Need for the Longer Term View

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In the previous post I mentioned some thoughts that came out of the article, “Moon Shots for Management.”  There are a couple other quick thoughts that I would like to mention in the following two posts.  First, there is the idea that incentives need to provide for the long term!

Stretch executive time frames and perspectives.  Compensation and incentive systems often truncate executive time horizons and skew perspectives.  For instance, research suggests that most executives wouldn’t fund a viable new initiative if doing so reduced current earnings.  Building new incentive systems that focus executive attention on creating long term stakeholder value must be a critical priority for management innovation.” (6)

Too often in for-profits, non-profits, public school districts, and even congregations, financing and decision making is tied too much to the short-term budget decisions without putting equal weight and value in the long-term health and possibilities for the organization.  By focusing solely on the short term there is little room for innovation, creativity, and collaboration.  In a congregation, for example, keeping decisions and discernment closely tied to current budget limitations may have the benefit of “living within one’s means,” but it also may have the limiting effect of living out of “scarcity” and not stepping out in the faith of God’s abundance.  Without a view of the future possibilities, why would people be willing to give more of themselves- their time, their money, their lives and passions?  They might be willing to give some, but there is little motivation and willingness to support beyond a basic level because they would struggle to see the long term value of the congregation and the work the congregation is doing and may be led and called to be doing.  This relates to non-profits within their acts of fundraising as well and how they must effectively fund-raise by tying the individual donor with the long term story and mission of the non-profit’s work and purpose.

I am not saying we should ignore all short term budget situations, or remove short term budget based incentives.  What I am advocating is for there to be some created balance between the long and short view.  You can’t be a very effective or sustainable organization without both.  So, what do you think?  How would you create incentives for long term growth and value?  How would you combine that with short term incentives as part of a cohesive incentive structure?

SOURCE:

Gary Hamel, “Moon Shots for Management,” in Harvard Business Review, (February 2009), 6.

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