Incentives and Leverage

Old men playing chess on a bench

“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”


How do you get things done in your professional life? Simple: understand the incentives and find the leverage. 

In the early part of your career, as an individual contributor, you can exceed expectations and gain leverage by being incredibly good at your job. You may do it with your skills and talent or by working harder than others.

Later in your career, though, being great at your job is not enough. You need the intuition to see an untapped opportunity beyond your day-to-day job (a.k.a. “white space”) and the ability to seize it.

It’s no longer an individual matter. Even if you have the vision for company-wide improvement and a clear articulation of its value, the people you need may have no incentive to help you. 

When this happens, you may need more leverage to make your needs their priority.

Misaligned incentives are pervasive in corporate environments, and they are usually a combination of suboptimal management decisions and a complex business environment. Over the years, I learned not to let them frustrate me, but use them to my advantage.

Avoid frustrations by tracking incentives all the way to the top

Man climbing a mountain
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Maximizing the productivity of any team and talent requires an incentive system that pushes people to work together for the same goal and find synergies rather than conflict. But setting up balanced incentives usually occupies a large amount of time and effort because we live in a (business) world ruled by opposing forces.

Think about a company that needs to deliver both the top line and the bottom line: often, one is a detriment to the other. Companies want to be around for many years, but in an economic downturn, financial markets outweigh short-term returns over long-term investment. For example, an engineering team building new features will not have resources to support tools that make the Marketing or Sales team more effective, which in turn will decrease their job productivity, which may hinder topline revenue and therefore profitability, which may ultimately force the CFO and CEO to cut funding to the project the engineers are working on. 

No matter how far down the corporate ladder you are, these dynamics influence your daily life. If you train yourself to track back the chain of incentives and macro-dynamics that govern your environment, you’ll maximize your chance of finding leverage or, at least, minimize your frustration with the impersonal realities that stack the odds against you.

Your colleague is not replying to your email or declines your meeting, not because they don’t like you (well, maybe), but because the topic is not their priority or there’s no incentive system that rewards putting time and energy into helping out a colleague beyond the goodness of their heart. They won’t get recognition, they won’t get promoted, they won’t get a bonus, and it’s just going to detract resources from what they are asked to deliver (or their personal life).

Designing a system that balances conflicting incentives and moves the broader system in the right direction is extremely complex, time-consuming, and often tedious but immensely important. Leaders should not only think of the metrics that drive the business forward. They must also consider how cascading those metrics as targets will create aligned or opposing incentives throughout the most junior members of the organization and decide if they accept the consequences. 

Create leverage when incentives are not aligned

Aligned incentives are an ideal but rare scenario. You need to find a way to get leverage even when incentives are not aligned.

You must understand your starting point correctly to avoid a lot of frustration and have a chance of succeeding.

People sometimes have the erroneous belief that since both parties have to gain from a partnership, they both have equal leverage, but that’s often far from true. Usually, someone has fewer incentives to make the project happen, less to lose from it not happening, or less to gain from it, and that person has the upper hand.

If you do not have the most leverage, you need to make it worth it for the other party, and that means directly or indirectly offering value or creating negative consequences if the deal doesn’t happen.

Understand your stakeholder’s incentives

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Remember that colleague who won’t accept your meeting? You may need to build goodwill with them even if you have to work against what you currently want. 

Here’s a personal example. Having worked in Media for many years, and because Paid Media is often the biggest line-item expense in the Marketing budget, I often manage the investment under close scrutiny of the C-suite and senior members of the Marketing and Finance teams. In my previous job, the Finance team had regular closed-door meetings with the CMO where they reviewed the department budget against performance and, inevitably, spent a lot of time discussing Media dollars. Because they spent a lot of time discussing Media, I had to spend an enormous amount of time briefing them each week on how to interpret the numbers and what happened. To save time with the game of telephone, and because I wanted to be in the room where decisions were made, I wanted to be part of that meeting, but because they had to make decisions on what brands to support and defund, they understandably wanted to keep the meeting small. 

Because I couldn’t sweet-talk my way into the meeting, I needed to give them an incentive to invite me to it, and I had to understand what drove the team. Ultimately, the FP&A team wants to show they have control of the P&L and are making smart management recommendations to deliver on company objectives. With that realization, I understood my assignment differed from what I was originally asked. My job wasn’t to teach them how to interpret media numbers;  my job was to give them the information showing the media budget was helping deliver on the financial plan they had set out. My job was to make them look good. 

At that point, inviting me to the meeting was like bringing a visual aid: they could show how the media expenditure and performance were helping P&L performance, but when the CMO was questioning a drop in GRP or asking how fast we could deploy media in Texas to support slowing sales, I could give him the answer right there and then, making their meeting way more efficient and productive. That was a win-win. I got access, they looked better, and the CMO got all his answers in a timely manner. 

Offer value by lowering indirect costs

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Sometimes, it is not just about providing value but maximizing the value you can offer by lowering the cost for your counterpart. 

