A New Perspective on Employee Motivation. How a Hiring Mistake Can Cost Lives

AVAlexander Volchek

My personal goal is to earn a lot of money. My personal goal isn't to bring happiness to clients. For many of you as owners, the people working inside the business are just things. Everyone around me, absolutely everyone, told me I was doing something completely absurd. Just freaking exploding. A business owner has an absolute right to do what they want. That's why a hiring mistake can cost you your life. Can incentives change the quality of an employee's work? Of course they can! You're on Alexander Volchek's channel. Here we discuss business, scaling, and growth, both for the business and for you as an owner, entrepreneur, or someone who wants to grow and find their next step. Be sure to subscribe to my channel and leave comments. I read, study, and look at everything myself. On this channel, we discuss scaling and partnerships a lot. I also spend a lot of time on how your business team, the employees working for you, have an incredible influence on your personal life, because your business affects your life and your employees move that business forward. That's why a mistake in hiring, selecting, or interacting with someone can cost you your life, your whole life.

Appoint the right director, and they bring tremendous growth and results. Perhaps they did it together with you, but you achieved a result. Appoint the wrong director, and you lose everything: it all falls apart and doesn't work out. Everyone around you says you're a worthless entrepreneur, a bad businessperson. In reality, some director in your company brought it about. They had an enormous influence. That happens very often. One of the main tasks in working with people is—

in working with people, it's the incentive system you agree on for working together with that employee. Let's consider three parts of an incentive system, plus perhaps ten or fifteen other smaller points that have an influence. We can put them under the heading of incentives so we have common terminology. There's the person's base salary: a fixed amount they earn each month. We're mainly considering the majority of people who work at one company. The second part is some kind of bonus. Bonuses can take any form: daily, weekly, monthly, quarterly, annual, or every five years. A bonus for certain events, or stock options. Everything involving any kind of bonus or reward. The third major part of incentives is what's called, at least in the Russian-speaking world, a benefits package. Various perks and extras for people: a pool, a gym, apples, coffee, refrigerators in the office, a ping-pong table, events and activities with employees, gifts for children for New Year's, gifts for International Women's Day on March 8. All those sorts of things. Trips together, outings, company parties. That whole third, additional part. How strongly do incentives affect people's results? Remember, people's work has a very strong influence on the business.

The business strongly affects your life, so your employees' work affects your life. How much do incentives change a person in terms of how they move forward and what they do? In reality, the influence is direct. What does direct mean? It means the influence is incredible. I always say I probably offer ideas with the same quality, stra—

ideas and strategy, take actions, write, I don't know, texts or technical specifications, communicate with people, clients, and partners—I do absolutely any of these things with the same quality. When I'm creating, producing, or working, I don't do it better or worse, or communicate with a partner or client better or worse, because of the incentive system I have. Basically, people act the way they act. Yet if you look at the longer term, at the circumstances more broadly, my incentives shape a particular strategy within me. But importantly, if I'm acting as an employee, incentives aren't the primary factor in my own decisions. The goal I've set always comes first. For example, I set a goal that what matters most to me is a large monthly salary. If that's what I've said, it means I want to earn, for example, $200,000 every month. Or someone comes in and says, “I want to earn $8,000 a month and definitely have another $20,000 in bonuses every month.” A person sets that for themselves and says it's what matters most. For someone else, what matters most is the professional work and activity they do overall.

