Revisiting Incentives

Understanding what motivates people can help invigorate a company’s whole value chain.

By Nader Museitif

Our world is driven by greed, fear, and sex. This is how some politicians may simplify the underlying principles of why humans do what they do, whether as individuals or in groups. Such observers assume we operate under similar instincts as those of our ancestors thousands of years ago; they wanted to procreate, hunt for food, and stay safe from nature’s perils or the evil of other fellow humans.

But humans have come a long way from these basic survival days. Over time, they became more enlightened by developing values, culture, science, and religion. While the world is far from perfect, people live much longer, and advances in technology have created things we would have deemed the stuff of science fiction only last century, and outright witchcraft before then.

But sticking to the procreate-greed-fear theory, we can’t deny it still drives a lot of how we act today. We still look to build families. We still have to make a living and earn money in order to sustain lifestyles, and instead of being afraid of predators attacking our caves, we worry about recessions, crime, and ISIS disrupting our families and assets.

If we put this theory in a business context, then the notion of greed becomes most applicable. And by greed, I mean the ambition to grow, to innovate, and to advance, thereby earning “more” because “more” is essential to sustain the way our societies operate.

It’s all about incentives: the mechanism to link a certain ambition to people’s ambition. Work more and get overtime. Buy a hybrid vehicle and save on custom duties. Do your homework and get an hour on the PlayStation. Sell more and get a higher commission.

How we incentivize people connected to a business will determine how far it goes. Customers, suppliers, and employees are all part of the formula. In fact, how you incentivize the whole value chain of your business can invigorate its performance. Customers should yearn to come back for more if they feel good about the product or service and its economic value. Suppliers and key partners should see the value in growth and see increasing, not diminishing, returns. While employees should see the impact of their work on the company’s overall results, their team’s productivity, and their own individual development.

The old definition of greed has changed, and if ambition is the right instinct to nurture, leaders can bring about great benefits from channeling all ambitions and incentivizing them effectively.