I still remember the day at Google when, during a 1:1 with my manager, I was explaining a campaign issue. It was normal for me to seek guidance. That was my approach until, one day, rather than giving me advice, he looked me in the eyes and said, “Going forward, I want you to do your best to come to me with solutions, not problems.” I was shocked, both concerned that he was sick of hearing complaining and angry that he was not giving me the support I expected. With time, I came to the realization that he gave me some of the best career advice I ever received. He was teaching me to find solutions on my own and rely less on him to drive impact.

Great leaders see it as their duty to remove roadblocks for the talent in their team, help them achieve their objectives, and ultimately allow them to grow in their careers. But while you may be tempted to go to your boss for help, there’s tangible value to go to them with solutions rather than problems. First, you reduce the mental workload for your boss by helping them make a decision rather than finding options. Secondly, you present yourself as a problem solver capable of running your area of responsibility independently if given the freedom and resources to make certain decisions.

Imagine you have an employee doing business-critical work who is going on parental leave. The suboptimal option is to go to your boss and say this creates a risk for the business. The better option is to create a business case that quantifies the revenue at risk, propose the alternative solution to hire a contractor, assess the budget, check HR and company policies, and go to your boss with a proposal that shows compliance with guidelines and ROI vs the opportunity cost of not hiring anyone.

Similarly, rather than asking what you should be focusing on for the year in order to be promoted, it’s better to plot the roadmap your department leader has set for the team and propose projects or efforts that further that agenda. You are creating leverage for yourself by enabling the vision your leader has set and, therefore, making your work and role indispensable for the future of the department or the company. Everyone can be replaceable (low leverage), but you can find ways to make your work invaluable. 

Find leverage by thinking broadly about value

Failing to get what you want is, for better or worse, the best way to learn to think laterally. 

When you join a company after the budget for the year has been set, you may find yourself constrained by what you can do. Throughout the fiscal year, you may get pitches from a multitude of companies that could make you more efficient or give you an edge over the competition. But because all your annual budget is spoken for, you may not have enough money even when cutting other costs. I found myself in this situation in my career, but because I always worked for high-profile companies, I learned how to offer my company equity in exchange for a more palatable rate.

When a startup is trying to acquire new customers, working with a big-name company and putting their name and testimonial on their site can help them attract business more rapidly. The value of attracting other businesses, especially when they are under pressure to grow from their VC, may be much greater than the discount you request. The value of getting our logo and case study on their site was much larger than the immediate revenue from a full-priced deal. Knowing that the deal wouldn’t have happened without the discount, that was a way to find leverage and get the deal done. 

When everything else fails, change focus and wait it out

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There’s a joke that asks, “How do you eat an elephant?” The answer is “one bite at a time.” 

In my career, I’ve been in many roles that required driving change management and wide cross-functional alignment. People are sometimes scared of change as it is seen as a threat to their role, status, career, or work routine. No matter how reasonable or palatable is your proposal, they may oppose you as a matter of principle or out of fear. 

When nothing else works to get them on your side, the best bet may just be to focus on partners or stakeholders who are more open to change and wait for the others to come around. It is not about coercing people but giving them time to accept change by providing examples around them. Time will always be the best judge. Either your vision for change is not going to be successful, and things are going back to the way they have always been, or the other party is going to be asked to conform by those to whom they can’t say no. 

But waiting things out also exposes the hidden cost of low willingness to be a collaborative partner for those difficult stakeholders. If the change is ultimately forced upon those who are resisting it, the more of a negative reputation you build by being singled out as the exception to the widely accepted norm.

In business and in life, you need to nurture a positive reputation because it can have a disproportionate impact when it matters most. You may think you hold all the leverage, you are a superstar performer, and you are in a highly coveted position, but small and highly unlikely events can have a devastating effect: your executive sponsor gets fired, your campaign hits a PR fail, your company gets acquired or goes through a restructure. Building equity and goodwill is like going to the gym: you won’t see the value immediately, but it will show up over the course of months and years.

Be unemotional about incentives and leverage

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Hopefully, I was able to show how understanding incentives and finding leverage is key to getting things done in the business world. 

The other important takeaway is to be unemotional about incentives and leverage but to be compassionate with people. 

Sometimes, people are not going to help you because incentives are misaligned, and the burden is on the leadership team to ensure they have a system that pushes people to work in unison. Sometimes, you need to create leverage, and there are many ways to get it done — by building equity, lowering the cost of doing business, or offering things of alternative value. Sometimes, the only option is to wait things out. 

Ultimately, the best thing is to put yourself in other people’s shoes, understand how they make decisions and the challenges they are facing, and then see how you can align incentives and create value for them — if not for an immediate gain, at least to build long-term equity. 

After all, I’m convinced it always pays off to be a good human.

Author: Paolo

Economist by education, marketer by profession, coffee roaster by hobby.