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MSMEs often launch incentives to energise teams and then discover they have rewarded the wrong thing. Salespeople chase top-line numbers that later cancel. Operations teams push throughput that increases defects. Recruiters fill roles that churn quickly. Managers optimise visible activity while hidden cleanup lands on someone else. Poorly designed incentives do not fail because people are dishonest. They fail because the system tells them what to maximise.
Start by defining the full performance equation, not just the first number. If sales earn incentive, should collection quality matter too? If dispatch speed matters, should rejection rate or customer complaint rate also be part of the gate? If hiring targets exist, should 30-day retention or probation success be included? Good incentive design protects the business from paying twice: once for the visible win and again for the hidden damage.
Caps, thresholds, and clawbacks are not signs of mistrust. They are design controls. A variable-pay plan can include minimum gross-margin standards, payment-realisation milestones, quality thresholds, and a review trigger for exception-heavy performance. This keeps incentives fair while discouraging tactics that create future firefighting.
The people question for Vol 006 is blunt: if a team member wins under the current incentive structure, does the business also win after refunds, delays, rework, and collection reality are counted? If not, the plan is motivating effort while mispricing outcomes.