How to Restructure Our Business Development Contractor’s Contract?
We’ve been working with an outsourced Business Development contractor for the past three years, having previously employed them as a full-time employee for over a decade. When their contract was initially created by the previous owners, it heavily relied on goodwill, and there were no established targets, goals, or KPIs—only a flat fee regardless of performance.
Over time, however, their output has significantly declined. The quality of work has deteriorated, and they’ve lost motivation, leading to a situation where we’re now losing 40% on every placement they bring in—compared to just 15% previously.
This situation cannot continue, so I am looking to renegotiate the contract. The line between employee and contractor has become blurred. For instance, if the contractor’s laptop breaks down for two days, they still charge us for the services during that time.
Currently, the contractor earns a flat rate of $100K but used to bring in 100 jobs and is now only delivering 60. I propose establishing a base rate with the potential for them to earn up to the full $100K if they meet the original target of 100 jobs, with even greater opportunities for bonuses if they exceed that target.
I would appreciate your insights on this approach.
Additional Considerations:
– We do need this individual during the medium term. If they’re dissatisfied with the new terms, I’ll recommend they continue under the existing agreement for six more months until we can find a replacement.
– The old contract specifies set hours and an hourly rate, which doesn’t effectively promote productivity. It would make more sense for the new contract to focus solely on retained business rather than referencing hours worked.
It sounds like you’re facing a challenging situation with your outsourced Business Development contractor, but it’s great that you’re taking proactive steps to address it. Here’s a structured approach to renegotiate the contract:
1. Prepare for the Conversation
2. Set Up the Meeting
3. Communicate Clearly
4. Present the New Contract Structure
5. Discuss Terms of Transition
6. Establish Boundaries and Responsibilities
7. Document Changes
8. Follow Up
Closing Thoughts
Renegotiating a contract can be uncomfortable, but being transparent and fair while focusing on mutual benefits can help facilitate a smoother transition. It’s important to communicate that these changes are not just for the company’s benefit but also provide the contractor with a clearer path to success and potential earnings. Good luck!