Someone says, “The most important thing to me is that, as a programmer, I write interesting, great code. Or that, as a salesperson, I sell particular things. Or that, as a person who shoots video, a videographer, I work in different great locations with interesting people.” The product matters to them. I've explained in other videos that many people have an entirely different goal and priority. Sometimes a wife or husband makes the decision for your employee or candidate. A wife comes in and says, “You'll choose this job.” And depending on—

“You'll choose this job.” Depending on whether the wife tells her husband at home—your employee—that his job is great or terrible, he'll work completely differently and perceive the job completely differently, because she hammers away at it and influences it every day. There's an initial, primary goal, and then incentives follow that goal. I'll give you my own example. I managed a fairly large company as its CEO. I didn't own it. When I started, the company's goal was to grow enormously in order to increase its valuation. That growth and valuation were connected with where and how, in which market, the company would receive that valuation, for example through a public offering, finding particular investors, or something else. The company wanted to make the asset's value incredibly high. Say that when I started, the company was worth $200 million. The task was to make it worth $1 billion. As for what mattered most to me personally—that was the company's main goal. I came to work there, and my incentive system aligned precisely with that goal. How did it align?

I had a stock option conditional on the company reaching a particular valuation, say $1 billion. I would earn, for example, $10 million, $20 million, or $30 million. My earnings were clearly defined. A very clear connection. The company has an overall goal: it has to be worth a certain amount. There are clearly defined parameters for what that means. Then there's a trigger: when those parameters are met, the trigger fires, and I personally receive—

my incentive payout as a result. My work at the company is very clearly tied to this goal. My personal goal aligns with it. My personal goal is to earn a lot of money. My personal goal isn't to bring happiness to clients. It isn't to make my wife happy at home. It isn't to enjoy the professional work every day. It isn't to conquer the world. It isn't to have a great team, a great office, or a great benefits package. I had just one personal goal: earn a lot of money within this particular arrangement. Even the amount was more or less clear. At that point, this was an extremely well-designed incentive system for a CEO. Incredibly well-designed incentives for a CEO. I focused only on that and moved only within that range. It's like entering a corridor and walking along it together. My corridor aligned with the company's corridor, which rarely happens between an employee and a company. There are always some differences in interpretation, but here everything was very clear. It was a large business, and everything was very clear.

Some time passes, and after a year and a half the company's goal changes. How much it's worth becomes less important. Moreover, even if its value still matters, the parameters used to calculate that value change, and other parameters become important: profit, political considerations, its competitive significance as a market leader, or its position in rankings. What happens to me at this point? As the company changes, its large, varied, complex shareholders change that goal, of course without discussing it with the CEO. Are there situations where they discuss the goal with the CEO? Yes. But in this case, the owners changed it, and there were many owners: five, six, or seven different combinations of structures, which also among them—

combinations of structures that negotiate separately and independently among themselves, changing all this between themselves too. When all these owners change it among themselves, I, as an employee—I'm the CEO, an employee—receive the news that the goal has changed. They come and start offering me completely different incentive systems. Actually, they don't even come and offer incentive systems. What happens to me? I see that our paths have diverged. I see it immediately, while I'm moving forward. I have a task and plans. The owners roll out completely new plans for you, but they have an entirely different goal in mind. Essentially, they communicate that goal to you without aligning it with you. I'm describing an absolutely real case. Before, they aligned it with me very clearly, and we moved in lockstep. Now the goal arrives out of alignment. What does an out-of-alignment goal mean? Imagine the owners are out of alignment with the CEO. Within the ownership group, their goals are also out of alignment. There are also lots of other executives and teams with their own personal goals, and they're out of alignment too.

All this misalignment just starts freaking exploding! It's a volcano. There's a volcano erupting inside everyone. Incidentally, people rarely know how to negotiate properly or examine things in such situations. What do I do as a CEO and as a person? I start aligning my corridor as closely as possible with the company's corridor in terms of the goal. At some point I understand—and this matters—that the company's priority right now is profit, while my priority is earning money. I start doing everything to earn money. I operate in a money-earning mode, but my earnings are only loosely connected with the company's goal. First, the company's goal is ephemeral, unclear in reality. It seems we need to earn money, but also the company needs to—

It seems we need to earn money, and the company needs to be valuable, and it needs to be a market leader. Then there's also a bunch of shareholders who can't agree among themselves. I understand that, in this situation, the only thing I can do is concentrate and listen to myself clearly, knowing that as CEO I need to earn money. I have principles on which my work is based: be honest and remember the clients. It's important that my team earns money alongside me, because everything has changed for my team too. Everything has changed for my team's team. For my team's team, everything has changed. For many people, everything has changed. There are also tens of thousands of clients affected by it all. Lots of partners and contractors are affected too. It affects an enormous number of people. I focus on my goal and start aligning, adjusting, and negotiating my incentives as closely as possible around my personal goal, understanding that my personal goal won't fully align with the company's goal, because that's impossible.

