The power of aligned incentives

While building communities and organizations, I tend to focus primarily on the structure, roles, direction and goals. One key thing that I find quite hard to do is to align the incentives of people across the group.

And the alignment needs to be both short-term and long-term. I am not a micro-manager (I think), so I attempt to set broad outcomes and let the people or teams decide what milestones to achieve when. But, especially for long-running projects, if the short term incentives are not aligned, people & teams often come at loggerheads.

Finding the right cadence for converging the divergent short-term incentives is a challenge. I believe doing it too often hampers maturing divergent thoughts, which is a critical element in mitigating the risk of group think. I feel that encouraging this thought diversity in a group and comparing one mature divergent thought with other is a much better operating model and gives higher dividends, than a placeholder structural diversity. I have been guilty of doing the latter as well, but more on protecting diverse thoughts in a later posts.

I have worked in some groups where the broad goals are same, but because of different business lines the short term focus of each was to ensure their group’s success. Teams often found themselves at loggerheads with others and bringing the groups together needed significant efforts. Secondly, the frequent conflicts had a significant impact on the team members, leaving them confused on the broad direction, with low reinforcement as overall impact was negligible.

Though it might seem that big organisations would be more susceptible to this misalignment, even smaller 5 person groups can suffer if individual goals are not aligned. I feel organizations need to be flexible in delegating incentive decision to the last nodal team and even individual if possible. Secondly, incentives need to be immediate and increasingly back-ended allowing development of robust long-standing products and services.

Life is tough and keeps throwing challenges and surprises. We all need reinforcements to continue the journey. The more aligned they are for individuals across a organisation, the more chances of success the organisation has. Thus, there is value in thinking on the incentives bottom-up. I find well thought incentives have value even on my personal projects.