Discipline #3 is about creating incentives that align personal and company goals. When individual rewards are tied to organisational success, your team’s energy flows toward what matters most.

Why Incentives Work

Firstly, incentives aren’t just about cash. It includes recognition, praise, thoughtful gifts – some of which don’t cost a lot, like lunch with a high profile artist / CEO friend of yours they’d love to meet. But don’t underestimate the importance of cash to align motivation. We employ HUMANS with lives, needs, and dreams. Money is a need-meeter and a dream-enabler. As employers, we’re usually their #1 source of money. Giving a big boost to their ability to meet needs and pursue dreams – tied to achieving doable stretch goals that matter a lot to the company  – is massively motivating. That’s why it’s human nature to prioritize what gets rewarded, and why cash incentives, done right, can be so powerful.

How to Align Incentives

1. Link Bonuses to Business Outcomes
   Tie personal bonuses directly to measurable results, like profitability or customer growth. This shifts focus from isolated tasks to shared goals.

   Example: At Fathom, profit-sharing incentivized teams to spend wisely, prioritize efficiently, and collaborate more effectively. This unlocked innovative ideas to get more done without hiring more people – which was the previous norm.

2. Use OKRs to Measure Performance
   Connect incentives to quarterly OKR results. For example, a leader’s bonus could depend on achieving 80% of their OKRs, weighted by importance.
3. Incorporate Long-Term Incentives at top leader level
   To avoid short-term thinking, implement three-year performance bonuses tied to 3-year BHAG progress. This encourages leaders to balance short term wins with sustainable growth.
4. Cascade to Teams
   Align team members’ incentives with their leader’s OKR attainment. When leaders succeed, the whole team wins—fostering accountability and collaboration.

Incentives in Action

Even Google, famous for its early culture of not linking bonuses to OKR performance, eventually change this and now links bonuses to OKR performance. Why? Because it works. Aligning individual goals with company priorities works, and rewarding the outcomes that matter most to the company works. When done thoughtfully and in balance, it creates a culture of shared success and fuels engagement to achieve the company’s top priorities.

Key Takeaways

• Incentives drive behavior: Tie personal rewards to company priorities to focus team efforts.
• OKRs are your baseline: Use quarterly OKR performance to measure and reward success.
• Long-term incentives build sustainability: Encourage top leaders to think beyond the current quarter and year, with long term-incentives.

When aligned incentives meet clear goals, execution clicks into a higher gear. Ready to take the next step? In the next post, we’ll explore Discipline #4: Lead by Scoreboard—because what gets measured gets done.

Resources

OKR Toolkit. Access here.

Take the Next Step in Scaling

Looking for more practical tools to align your team and drive execution? Explore The Art of Scale book for detailed strategies on creating and implementing incentives, plus other tools to help you scale effectively.

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