As CEO, that allowed me to do something positive for the company, accomplish its task, and do something positive for myself. It sucks that the owners and shareholders didn't actually hear, know, or feel this, and didn't really want to know. For many owners, and many of you as owners, the people working inside the business are just things: apples, kettles, tables, things. They see them as material. That's a huge mistake, because the people we hire onto our team—whether it's the CEO, COO, marketing director, sales director, CTO, HR director, or finance director—determine, remember, our lives as business owners and businesspeople. Our lives depend on them. Unless you have eighteen businesses. In those situations, different—

outcomes can occur. Always remember that. First, you need to understand the goal of the person working for you. Understand that manager's goal, for example; listen to them a little, hear them, try to align with them, and don't just defend your own interests. These incentives determine how the person will work, act, and make plans. Of course, I won't get into how unequal the world is, both socially and in business. There are many teams whose business owners say they're about people and providing value. Yet they may earn millions and billions while their employees don't earn money. That's their right, their absolute right. But understand clearly: if you're a business owner earning $1 million in net profit every month, and a director working for you earns $1,000, that director probably thinks in thousands of dollars, certainly not millions. The probability that a director earning $1,000 thinks in millions is very small. It happens. It does happen.

There are people capable of thinking on a large scale while earning little, because the scale of your thinking, your inner scale, isn't always directly connected with money. Not at all. But there's something strange about the exchange of energy here. There's a certain dishonesty in it, and as a business owner you'll very often lose because of it. A person is afraid to share. A couple of weeks ago, I asked someone an interesting question: “Listen, which is better for you: owning a company where you have 100% and earn $1 million a year, or owning a company where you have 30%—

but the company earns $100 million a year?” What does that mean? He earns $30 million. He says, “Of course it's better to own 100%.” I say, “Wait, once more. You own 100% of one company and earn $1 million. Here you own 30% and earn $30 million.” He says, “Yes.” I say, “You earn thirty times more here, and in theory you should work less, because you have less responsibility. Here you're solely responsible for that million dollars you earn. Everything depends on you. At least you're the sole owner, responsible for the business. There, you have 30%, not even a majority stake—well, perhaps a majority if there are fifty other partners. But if there's another partner with 70%, that's fantastic! Less responsibility, less importance, less of everything, and thirty times the earnings. That's great! You can even choose what to do.” He looks at me, and things don't align in his mind. He can't reconcile them, because ownership matters to him, significance matters, this particular sense of things matters. He says, “Yes, Sasha, of course I know these things.

It's better to own 1% of Apple than 100% of this small business.” I say, “What do you mean, 1% of Apple? What are you talking about? You'll never own 1% of Apple in your life, because 1% of Apple is $30 billion. And you don't have to work at all if you own 1% of Apple. You just have it. Not only is it worth that much, it also generates profit.” There's simply a disconnect in his mind. He can't combine and calculate these parameters and draw normal, reasonable, calm, honest conclusions. That particular connection isn't there. An acquaintance of mine lives in Spain. She says, “Listen, you live in the Valley.” I live in Silicon Valley in the U.S., a little south of San Francisco, where all the world's technology companies are located. Incidentally, California isn't just a leading economy in the U.S.; it's the world's sixth-largest economy. Two Russian Federation budgets—

