03.25.22 - Guard the incentive
I hope you’re having a wonderful time being alive and making money!
The last few months have been an epic ride for me — both personally & professionally. We broke ground on a subdivision in Nashville catering to out-of-town renters. These properties are absolutely gorgeous and located in a highly desirable area of town.
In addition, we went under contract for fifty cabins in Branson, Missouri located right next to the Branson strip and in the middle of all the action. Our businesses are booming after a slight stutter-step towards the beginning of the year.
What I’m thinking about this afternoon, and why I’m writing you, is to prevent your own stutter-steps and help you avoid one of the biggest mistakes I’ve made in my professional career.
Our teams grew quickly. We went from 1 part time employee to nearly 200 full time employees in just about 5 years.
I’ve learned a lot of growth lessons and some of them have been quite costly. One of the costly lessons has to do with incentives. If you want to understand what’s wrong with the US Political system, look no further than “incentives” for your answer.
When people are incentivized for the wrong behavior or (worse) selfishbehavior, the entire mission is threatened. The area I see this the most is in executive compensation packages (and politicians).
Keep in mind, I am running 6 (soon to be 7) brands, four of which are wholly owned and 3 as an equity advisor… I’ve had nearly 150,000 students and over 10,000 clients in my time as a growth consultant; and I’ve seen this time and time again: as businesses grow, if the incentives are not changed the behavior will not change.
Upton Sinclair wrote, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
My question to you is this: what are you expecting from your team that you are not incentivizing them for? And secondarily, what are you incentivizing in your team that you do not want them to be doing?
In one of my service companies, we had a whole cadre of leaders who were incentivized on one thing and one thing only: profit. What happens when a leadership team is explicitly comped on profit? Corners are cut, people are mismanaged, and resets are required.
“Profit” is why the United States moved important jobs & labor to other countries like China. It is why, in 2008, we were able to print so much money without noticing a devastating inflation (costs simply lowered as we kicked jobs out of US into lower pay locations).
And it is why, now, we are reeling under the weight of CPI and inflation and ordinary citizens are being advised by Bloomberg and the like to just… “carpool,” or “buy cheap groceries,” and a host of other equally preposterous advice.
Many times, profit should be a goal but not “THE GOAL.”
This is a reminder for you to write your incentives around the LONG TERM game plan. And each year, take another look at them. Make sure that the plans you put down 3 years ago are still “long term” (hint: if your organization has grown quickly, they will not be and they will 100% require re-writing).
As we head into the next quarter, keep in mind that everything you want is right at your fingertips. There is no obstacle that is as difficult to overcome as the mind.
If you want help to grow (or even exit), I’m just an email away.
At your service,