James Dooley: Hi, today I’m joined with Mads Singers, and today’s episode is about how to create a great incentive structure for your team. Mads Singers: Incentive structure is one of the questions I get most often, particularly from small business owners and entrepreneurs. They are usually very eager to give away their business before they have even built one. My general approach is do not do that too early. I see a lot of people make the mistake of hiring someone and giving them equity straight away. They might have a small company with four, five, or ten people, and they want to hire a great marketing person. They go out and say, “Here is a salary plus equity.” My philosophy is simple. I would never give equity until I see that the person can deliver. The reason is simple. So many people have brought someone in, given them equity, and then discovered that the person was a complete failure. If you give someone equity early, getting rid of them later can be extremely painful, depending on how the contracts are set up. When it comes to equity, I always recommend waiting longer. Make sure people are fully bought in. Make sure they are delivering. I have mainly done this in situations where someone becomes a critical part of the business. That could be an operations manager, a senior marketer, or a salesperson. These are people who become so ingrained in the business that you simply do not want to lose them. James Dooley: I completely agree. For me, incentives are tied to certain goals, and part of that goal is time. I do not believe you can fully trust someone until you have worked with them through both good and bad times. It is easy to trust people during growth periods, but when times get tough, you really see how people react. Until I have experienced that with someone, I would never consider equity. For the businesses I am involved in, three years is the minimum. I would never give equity in a business that I know will have a specific value further down the line until someone has proven themselves over time. I think too many founders fail to value their business properly. If you are good at what you do and have a clear plan, you can raise capital without giving away huge chunks of equity. I see horror stories all the time where people give away 10, 20, or 30 percent far too early. What are your thoughts on timelines? I use three years as a rule of thumb, even though I know it depends. Mads Singers: I have never had a fixed timeline in mind, but thinking about it now, I have never given equity in less than three years either. I want to see consistency over a long period. I want to see ownership and responsibility. I want to see growth. That shows me the person is not just a one trick pony. Another important point is that business owners often see equity as the ultimate motivator, but for most people it really is not. Owning ten percent of something that has no clear value does not motivate most employees. I have worked with companies where staff literally handed equity back and said they did not care about it. That shows how little it meant to them. For me, incentive structures are about creating upside without relying on equity. People should benefit when the company does well. With sales teams, commission makes sense. Outside of sales, I do not believe in paying bonuses when the company is losing money. I prefer team based incentives. If the company hits certain growth targets, then the senior team benefits together. For example, if revenue grows from one million to three million, you might take two hundred thousand and divide it across the team. The key is setting clear goals with tangible outcomes. James Dooley: We have talked about equity and profit sharing, but there are many other incentives. I want to list a few and get your thoughts. Health insurance is a big one, especially for overseas teams. Extra holidays, bank holidays, or additional annual leave. Some people value time off more than pay rises. Others prefer a four day work week. Some companies offer gym memberships, team events, or trips. What have you found works best? Mads Singers: I like all of those, and this is where personality profiling is extremely valuable because different people are motivated by different things. Most entrepreneurs are motivated by money, but most employees are not. You can double someone’s salary and still get no extra effort from them. We focus a lot on practical incentives. For example, internet quality is huge for remote teams. When Starlink became available in the Philippines, we paid for it for some team members. It was a small cost for us but made a massive difference to them and to productivity. Health insurance is another strong incentive. We have also bought desks, chairs, monitors, and other equipment when we knew it would improve someone’s work life. We have done experiences as well, like weekends away with a partner as a reward. There are many incentives beyond money. For some teams, financial incentives still matter, especially commission based roles, but there is no single solution. The key is understanding the individual. James Dooley: Anyone watching this, let us know what incentives you have used, whether for in house or remote staff. What worked well? What did not work well? Mads, it has been an absolute pleasure having you on. Thank you very much.