@Just_a_guy
I'm just a grumpy individual - not a world authority on the subject.
That said, I think if you are an even moderately typical human being, then you have most of what you need to work out some of the essentials of what it is that makes people tick. You don't need to be a Martian looking down from above, here.
So when I say "proper" incentives, I mean incentives that are traceable to what it is that drives humans. But also
proper in the sense that what the individual is incentivised to achieve, actually leads to good outcomes for the organisation. For instance, is a heavy reliance on short term bonuses aligned with good long term outcomes?
But I firmly believe that it starts at the top. There will always be individuals that are wired to work harder, or to have more integrity, or to be more innovative, or to be more independent and not succumb to group-think, etc etc. However, over the long term, whether these individuals will thrive, and which sort of individuals will tend to get recruited, will be dependent on the prevailing culture.
So in terms of promoting the right sort of culture, we have to first look at top management, starting with the board. After all, no matter how clever or capable the management may be, they are only human. What is going to make them get out of bed, day after day, with the drive to achieve, and the focus on the long term? Over the passing years, what's going to prevent the slow and steady creep of waste, bureaucracy, disinterest and apathy?
I don't think there's one answer. But I find it difficult to get away from the importance of the sense of ownership. When something is "your baby", it's very human to want to do the right thing by it. There are many ways of looking at "ownership", and generally speaking, not every employee is going to have a meaningful
financial stake in the business. But for the guys with overall responsibility, having a meaningful financial stake is hard to beat.
I don't want to suggest that humans only respond to financial incentives. They clearly do not. A company with a culture of excellence will generally incentivise their employees to achieve excellence for a whole host of reasons. For instance, an employee with leaders he or she respects and looks up to, will feel strongly disinclined to disappoint them. This is a very powerful incentive, which has nothing to do with material self interest.
Clearly these sorts of dynamics occur at all levels of the organisation, including at board level. But at the top, I think the best guarantee of maintaining the right culture derives from the incentive of financial ownership. And if it's not ownership by the directors themselves, then I think ownership by a, or some, passive but interested substantial shareholders may suffice too.
(20min delay)