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I’m quite fascinated by the simple self-funded incentive model mentioned in Brad Hams book Ownership Thinking. In the nutshell, first you make sure that all of your employees are ”in the business of business”, meaning that they have access to, and understanding of company financial situation. Then, you decide a profit sharing plan where a certain portion of company profit is divided to all employees (either the exact same sum for everyone, or in proportion with each existing salary).

Very simple, avoids most local optimization issues and encourages teamwork. Basically a simplified shareowner model, without the shares. Some caution must still be taken to avoid short-term thinking in potential payouts if they happen in large batches.

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