Tag: Incentive Fees

When “Success Fees” Backfire: The Capgemini–ICE Controversy and What It Teaches Consulting Leaders

Success fees (or incentive-based fees) are increasingly common in consulting contracts: part of the firm’s remuneration depends on outcomes. In theory, it aligns interests and de-risks the engagement for the client. In practice, if the metric is badly designed—or the client context is politically, legally, or ethically sensitive—this pricing structure can become a reputational accelerant.

That tension has been thrust into the spotlight by the controversy around Capgemini’s work with U.S. Immigration and Customs Enforcement (ICE), as reported by Le Monde. Beyond the noise and the outrage, there is a sober lesson here for every consulting leader: variable fees magnify governance requirements. Not just in sales. Not just in legal review. At the highest level of the firm—especially when the work touches sensitive missions, sensitive data, or outcomes that can be construed as coercive.

Before going further, a personal note: I used to be part of Capgemini Consulting (now Capgemini Invent, the group’s strategy consulting division). I have worked with many exceptional people there—client-first professionals with strong integrity and real pride in craft. My default assumption is not “bad actors,” but complex systems: decentralized P&Ls, fast-moving sales cycles, and contract structures that can drift into dangerous territory when incentives are poorly framed and escalation is ambiguous.

The mechanics: what “success fees” really are (and why they’re attractive)

In consulting, “success fee” is an umbrella term that can describe several pricing mechanisms:

  • Outcome-based fees: part of the fee depends on achieving a defined business result (e.g., cost savings, revenue uplift, SLA attainment).
  • Incentive fees / performance bonuses: additional compensation if delivery performance exceeds targets (often tied to operational KPIs).
  • Risk-sharing / gainsharing: the firm shares in realized value (sometimes audited), often with a “base fee + variable component” model.
  • Contingency-style arrangements: payment occurs only if a specific event happens (rare in classic management consulting, but present in certain niches).

Clients like these models for predictable reasons:

  • They transfer risk: “If you don’t deliver, we pay less.”
  • They signal confidence: the firm is willing to put skin in the game.
  • They simplify procurement narratives: “We only pay for results.”
  • They can accelerate decision-making: variable pricing can unlock budgets when ROI is uncertain.

Firms accept them because they can (a) win competitive bids, (b) monetize exceptional performance, and (c) strengthen long-term accounts. In a market where buyers push for value and speed, variable pricing is often framed as modern, fair, and commercially mature.

But here is the problem: success fees change behavior. They don’t just pay for outcomes; they shape how teams interpret “success,” how they prioritize work, and how they balance second-order consequences.

The core risk: incentives create “perverse optimization”

Any metric used for variable compensation becomes a target. And when it becomes a target, it stops being a good measure (Goodhart’s Law in action).

In commercial contexts, the damage is usually operational: teams optimize for the KPI rather than the business. In sensitive contexts, the damage can be broader:

  • Ethical drift: “If we hit this target, we get paid more” can quietly reframe judgment calls.
  • Externalities ignored: the metric may not capture collateral impacts (e.g., privacy harms, community trust erosion).
  • Weak accountability: teams delivering a narrow scope may not see—or be incentivized to consider—the societal effects.
  • Reputational amplification: once reported publicly, “bonus for X” can be interpreted as “profit from harm,” regardless of nuance.

This is why success fees require stronger governance than time-and-materials or fixed price: the contract is not only a commercial instrument; it becomes a behavioral design mechanism.

The Capgemini–ICE controversy as a governance stress test

Based on the reporting referenced above, the controversy is not just “working with ICE” (a politically charged client in itself). It is also the structure: the idea that compensation can be adjusted based on “success rates.”

In a purely operational lens, “incentive fee for performance” is not exotic. Many large organizations, including public bodies, write performance clauses and bonuses into contracts to drive service levels. The controversy arises because the human context changes the meaning of the metric: what looks like a neutral operational KPI can be interpreted as enabling enforcement outcomes against individuals.

Key lesson: In sensitive domains, incentive design is inseparable from moral narrative.

Leaders may see “a standard performance-based contract.” Employees, unions, media, and the public may see “paid more for more removals.” And once that framing sets in, you are no longer debating legal compliance—you are in a reputational and values crisis.

