Page 113 - HBR Leader's Handbook: Make an Impact, Inspire Your Organization, and Get to the Next Level

Getting Great People on Board 103

The classic case of this is when a leader rewards and promotes people
based on achieving individual goals, while assuming (or hoping) that these
people will work together for the greater good of the team. But if their
individual goals conflict with each other in some way, it’s likely that they
will compete with each other rather than collaborate, not because they are
ornery, but because most people will rationally do what’s in their own best
interest first.
By making your incentives philosophy explicit, you send a clear mes-
sage to your people about what you expect of them. For example, Andrew
Géczy, the CEO of Terra Firma, a private equity firm in Europe, and a for-
mer executive at Lloyds and ANZ banks, explained to us that part of his
incentives philosophy is that people’s behaviors (and not just their perfor-
mance results) are a key factor for compensation and promotion. He uses a
two-dimensional grid for performance assessment with behaviors on one
axis and results on the other. By making this clear to his organization, he
prevents his managers from using tactics to get results in the short term
that could harm the organization in the longer run.

Questions to ask
As you articulate your incentives philosophy, here are a few questions that
you should address:

• To what extent are you committed to making sure that your team
truly functions as a meritocracy, where individual achievement
is rewarded versus just tenure, loyalty, or personal relationships?
(Some leaders talk about results being paramount, but then reward
people differently.)

• Is tenure rewarded at all (and if so, how)?

• What’s the balance between individual achievement and collec-
tive achievement? In other words, should your team members be
rewarded if they hit their individual goals, but the team misses its
targets? Or should there be a portion of individual rewards that
is based on the collective results—and that perhaps will differ for