Show Me This, and I’ll Show You the Outcome

“Show Me the Incentive, I’ll Show You the Outcome.” This was a famous observation of Charlie Munger, Warren Buffett’s long-time partner at Berkshire Hathaway. He thought that getting the incentives right is perhaps the most important rule in management. He thought of incentives as a “superpower.” Simply put, incentives drive behavior. And it's amazing how often businesspeople neglect this reality.

They Are Not All Monetary. If it were only that simple! But, no, the reasons people behave in a given way are many and varied. While many people are driven by financial incentives, many are also driven by non-monetary rewards. Recognition, prestige, promotions, titles, or the simple ability to work independently without being micromanaged. A good leader understands what drives their team members and structures the incentives appropriately. 

They Change. Incentives must be dynamic, simply because life and people’s position in life are naturally dynamic. Incentives must continuously be monitored to ensure they are accomplishing the objective.

GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market.  Visit us here.

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