within a single state, California, in the U.S. My acquaintance says, “It's so expensive where you are. Housing is so expensive, and taxes are so high.” I say, “Listen…” She has four children, I have four children, she has four children. I say, “You live in Spain. Do you pay for your children's schooling?” She says, “Of course. School costs money. It's a private school, you pay for it.” I say, “How much does it cost?” She says, “School costs $1,500 or $2,000.” I say, “Multiply that by four children and it's $8,000. Because I live in exactly the right place, a good, right ZIP code, yes, my house costs more than yours in Spain, for example. My taxes are higher. But my children attend the best American schools for free.” She's standing there, and the connections start changing for her. She says, “Am I understanding correctly? You pay for insurance in America, for example. I pay much less for insurance in Spain, but I pay for school, while you don't pay for school there.”

In business, too, many different factors affect how people interact and what they agree on together. Look inside yourself. As a person and business owner, how much do I—or you—understand that other people, partners, and other strong employees on your team deserve to earn good money, because that helps you grow, helps your business grow, become effective, and generate a lot of money? Or how much money might you currently be missing out on, even if you earn very well and say, “Actually, I earn $1 million”? You may already have lost a huge market because you have the wrong team, because you and someone couldn't agree on their salary. I've been in business and professional work, in technology businesses, in educa—

professional work, technology businesses, education, and different businesses. I now have more than twenty business areas, and I've been doing this for twenty years. The way my life has worked out makes me incredibly happy and grateful. It gives me real steadiness: I've had my own businesses, or been an owner of a business, both a majority and a minority owner. At the same time, I've often been in management, holding some role at a company, such as director or CEO, both when I owned the business and when I didn't own it at all. I had nothing in it, just a salary. I'm completely comfortable with that. You can run your own business or work as an employee. Both are incredibly interesting and great in life. I was CEO of Megaplan from 2010 to 2012. In 2012, I received an offer to become a partner in Business Molodost. Business Molodost was a small company making $200,000 a year. In 2023, we were already making $20 million. “Come join the partnership.” I joined. There were three partners, each with one third.

It took shape, and by 2013 I already owned one third of Business Molodost. When I managed Megaplan, I was its CEO. I didn't even have a stock option. I had no option. I led the deal and sold Megaplan to 1C. 1C raised money from the Baring Vostok Capital fund and bought the company. As CEO, I received nothing. Many people ask me, “Where was your option? You should have had an option! It's a technology company, a task manager, a cloud service. You grew it from 10,000 clients to 120,000.” I say, “Listen, that wasn't our agreement.” I had a base salary and a bonus. At the time, my base was about $7,000 or $8,000, and my monthly bonus was roughly $7,000 to $8,000. Now I'm leaving. That's it. I've already said I'm leaving. Why am I leaving? They ask me why. I say, “Well, here I have a chance to earn $200,000 in three months, because I signed a declaration that I'd buy a $200,000 car, which I actually did in June 2011.

But the overall goal is, well, I could earn a million dollars, and I won't earn that here.”

Earn those dollars, but I probably won't earn them here. They tell me, “You know, very few people earn a lot of money.” The CEO of 1C says to me, “You've asked for a rather large base salary. You've asked for quite a lot of money.” I'm standing there, and at that moment I had a very strange feeling. There's a company worth tens of millions of dollars. When I was selling it as CEO, preparing all the budgets, plans, and everything, we planned for it to be worth half a billion dollars in five years, meaning in 2017. As CEO, I say, “Listen, could you design the right incentive system for me: pay a good base salary and give me a huge bonus depending on meeting the plan? Share a huge bonus with me.” Again, can you pay a CEO $20 million if the company becomes worth half a billion? We grow from, I don't know, $20 million to half a billion, adding $480 million. Can you give $20 million of that $480 million to the CEO? I think, hell yes! I'd even give $40 million if it happened. Someone says, “No, you can't! What are you talking about, $20 million? What CEO? Why give him $20 million when he earns $170,000 or $200,000 a year?

