Incentives: value creation OR value destruction

One of the essential challenges firm faces is how to motivate firm employees to behave in line with stakeholder’s value maximization. Managers, in turn, face the challenge to motivate their employees to work hard and do the right things. 

Thus, the critical question is not whether an organization has an incentive system. Instead, it is whether the incentive system it has motivates behavior that leads to value creation or value destruction. That’s why understanding how to motivate employees is the critical challenge of every organization till today.

Every organization develops some strategy if any, However, successful strategy tends to consist of two parts, The business strategy, and organizational strategy.

Business strategy tends to focus on answering whether the organization to compete in specific product markets and if yes how to compete, while Organizational strategy focuses on the success of execution of the business strategy.

It’s crucial to align all these elements when designing an incentive program for the employees within the organization. Unfortunately, many organizations, especially in the region, use the wrong incentive structures to motivate their employees. As a result, it steers the behavior of its team member for undesired actions. This is done, as a result of copying other organizations incentive program and applying it within the organization, without going through the full design cycle.

#incentives #team #teamwork #strategy #competitiveadvantage #competition