Rewarding incompetence

Incentives are important. I talk about this a lot, still I tend to believe that most people don’t fully grasp how important they are. Munger does this too.

With incentives in place, people are sufficiently motivated and (continue to) do a good job. A less talked about part of this is what happens if you don’t do anything about it.

If you keep a non-functioning team member instead of letting them go, you are basically rewarding that person’s behavior.

If you accept poor efforts; be it processes, products or meetings, you are saying that this is sufficient and those who do it better than that are doing it wrong.

If you don’t promote and compensate your best people because you’re afraid of jealousy within the ranks, you are basically rewarding your more imcompetent people.

A natural consequence of such inaction is that your best people go elsewhere. Not just because incentives are absent, but because your organization is incentivizing not doing a good job - rewarding incompetence.