Prep Talk:

Aligned Incentives Are (Not)

A Cheat Code

From Permanent Equity’s Ops Desk

Estimated Reading Time: 8 minutes

Read on mobile/as PDF.

Jump to thoughts on:

“Rowing in the same direction.”

“On the same page.”

“Singing from the same hymnal.”

“Seeing eye to eye.”

Frameworks (and highly paid consultants) abound for helping you solve your alignment challenge.

Vision and values statements.

Enterprise operating systems.

KPIs.

Roadmaps.

And,

incentives.

The problem isn’t that incentives are useless, but that the incentives you’re able to engineer pale in comparison to the totality of each person’s incentives.

Yes, incentives are important to get broadly right. Don’t create situations where bad actors obviously benefit.

But, beyond that, incentives you can create rarely deliver what you hope for.

Sound familiar?

They have hopes, dreams, fears, loves, and feelings. What drives them is nearly impossible for them to know themselves, let alone for you to understand.

They’re not just excited about the upcoming presentation but also battling a toothache and worried about gaining weight and anxious for their son’s upcoming soccer game.

They want to be seen as a helper and a peacemaker and a strong leader.

They love to hear themself talk and hate that they love it.

They want more of everything, but are unsure why, and when it comes down to it, they’re fairly satisfied with where they’re at.

You introduce a new team-wide sales incentive.

All new revenue this month will get an increased 5% commission.

What do you expect?

Obviously people will produce more revenue right?

But why?

Will people stop playing around on the internet and call more customers because they get a little extra commission?

Or, will they go home later? 

Or will they try to poach the best clients from a co-worker?

Or will they bribe a prospect with a "one time" deal that inevitably means they will be a short-term client or a poor margin one?

Are you sure

you want that?