DeepSummary
Alex Hormozi discusses an innovative approach to performance management and compensation structure that drives higher outcomes. The concept involves offering a portion of an employee's compensation as variable pay tied to personal goals they set for themselves. These goals must align with the company's overall objectives and be quantifiable.
By allowing employees to have autonomy in setting their own goals, combined with social pressure from sharing their goals publicly within the team, it creates a self-correcting mechanism where employees are motivated to set ambitious yet achievable targets. This approach fosters a sense of ownership, progress, and growth for employees.
Hormozi highlights the benefits of this strategy, including increased motivation, job satisfaction, and reduced employee turnover. It applies to both sales and non-sales roles, enabling employees to feel like they are contributing to the company's growth, even in positions not directly tied to revenue.
Key Episodes Takeaways
- Offering a portion of compensation as variable pay tied to personal goals set by employees themselves can drive higher performance and motivation.
- Employees setting their own goals, combined with social pressure from sharing goals publicly, creates a self-correcting mechanism for ambitious yet achievable targets.
- This approach fosters a sense of ownership, progress, and growth for employees, even in roles not directly tied to revenue generation.
- By allowing employees to feel like they are contributing to the company's growth, this strategy can increase job satisfaction and reduce employee turnover.
- The personal goals set by employees must align with the company's overall objectives and be quantifiable.
- This innovative approach leverages principles of autonomy, social pressure, and a sense of ownership to drive better outcomes for both employees and the company.
- It applies to both sales and non-sales roles, enabling all employees to feel like their contributions matter and impact the company's success.
- Creating an environment that promotes employee fulfillment and growth can lead to a stronger and more successful business overall.
Top Episodes Quotes
- “If everybody on the team has to say what their personal goal is and they get to set it, and if they hit their personal goal, as long as it's aligned with the company goal overall, if they set that goal, they can set it as big or as little as they want, what happens is that the social pressure of wanting to set good goals automatically self corrects.“ by Alex Hormozi
- “And so this gives those roles the opportunity to feel like they are contributing to the overall growth of the company and have something in the balance that matters.“ by Alex Hormozi
- “But if you can create an environment that increases the likelihood that they feel that way, given a normal human construct, I think that you're going to build a better business.“ by Alex Hormozi
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Episode Information
The Game w/ Alex Hormozi
Alex Hormozi
1/29/24
It’s about allowing them to have complete control over their goals. Today, Alex (@AlexHormozi) explores an innovative approach to performance management and compensation structure that drives higher outcomes. By leveraging variable compensation tied to personal goals aligned with company objectives, the strategy fosters motivation, job satisfaction, and reduced employee churn, benefiting both sales and non-sales roles.
Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.
Timestamps:
(1:12) - The concept of variable compensation
(3:18) - The power of autonomy in goal setting
(4:32) - The impact of social pressure on goal setting
(5:53) - The benefits of this approach for employees and the company
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(This episode is a re-run. Original airdate was December 21, 2021)