Great incentive design isn’t just about bonuses. It should shape behaviour, reinforce culture, and help the company to reach strategic goals.
The wrong incentives can encourage short‑termism, misaligned priorities, or even gaming.
However, when incentives are tightly aligned with your strategic objectives, they become more effective.
In this post, we’ll explore how you can link incentives to real strategic outcomes and communicate them clearly, so everyone understands the why behind their rewards.
Far too often, incentive plans are built backwards with the reward first and strategy afterwards.
This can create unintended outcomes:
These mismatches quietly sabotage your strategic intent.
Begin with strategy and define the outcomes that truly matter. Only then can you design incentives to support those outcomes.
Start by defining the strategic north star. Look at the outcomes that drive success.
For example:
Why does it matter? McKinsey found that companies in the top quartile of organisational performance were 2.2x more likely to achieve above-average EBITDA margins than those in the bottom quartile.
McKinsey noted that this performance advantage was driven by alignment in areas like direction, motivation, and coordination, all key strategic levers
Incentives must start with measurable strategic outcomes.
Top performers use bonus plans that reflect those goals, not vanity metrics.
Companies seeing standout performance align incentives with areas such as motivation, coordination and clarity of direction.
Differentiating incentives per role is vital but it mustn’t erode collaboration:
Atlassian’s Incentive Bonus Plan is explicitly designed so employees are rewarded for both company performance (e.g., shareholder return, EBITDA, revenue metrics) and individual contributions aligned with strategic goals.
This transparent mix ensures company success doesn’t come at departmental cost.
A blended approach balances individual impact with collective success.
Money isn’t the only motivator:
Atlassian models this too. Beyond cash bonuses, they offer equity vesting over time, embedded into compensation so employees feel long‑term ownership and alignment.
A mix of company‑wide and role‑specific incentives works best.
Non‑monetary rewards build culture, motivation, and loyalty. Blended incentives keep teams connected to strategy.
Constant testing is key for effective incentives.
It’s important to regularly check whether the behaviours you’re rewarding are genuinely improving strategic outcomes or creating unintended side effects.
Keep an eye out for ‘gaming’ or short-term skews, such as deals being pushed through hastily just to hit a target.
To get the full picture, combine hard performance metrics with employee feedback and customer or business impact data.
“Incentives must evolve as your strategy evolves or they will work against you.” - Harvard Business Review
Continual evaluation ensures your incentives stay relevant and effective.
Don’t assume people understand why incentives exist.
Explicitly link the strategic goal, the behaviour rewarded, the criteria for measurement, and the payout mechanics.
When incentives are clear and easy to understand, they build trust and significantly boost motivation.
Thoughtful, aligned incentives drive execution and improve culture.
Start with objectives, blend shared and role-specific measures, balance monetary and non-monetary motivators, monitor regularly, and communicate clearly.
Audit your current incentive plan. Does it reflect strategy? Are you rewarding the right behaviours? If not, it’s time to rethink.
An employee share scheme, managed through Vestd, can turn trusted, empowered team members into true co-owners of the business, strengthening both commitment and retention.