The Lie We Tell Ourselves About Money

And Why Performance-Based Pay Sucks!

There’s a dangerous lie we keep telling ourselves in business.

That money is a motivator. That it brings alignment. That it drives performance.

Bullshit.

I've seen firsthand how money — specifically, performance-based compensation — doesn’t just fail to motivate people. It destroys culture.

And I say that as someone who has tried every variation of the "incentive" playbook. I've run teams in advertising where bonuses were structured down to the decimal. I've built and scaled a company where we experimented with variable comp, team bonuses, individual performance bonuses, shared upside — you name it.

Not once did it build a healthier team. Not once did it make people feel more connected to the mission. But it did something else: It made people compare. It made them resent. It made them distrust each other — and me.

Let me explain.

The Bonus Delusion

We’re taught this classic MBA myth: “Align your employees with company success by tying a part of their compensation to performance.”

Except most employees — let’s be real — have very little actual influence over the company’s financial performance.

You think a junior designer or researcher has real control over revenue? Over EBITDA? Over strategy?

Let’s stop pretending.

This idea that “every touchpoint matters” sounds great in an HR memo, but it’s nonsense in real life. Great work from a junior employee might brighten their manager's day — and that matters. But they’re not driving acquisition. They’re not building the product. They’re not making strategic bets. And yet we ask them to ride the same emotional rollercoaster as the CEO when quarterly numbers fall short — and then act surprised when morale tanks.

If anything, performance based comp should be highest at the top, where the strategic levers actually sit. Why should employees lower down the totem pole have to bear the cost of mistakes made at the top? But no — what happens in most orgs is the exact opposite. Executives get guaranteed salaries and bonuses, while the people doing the day-to-day grind get peanuts and volatility.

It's not just illogical. It's broken.

Culture Decay in Real Time

Here’s what I’ve seen happen — over and over again.

You roll out performance bonuses thinking it’ll drive accountability and focus. For the first quarter or two, things look fine. Maybe even great. People are talking about “hitting targets” and “stretch goals.”

But then the comparison game starts.

Someone on the team finds out they got less than someone else — and suddenly that number isn’t a bonus, it’s a verdict. “Do they think I’m worth less?” “How did they get more when I worked harder?” “I crushed it — and this is what I get?”

That number becomes the story. It rewrites everything else that happened during the year.

Even worse, when the company has a bad year — for reasons way outside any single person’s control — you’re now punishing everyone with smaller bonuses. Or none at all. And in doing so, you’re effectively saying:

“You didn’t work hard enough.”

That’s how you lose people. Not just to other jobs — you lose their belief in the mission. You lose their trust. You lose their desire to try.

Founders, Listen Closely

This is especially important if you’re a founder going through growth right now.

You’re hiring. You’re formalizing roles. Maybe raising capital. And suddenly you’ve got advisors or investors telling you it’s time to put in place a “performance-based comp model.”

It sounds smart. Strategic. Even necessary.

But here’s the truth no one tells you at that stage: performance bonuses are not a leadership shortcut — they’re a leadership tax.

They cost you in morale, culture, and time spent managing perception instead of reality.

You’re at a crossroads. The systems you build now will become your company’s operating system for years to come. Choose carefully.

Because once you introduce comp as the lever for motivation, it's hard to undo. You're not just building a company — you're building the emotional architecture your team will live in.

Make sure it's somewhere people want to stay.

When I Finally Got It Wrong (and Right)

I’m not preaching from a distance here. I made these mistakes myself. More than once.

In the early days of building my company, I thought bonuses were a great way to reward loyalty. We were lean, so I couldn’t offer big salaries — but I thought a strong year-end bonus would make up for it.

It didn’t.

Instead of gratitude, I got confusion. Disappointment. The dreaded comparisons. And as we grew, it only got worse. One employee told me outright: “I feel like the bonus killed the team dynamic.”

They were right.

It wasn’t until I finally had the courage to stop the bonus programs altogether — and simply pay people what they deserved, up front — that things changed.

We could finally stop talking about money and start talking about the work again.

And isn’t that the whole point?

Why It Feels Easier to Dangle a Carrot

When leaders lean on money to motivate people, it's usually because they don’t want to do the real work of leadership. There, I said it.

Because real leadership is hard. It means...

• Making every team member feel seen and valued.
• Understanding what makes them tick.
• Creating clarity about how their work fits into the bigger picture.
• Checking in often enough to give people feedback that actually matters.
• Listening, adapting, growing — even when you don’t have the answers.

That’s hard.

You know what’s easy? Writing a bonus formula. Plugging in some KPIs. Blaming the spreadsheet when people get upset.

Using money to compensate for the absence of meaning.

So What Should We Do Instead?

It’s not complicated. Pay people what they’re worth but stay within your means. Be transparent about how you make those decisions. Make sure compensation reflects the role, not just the output in a given quarter.

And then take money off the table.

Because when you stop holding the carrot, you finally get to see who’s running because they want to run.

And those are the people who will build something great with you.

Not because they’re chasing a 5% kicker. But because they give a shit. Because they want to do good work. Because they believe in what you’re building — and in who they’re building it with.

I’ve worked at places where performance bonuses were weaponized. I’ve led teams where they created division. I’ve consulted for companies where they became the source of politics and backchanneling.

And I’ve seen what happens when you drop the whole charade.

People stop counting. They start contributing.

And that, to me, is the only kind of performance that ever really matters.