Why this can happen to any consulting firm

It would be comforting to treat this as a one-off “Capgemini story.” It is not. The structural conditions exist across the industry:

  • Decentralized growth models: subsidiaries, sector units, and local leadership with P&L accountability are designed to move fast.
  • Procurement language reuse: performance clauses and incentive mechanisms are often templated and reused.
  • Sales incentives: growth targets can create pressure to “make the deal work” and underweight reputational risk.
  • Ambiguous escalation: teams may not know when an engagement needs executive or board-level review.
  • “Not our policy domain” mindset: delivery teams focus on scope; public narrative focuses on outcomes.

And yes—every major consulting firm works with sensitive clients (in different ways and at different levels). The question is not “do we ever touch sensitive domains?” It is: how do we govern them, and how do we design incentives inside them?

A practical framework: how to govern success-fee contracts in sensitive contexts

If you lead a consulting business, here is a workable approach that does not rely on moral grandstanding or naive “we’ll never do X” statements. It relies on process, thresholds, and transparency.

1) Classify “sensitivity” explicitly (don’t pretend it’s obvious)

Create a sensitivity taxonomy that flags engagements involving one or more of the following:

  • Coercive state powers (detention, deportation, policing, surveillance, sanctions).
  • Highly sensitive personal data (immigration status, health data, biometric data, minors).
  • Life-and-liberty outcomes (decisions affecting freedom, safety, or basic rights).
  • High political salience (topics likely to trigger public controversy).
  • Vendor ecosystems with reputational baggage (partners with significant controversy history).

If a deal meets the threshold, it triggers enhanced review automatically.

2) Elevate approval: “highest-level review” must be real, not symbolic

The minimum for flagged engagements:

  • Independent legal review (not only contract compliance, but exposure assessment).
  • Ethics / values review with documented rationale (what we do, what we won’t do, and why).
  • Executive sign-off at a level that matches reputational risk (often group-level, not business-unit).
  • Board visibility when the potential public impact is material.

A review process that can be bypassed under commercial pressure is not governance—it is theater.

3) Redesign incentive clauses to avoid “harm-linked pay” narratives

In sensitive contexts, assume the variable fee will be summarized in one sentence by a journalist. If that sentence sounds like “paid more when more people are caught,” you have a problem—even if technically inaccurate.

Better patterns include:

  • Quality and compliance incentives (data accuracy, audit pass rates, error reduction).
  • Safeguard-linked incentives (privacy-by-design milestones, oversight controls, documented approvals).
  • Service reliability incentives (availability, response time) rather than “impact on individuals.”
  • Caps and neutral language that avoid tying remuneration to coercive outcomes.

Put bluntly: align incentives with process integrity more than enforcement yield.

4) Build an “exit ramp” clause you can actually use

Sensitive engagements should include contractual provisions that allow termination or scope adjustment when:

  • new facts emerge about downstream use,
  • public trust materially deteriorates,
  • the client’s operating model changes in ways that alter ethical risk.

Without an exit ramp, leadership can end up trapped between “we must honor the contract” and “we can’t defend this publicly.”

5) Treat internal stakeholders as part of the risk surface

Employee backlash is not a PR anomaly; it is a governance signal. When teams learn about a sensitive contract through the press, trust collapses quickly.

For flagged deals, firms should pre-plan:

  • internal communication explaining scope, constraints, safeguards, and decision rationale,
  • channels for concerns and escalation without retaliation,
  • clear boundaries for what employees will and won’t be asked to do.

Where I land: integrity is common; governance must catch up

I do not believe most people inside Capgemini—or any large consulting organization—wake up aiming to do unethical work. The industry is full of professionals who care deeply about clients, teams, and societal impact.

But that is exactly why governance matters: integrity at the individual level does not prevent system-level failure. When contract incentives, client sensitivity, and escalation pathways are misaligned, even good people can end up defending the indefensible—or learning about it after the fact.

Success fees are not inherently wrong. In many commercial transformations, they can be a powerful alignment tool. The lesson is narrower and more practical:

  • Success fees should be treated as “behavior design.”
  • Sensitive clients should trigger “highest-level review” automatically.
  • Incentives must be defensible not only legally, but narratively.

If you lead a consulting practice, ask yourself one question: “If this clause were read out loud on the evening news, would we still be comfortable?” If the answer is “it depends,” the contract needs rework—before signature, not after backlash.