Most people are, by default, fearful (fear of losing their job). You should change the incentives to make them more long-term greedy instead of being fearful. Here are some of the best ways to incent your employees to be long-term greedy:
- Compensate them for the long-term. Probably, the people that understand this is 3G Capital (one of the most successful private equity firms in the world and the owners of Burger King, Heinz, and AB InBev). They give their employees the smallest base salary possible--just enough to live on. And then they incent people with massive bonuses based on core objectives. But these bonuses are often paid in form of stock and not available to be cashed in for many years. In this way, employees of 3G Capital companies are incented much like those of start-ups--with a huge percentage of their income coming in the form of illiquid future equity. So people are much more incented to do what is in the long-term best interest of the company.
- Hire people that have lots of opportunities. One counter-intuitive thing is to try to hire people that could find another similar paying job right away. That person is going to be a lot less fearful of losing their job and they will be much more likely to try to do what is right for the company. And if you start to see these people leave your company, you know you have a serious problem and you can fix it. If you hire mostly people that don't have better options, you (1) may not know you have problems until it is too late; and (2) they are likely not going to want to rock the boat.
- Make it safe for people to challenge authority and conventional wisdom. Most people are fearful for good reason--because in many companies there are serious consequences for challenging the status quo. You need to reward people for taking on conventional wisdom in the company (even if they are challenging your authority). Show people by your actions that being long-term greedy is really important. And show them that being fearful will actually hurt their career.
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