Incentives

A friend of mine runs his own business, and asked me some great questions today:

What’s the incentive structure for you?

You are very good at getting the results you want. Are you rewarded for those results, or do you get rewarded for something else?

Are you happy with the game you have to play to get that reward?

Would the reward be better elsewhere, for playing the same exact game?

Make sure you are good at the thing that gets rewarded.

It reminded me of this article Patrick McKenzie wrote on Salary Negotiation back in 2012. As an employee, you are not rewarded for the job that you are currently doing. You are rewarded for how well you negotiated when you accepted your offer. Poor negotiation can lead to a wage gap later on, where it is hard to catch up.

As long as we are working for money, there will always be a gap between the results we deliver and that something else we are actually rewarded for. The question remains, what are you willing to do, to achieve the latter?

If you are running a small business, your results are the value you deliver to your clients. What you are rewarded for is how good you are at selling. If you work for a big company, your results are the products you ship and the value it provides for your customers. What you are rewarded for is likely how good you are at getting promoted and negotiating with your employer.

In either case, the monetary value you receive has nothing to do with the actual results you deliver.

This isn't to say that you shouldn't focus on your skills or at being good at your job. I firmly believe in Julie Zhou's advice from How to Think About Your Career:

Your career is defined by your skills and how you’ve used them, not by any external measure of your progress.

I also really believe Julie Zhou's advice from Get Over Yourself:

Focus foremost on making the company successful.
Focus on the we, not the I.
Fight for a bigger pie, not for your bigger slice.
Care less about credit and care more about results.
Ask not what the company can do for you, but what you can do for the company.
Do this, and the rest will follow.
Do this, and you will be a leader.

At the same time, I have at some point found out at every job I've ever had, that I was underpaid relative to my peers. I have also had employers offer to significantly increase my salary, only after I gave my resignation.

Doing the hard work of reading dense technical papers, writing design documents, and doing all the coding and glue work to ship production systems is how I have developed my skills to become an Uber Tech Lead today. I rarely think about whether or not I am being compensated fairly, because I enjoy what I do and I love the problems that I get to solve. Having great managers is how I get to use my headspace to focus on solving those problems. They were the ones helping me navigate the incentive structure and move up the ladder because of my results.

You need both to develop your skills and to navigate your incentive structure to get the actual reward. The money needs to come in somehow for you to live your life.

Make sure you are good at the thing that is actually getting rewarded.