It seems to workers that upper management’s strategies and actions are often cloaked in mystery, as they secretly plot in their buttressed conference rooms while employees are left on the outside looking in. To understand why your managers do certain things, you need to follow the incentives offered by the organization and its corporate leadership.
For example, if employees are financially incentivized to carry out unethical practices by being given a huge bonus, it will appear to everyone else that this is the standard for conducting business. The incentive for breaking the rules creates a corporate culture of doing questionable activities in pursuit of profits at all costs without concern over the repercussions.
Charlie Munger, billionaire and right-hand man to Warren Buffett, famously said about the corporate world, “Show me the incentive, and I will show you the outcome.” Munger maintained that incentives are a catalyst for driving the behavior and actions of workers. You need to know the incentives offered to determine why things are done within the organization. By understanding the incentives of bosses and corporate leaders, we gain a clearer picture of what is really going on in the workplace.
Incentives shape behavior and determine the outcomes. Bosses align incentives with desired behaviors and goals. It encourages positive actions and drives success.
Recognizing Employees
How supervisors reward and recognize their employees indicates what they value. If the manager rewards employees for short-term results, they signal that they only care about the here and now and are not concerned with long-term growth. This could be a sign that the company and its management team want to make as much money quickly as they may not be around a year from now, so they don’t really care about the firm’s future.
Employee turnover shows what’s going on in the workplace. If employees are constantly leaving, it’s a sign that the company is not offering incentives to make people happy or long-term growth opportunities within the company. Workers pick up on that vibe and start quietly quitting, then leave when the right new job comes along, as they realize there’s no future at the firm.
Salary, Bonus, Stock And Promotions
One of the most common incentives is offering compensation, bonuses and stock options tied to a person’s performance. The money incentivizes a person to do well in their job. Offering stock-based compensation to workers incentivizes both the worker and the company. The employee will feel a sense of ownership in the organization and work hard to earn more equity, hoping to realize a financial windfall if everything goes well. The company benefits by having a supercharged, motivated workforce.
People are motivated by having the chance to fast-track their careers with promotions and lateral moves within the firm. They’ll work hard to show they are worthy of rising through the ranks. If the boss promotes the person, it sends a message to the individual and workforce that you will be rewarded if you put in the effort.
The incentive will create a virtuous cycle of people contributing the best they can with the knowledge that they’ll be rewarded for their efforts. The company and its shareholders benefit because productivity leads to higher revenue, more profits and a growing stock price.
Power And Control
Some toxic and narcissistic bosses are motivated by power. Their incentive to be in control and wield authority may ultimately benefit them. Still, it will harm the morale of the employees, which will have a deleterious effect on the company.
Corporate leaders are incentivized to win and crush their competitors. The downside is that they run afoul of ethics, rules, regulations and law to pursue profits.
Some executives need to justify their jobs and lush pay packages. This could result in poor decision-making rooted in making the executive look good, but not a smart business move for the overall organization.
The overall culture of the workplace can also be a reflection of the incentives that bosses and corporate leaders have in place. For example, if the workplace is highly competitive and cutthroat, it may be a sign that the incentives are focused on individual achievement rather than team collaboration.
The way that bosses and corporate leaders make decisions can also be revealing. For example, if they are quick to make heavy-handed decisions without consulting with their workforce, they may be more interested in asserting their authority than getting buy-in from their team.
How bosses and corporate leaders communicate with their employees can also be a clue to their motives. For example, they may be more interested in controlling their employees than building trust and collaboration if they are often critical and negative.
Making A Difference
Many managers are motivated to make a difference and positively impact the world. They leverage their position to enact decisions that are in the best interests of the company, the employees and the community.
How bosses and corporate leaders invest in their employees’ training and development can be revealing. If they only invest in training that will help employees meet short-term goals, they may not be interested in helping them develop the skills they need to succeed in the long run.
Corporate leaders supporting their employees’ work-life balance can also be a clue to their priorities. For example, if they are unwilling to offer flexible work arrangements or paid parental leave, they may be more interested in control and maximizing profits than in the well-being of their employees.
The Desire To Please And The Fear Of Failure
Some bosses are motivated by the fear of failure. They don’t want to lose their jobs or their reputations. This can encourage them to make safe and predictable decisions, even if those decisions are not the best for the company or staff.
Some corporate leaders are motivated by the desire to please their superiors. They want to be seen as good managers to advance in their careers. This can encourage them to make decisions that will appease their superiors, even if they don’t align with their personal values or the company’s and employees’ best interests.
Source: Forbes
