Over my last decade in business I have had the pleasure to work with many successful leaders and their companies. I have tried to learn and apply the best practices.
One best practice that continuously has proven its power in driving results is simpler than you'd think. Can you guess?
What is it? The answer: Incentives.
Incentives can literally transform an organization almost overnight. I experienced it in my days as Trade Commissioner of Denmark. I was hired to lead the South-East United States as my Business Unit, having its separate Profit and Loss. It was an amazing time as was essentially the CEO of a small and very successful business with a team that I had found and hired. I must say that I did what I could to win. Everyone of my peers did and that was the game we played. We were competitors more than colleagues. It was so bad that we started poaching talent from one another.
A new Ambassador came into place a few years later and completely changed everything. Overnight we were measured not just on individual revenue and earnings but had a 3rd and very significant KPI: Revenues for all of the USA (5 business units).
Result: I started instructing my team to share their projects with our NY, LA and Chicago colleagues. Projects became harder and more expensive to manage but we came together as a team and the customers benefited.
Overnight we aligned and turned from one-for-a-few, to one-for-all and all-for-one. To this day the power of incentives stands with me as the most powerful lever you have in your arsenal of enterprise growth tools.
I continue to see incentives being used in many of the most successful organizations and change initiatives. A few recent examples:
– One of Scandinavias most successful and fastest growing professional services organizations. This company has been growing 100%+ for the last many years and continues to expand. They are now looking at opening an office in the USA.
Speaking with one of my close friends, a Senior Partner, he specifically called out the unique incentive structure as a core element for their success.
"We compensate the different teams equally on the revenue they generate. If two teams both engage in a 10million dollar deal, both of the teams get compensated for the full amount (vs. splitting the 10). We know this drives the behavior we need for success."
– A senior leader in one of the worlds largest enterprise services related firms shared with me how aligning with incentives has been critical to catalyzing their transformation and renewed growth. "We measure every single person on one KPI that everyone can relate to. It bonds people. Tell a colleague how your initiative will impact this kpi and they will quickly come to your support as it also benefits them. We give full credit for deals closed, no matter how little or much you were involved in the deal. (Similar structure to the Scandinavian example above).
Incentive structure continues to be my first go-to for rapid impact at scale. It changes behavior, which changes outcomes and changes your growth trajectory as a company.
CxOs would do well to consider how to simplify and leverage incentives to accelerate initiatives and catalyze growth.
How are you leveraging incentives in your organization and what have you learned?