“Vision without execution is hallucination,” Thomas Edison said.

As a business owner, you can support employees in executing your vision through an incentive plan that steers everyone in the same direction. But that may mean changing the way you motivate your team.

It’s not uncommon for businesses to stimulate execution by offering individual employees bonuses tied to meeting pre-defined performance levels. And often, that works; it gets an employee to hit a quota quickly.

Individual bonuses are an old-school technique executives use to act as a management tool. Adam Smith, the author of An Inquiry Into the Nature and Causes of The Wealth of Nations, used the “invisible hand” metaphor to describe how people (and nations) are guided by an unseen force that incentivizes individuals to act in their own self-interest to produce what is necessary for the company that employed them. Smith’s tome detailed how labor gravitated toward where it was treated best. And from the publication date of 1776 until recently, “treated best” meant monetary incentives for independent quotas, with an emphasis on “independent.”

Today the definition of “best” has changed considerably, but we won’t overly focus on the types of compensation (cash, time-off, acknowledgment, etc.) that motivate people. Instead, we’ll spotlight the African proverb, “If you want to go fast, go alone. If you want to go far, go together.”

Individual incentive plans work to attract potential hires and guide them toward operational output. But you often end up with high-performing employees who are not aligned with corporate culture or values. Those are the energy vampires.

Energy vampires know what needs to be accomplished to nourish them. They’ll drain their colleagues of time, capacity, and energy to get what they need to be sure their bonus kicks in. On the surface, that may sound okay if you, as the owner or manager, have prioritized the specific output the vampire is trying to accomplish.

But what about the resentful employees who were pulled off their own projects to work hard so someone else could get a fat bonus check?

High performers should be paid more. Period. But if an employee or department is forced to abandon their work to make someone else a high performer, is it fair that they’re not bonused? An incentivized employee may be delivering short-term value but costing the team its desire to participate in a collaborative culture over the long run.

Some antiquated plan types focus too much on the success of one or a few individuals. The success of a few should be a tool, not a goal (your goal is a successful company). Avoid putting the company in a position where you feel desperate to incentivize a small number of employees to get a certain amount of work accomplished in a pre-defined time. Instead, direct overall behavioral alignment toward the company vision, improving the performance of the business by encouraging employees to act like owners.

A group incentive plan promotes teamwork, increases employee engagement, retains talent, and aligns individual goals with organizational objectives. It encourages workers to think and act like owners, which stimulates the company’s performance. That isn’t to suggest abandoning annual goals, but they should be targeted toward long-term value creation. And the way to do that isn’t to tell a worker, “Do this number of things and get a bonus.” You want to give them as much information as possible about how their input will improve the entire organization so they can take ownership of decisions that will benefit the company.

Keep your group incentive plan simple

Don’t make it too complex, as Mary did. Mary created what she thought was a group incentive plan for her digital marketing company in Waltham. Mary knew the objective she wanted to achieve (in her case, it was more clients). Mary believed that if each department, and some individual employees, had specific quotas, their independent work would bring the company closer to its goal. But she was wrong.

First, the plan was convoluted. Mary created incentive documents that spanned two to three pages, depending on the role and the department. Some departments had triggers, tiers, and pro-rata bonus payments. Other departments had goals that were not tied to other divisions, creating competing interests.

Some employees were left unclear on what they had to do to trigger incentives — they just understood if they worked harder or longer, their output would be rewarded. Instead of a collaborative effort toward a shared outcome, an unaligned hamster wheel of activity was formed. The unintended consequence was the creation of “silos,” where departments were hoarding what they perceived to be required resources to meet what they considered to be their goal instead of working toward the overall company vision.

Be transparent about the reward

Also, despite the lengthy description of what she wanted to be done, Mary didn’t detail the rewards for hitting those benchmarks. Mary confided in me that as a reward for trying — no matter what tier was achieved and by which group — she would throw a barbecue bash that rivaled the team’s annual holiday party. Although Mary was excited about it, I sensed the staff was expecting something closer to envelopes stuffed with Benjamins. When developing your group incentive plan, gather employee input on what is meaningful to them. You want to avoid surprising your team with $100 gift cards, leading them to revolt against you because of your lack of appropriate recognition. Plus, when setting goals, it’s important to hold employees accountable for actually achieving them.

Mary’s incentive plan did have some good points. For instance, the goals could be measured objectively. And while she set the targets aggressively, they weren’t unachievable. An incentive plan with unattainable goals is an obvious ploy by management to push employees to work harder with no intention of paying them. That doesn’t promote cultural improvement; it breeds discontent.

Based on Mary’s experience, it should be obvious that the design of your group incentive plan should be kept simple. It should be easy to explain and understand. The targets should reflect the company goal — there should be one voice, not competing outcomes. The incentives should align employee goals with an owner’s mindset.

Notably, a group incentive plan is not an expense — it should be self-funded. While the goals should not be out of reach, they should be a stretch beyond what you might have otherwise expected. The results should drive the value of the business.

Track your team’s progress

The metrics should be tracked as often as possible, daily being ideal. The intention isn’t to micromanage workers. And it’s not to create one of those fancy cardboard thermometers designed to boost morale by showing how much progress is made. Both can be useful, but the real reason is to determine where to provide needed support. Setting the incentive plan is just the beginning. You must evaluate where plans are falling short and step in to shore up weaknesses. Your job isn’t to frustrate your people as they strive to reach the finish line. Your role is to do whatever is required to carry them over it.

Skillfully crafted group incentive plans pay dividends. The improved performance continues, and customer satisfaction is enhanced. When employees work together effectively toward a common goal, customers feel it. A plan that breeds an owner’s mindset will boost the company’s reputation and lead to repeat business and customer loyalty.


This column first appeared in the Berkshire Eagle on June 14, 2023.