Incentives Work: The 62-to-11 Ratio

The Real-World MBA

I took the classes at Texas A&M University that all business students take. I was fascinated by macroeconomics and Freakonomics just like everyone else. I even went to business school at Southern Methodist University and learned from some of the best educators Texas had to offer.

But I am still constantly fascinated by the practical, real-world knowledge anyone can gain if they just pay attention to the environment around them.

The $100 Challenge

Recently, I was at Los Sueños, the Marriott resort and marina in Costa Rica. I decided to take two of my high-performing executives out billfishing on my best friend's very large Viking yacht.

I have been around billfishing and Los Sueños for over 25 years. I know the unwritten rules. I know that sometimes, a boat captain will only motor out 15 miles just to save on gas.

So, I went directly to the captain and challenged him with a very specific incentive.

I told him: "For every billfish we catch, I will give you a $100 gratuity, completely over and above the customary 20% we give to the crew."

And sure enough, that captain motored out 25 miles, and we started catching sailfish and marlin left and right. After catching 62 billfish, I actually had to tell the captain we couldn't reel in anymore. Our arms were pure Jello.

The 62-to-11 Ratio

This is a stark, real-world example of how a direct incentive system can instantly change the productivity of an organization—even a small one.

To this day, I wonder how many fish we would have caught without that incentive in place. But here is what I do know for a fact: the average catch on that exact same day, by all the other boats at the marina, was 11 billfish.

We caught 62.

I love telling that story. It perfectly defines why Dale Ventures fundamentally believes in above-market salaries, robust benefit packages, and even paying for golf clubs and lessons for our C-Suite executives.

Pull Your Head Out

Incentives are the absolute key to motivating elite performance.

If you are a founder and you do not aggressively provide incentives for performance that goes above and beyond, then you should expect your organization's financial performance to be vastly less than its true potential.

Founders, pull your heads out.

You cannot demand 62-fish results on an 11-fish budget. Build the right compensation structure, explicitly reward the wins, and watch your team motor out to the deep water.

Incentives work.