Why give him $20 million? He earns $200,000, which is 1% of $20 million. Why? We could give him another $200,000, for example.” Many of you listening, remember yourselves in the different roles you've held. But the paradox wasn't the bonus that should be paid for achieving a particular big goal. The paradox was the base salary. Let's pay a base of $10,000 instead of $7,000, or $12,000 instead of $10,000. The paradox was that this base salary was considered large. What are we measuring by? As business owners, we measure by some strange state of our own. How much can I pay another person, because in my own life as a business owner I don't spend money, for example? Perhaps I don't know how—

perhaps I don't know how to spend it. Or the business owner has never worked as an employee and earned money that way. “I've always employed people who earned little, even if I earn a lot as the owner.” Or, “I once worked somewhere as a director earning $3,000, so why the hell should I pay him $10,000?” A severe disconnect begins because of you as the business owner or manager. An employee comes to you, and you don't want to pay them because you don't know, aren't even worthy, lack the ability, or don't understand how to earn that much yourself. There's a disconnect. Your ego eats up money that doesn't even exist yet: future options, future bonuses, or some tiny part of that salary or that knowledge. Especially when people like this turn up and say these things. It's very funny, and at the same time it makes you want to cry. In reality, in 2012 I was calmly, completely open to reaching an agreement and moving forward together. When I left for Business Molodost, I was stepping into the unknown. The company was on Tverskaya Street, on the seventh or eighth floor of an ordinary residential building.

They rented an apartment, and people walked around it in slippers. Fifteen people worked there. Absolutely nothing was organized. The company had little monthly revenue. I think half its revenue was simply the salary I earned at Megaplan. But they didn't just show me a carrot. They said, “This isn't a carrot; it's a whole garden that will be yours. If you join our partnership, together we'll earn money and everything will be fantastic.” That's exactly what happened, because those people, those partners, were incredibly open that year, very open. I was able to hear them. A huge thank-you to myself for being able to hear them, accept their offer, and hear it, because everyone around me, absolutely everyone, told me I was doing something completely absurd.

I was running a market leader, building enormous partnerships. At all those exhibitions, we were leaders, speaking everywhere. You're in that corporate segment. Who are these people, some small education company doing something? Moreover, at that time I didn't have big financial expectations. I didn't know how to earn large amounts. I didn't know what big money was; I hadn't felt it or seen it. So at that time we could have had a good, normal conversation and reached a great agreement together. Megaplan, of course, never became worth half a billion dollars. I'm not saying I would have taken it there. Everyone can draw their own conclusions. These examples aren't intended to blame anyone, because a business owner has an absolute right to do what they want, provided it's within the law—even if it doesn't fit your principles, spiritual principles, or principles about humanity's progress. That doesn't mean I'll work with such people, or that everyone will work with me. But a business owner has the right to do what they want. They can hire all one hundred people for free and say, “You'll work because you're working with me.”

That's their right. I'm showing you, as a business owner, manager, or future business owner, how to look inside yourself and ask where you can make different team decisions in order to scale. Get your ego the hell out of the way, put aside your desires, whims, circumstances, and endless attempts to prove who knows what for who knows why. Focus on wanting to scale and grow, knowing that an incredible source of growth is the right incentives for your employees. It's—

your employees. It's the right incentives for your team and the ability to hire people properly. Leave your questions in the comments about hiring, different situations, comments, or difficulties. My name is Alexander Volchek. You're on my YouTube channel, where I try not just to describe my life experience, not just to share what I know without experience, and not just to discuss management techniques, systems, scale, sales, marketing, finance, management, HR, partnerships, and development. I try to give each person individually, personally, the opportunity to hear their real, personal next step at this moment, in the place and circumstances where they are. What is the right next step for you as a person or business owner, depending on your current role—and there are always many roles? What step should you take now? What should you do to scale, scale your business, grow many times over, and grow as a person? Because it takes a person who operates on a large scale to scale a business. To grow. Be sure to watch the earlier videos, visit my channel, subscribe, leave comments, and like the videos.

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