Would the number and value of deals completed by tech transfer offices increase if their staffs received economic incentives or success fees tied to every license agreement completed? Possibly. But even TTO directors who agree that incentives are a good idea stress that implementing a successful commission system or incentive-based program is complicated. “Managing it is a laborious job because you’ve got to be constantly managing peoples’ behavior, so it is not for the faint of heart,” stresses Jonathan Soderstrom, PhD, managing director in Yale University’s Office of Cooperative Research and president of AUTM. Soderstrom speaks from experience — he implemented an incentive-based compensation plan at Yale beginning in 2000, but it was designed to reward a number of desired activities, not just sales and revenues. In fact, the program set up at Yale is continuously adjusted, depending on the goals set by the TTO and the university for the coming year. “You look at a lot of indirect impacts that have nothing to do with the amount of royalties you generate,” adds Soderstrom, although he stresses that the program is also designed to nurture the kind of high-quality deals that will ultimately benefit Yale the most. But the incentive system also has been carefully structured to avoid turning TTO staff into what amounts to glorified sales reps looking to score quick bucks. Though short-term revenues may increase in a purely dollars-based plan, the university’s long-term rewards could be seriously compromised, he maintains. “If what you are incentivizing is royalties, then people are going to go for as much money as possible up front and forgo later-stage [income]. But the big money is to be made in the royalties downstream if you are successful in actually getting a product on the market. So I don’t want to incentivize people to try to maximize near-term revenues –that’s crazy,” he says. “I want to incentivize people to take the time necessary to get an important deal done or a big, complex deal that requires a high degree of intellectual content.” The details of the Yale incentive scheme, along with advice on bonus plans from several other experts, are featured in the July issue of Technology Transfer Tactics. Click here to subscribe and get access to all current and back issues.

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