How to Reassess Our Business Development Contract

We’ve been working with an outsourced Business Development contractor for the past three years, following over a decade of service as a full-time employee. When the original contract was established, it relied heavily on goodwill from the previous ownership, lacking clear targets, goals, or KPIs, and simply offered a flat rate regardless of performance.

However, over time, the contractor’s output has significantly declined. The quality of work has become inconsistent, and motivation appears to have waned. This situation is impacting our bottom line; we are currently losing 40% on each placement made by this contractor, compared to about 15% previously.

Given these developments, I believe it’s essential to negotiate a new contract. The distinction between employee and contractor has become quite blurred. For instance, if the contractor’s laptop malfunctions for two days, they still bill us for services rendered during that time.

Currently, the contractor earns a flat rate of $100K, but their job placements have dropped from 100 to 60. I propose introducing a base salary with potential earnings up to $100K, contingent upon achieving the previous target of 100 placements. Additionally, there should be incentives for exceeding that target.

I’d like to gather feedback from the community on this approach.

Key Considerations:
– We do require this contractor in the medium term. If they are dissatisfied with the new terms, I’ll offer them the option to continue under the existing agreement for another six months while we search for a replacement.
– The existing contract stipulates specific hours and an hourly rate, which doesn’t account for productivity and leads to more time spent verifying hours worked. A new contract should focus on retained business without referencing hours at all.