Chief Incentive Officer

The Tim Ferriss podcast has fantastic guests and the interview with Safi Bahcall was an exceptional one. Safi outlined an interesting role that all companies should have which is a “Chief Incentive Officer”. The described aim of a Chief Incentive Officer is to manage and influence the behaviour of the employees, so the employees are incentivised to do things that benefit the company. Consequently, the valuable behaviour is rewarded e.g. increased sales, increased implementations, reduction in waste, creation of effective and efficient processes etc.

To achieve this the Chief Incentive Officer has a compensation budget in the form of cash and equity in the company to financially incentivise the desired behaviour. Plus, they have non-financial benefits such as peer recognition and the benefit of being involved in an interesting challenge.

The aim to the Chief Incentive Officer is to take the incentive management away from line managers so they can focus on managing and improving their teams.

A lot of companies if the company achieves an arbitrary target then everyone gets a 10% bonus and 0% bonus if the company does not make it.

Safi described having a Chief Incentive Officer as “bringing a gun to a knife fight”. As this role allows the company to align incentives with value creation. Which is not possible or at least very hard to do at the team management level. As every team has their own objectives and these may not fully align to the company.

The advantage of a Chief Incentive Officer is that they know how to encourage and reward the best behaviour. In the same way as the Chief Technology Officer knows how to ensure that the company has the best hardware and software required to deliver the strategy of the company. The Chief Incentive Officer is a professional in getting the desired behaviour from individuals. This is not left up to all the line managers of a company to work out the desired behaviour and then work out how to get it from their team.