Parents use it to push for good grades.
Puppy owners use it to train Rover to fetch. Now outsourcing customers are writing incentives into their contracts to improve the performance of their suppliers. Incentives are helpful when structuring an outsourcing relationship, observes Robert Zahler, a partner at Shaw Pittman, a Washington, D.C. law firm specializing in representing clients who are the customers in outsourcing contracts. The difficulty, however, is to devise an incentive program that is fair as well as produces efficient performance. Currently, Zahler says, there are three outsourcing models that companies can use when negotiating outsourcing contracts.