vendor she had used successfully at the last company she worked for. The problem in my view is that success at meeting one company's needs does not necessarily translate into being the best choice for a different company with its own unique requirements. In both of these examples the vendor that ended up winning the business was not the one that best met the company's requirements. Call me old-fashioned, but I believe the most important criteria in selecting a vendor should be how well they address your business requirements. Of course if the vendor is difficult to do business with or has a price that is way out of line then you need to look elsewhere. Also, this approach of buying BPM solutions based almost entirely on prior relationships tends to favor the largest, most well established vendors. This in turn can have a chilling impact on newer, smaller vendors and the competitive pricing and innovative solutions they bring to market.