Avoid Being the Low-Hanging Fruit: Aligning Incentives for Team Performance

It's common for employees, particularly in roles like sales and programming, to prioritize securing a stable, fixed income from their employer over achieving performance-based results with external customers. As a startup founder, you'll likely encounter this firsthand.

Consider trying to hire a salesperson on a commission-only basis. You'll quickly find they demand a fixed salary in addition to commission. Despite your attempts to explain the motivating potential of a purely results-driven model, you'll realize this mission is often impossible. Sales professionals excel at selling, and their most effective pitch is often the idea that their time, regardless of product sales, must be compensated. If you don't agree, they'll simply move on to a founder who will. A similar dynamic plays out when attempting to pay programmers based on deliverables; they readily convince employers to pay for their time instead.

City of God (2002) by Kátia Lund

A sales representative might not understand coding or how computers fundamentally work, but they possess a powerful ability to persuade. This skill is precisely why founders need them – to connect with prospects and convert them into paying customers. However, this same persuasive ability presents two strategic paths for the salesperson:

1. Engage External Prospects: Use their skills to turn market prospects into paying customers.
2. Engage the Employer: Use their skills to convince you, the startup owner, that they deserve a decent weekly paycheck, even if they fail to close deals with customers.

Which sale do you think is easier? The answer is clear. External customers are demanding and unforgiving; they will simply disengage if the offer isn't compelling. You, the employer, are physically present, financially invested, and emotionally vulnerable. You are the "low-hanging fruit," the easiest target for their persuasive efforts.

To ensure your team focuses on overcoming external market challenges, you must make internal obstacles more significant. A customer represents an external hurdle that, once cleared, directly leads to a commission payment. You, on the other hand, represent an internal hurdle that, if overcome, secures a fixed weekly salary. You need them to engage with the external challenge, but they will naturally choose the path of least resistance.

As Joseph Stalin famously said, "in the Soviet army it takes more courage to retreat than advance." This wartime principle holds surprising relevance for the sales and development teams you hire. It must be more challenging for them to convince you to pay a fixed salary than it is to persuade a prospect to buy your product.

Emotionally, constantly pushing back can be taxing. It's akin to the difficulty of saying "No" to someone begging for money. Like salespeople, individuals begging for sustenance (unless physically disabled) face two life strategies: find employment or beg. For both the beggar and the sales rep seeking a fixed salary, the "begging" strategy is often perceived as easier.

Programmers operate under a similar dichotomy. They can solve technical problems by delivering qualified pull requests, or they can persuade you that payment should be for their time, not their output. Which obstacle becomes harder for them to overcome ultimately depends on you.

To steer your technical team towards results, implement these steps:

1. Define Contribution Metrics: Establish clear, measurable formulas for assessing their work.
2. Link Pay to Results: Directly tie their compensation not to your discretion, but to tangible outcomes like merged pull requests.
3. Eliminate Time-Based Discussions: Taboo any conversation about compensation based purely on hours worked.

The result will be a technical team singularly focused on resolving external problems. They will "advance" because "retreating" (i.e., attempting to secure time-based pay without tangible output) will be pointless. You simply won't pay them for their time, regardless of how many times they insist, "I was working hard the entire weekend."

Incentives profoundly shape behavior. If you reward excuses, you'll receive excuses. If you reward results, you'll achieve results. As a founder, your primary role is to eliminate any temptation for your team to "sell" you anything other than concrete, valuable deliverables.