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Why Someone With Skin in the Game Will Perform Better
- Jan 26, 2024
The concept of "skin in the game" refers to having a personal stake or investment in the outcome of a situation. When someone has skin in the game, it means they stand to gain or lose something based on the success or failure of a venture or decision. This principle is often associated with improved performance and decision-making. Here are several reasons why individuals with skin in the game may perform better than salaried employees. Alignment of Interests: When individuals have a personal stake in the success of a company, their interests are directly aligned with those of the organization. This alignment often leads to a stronger commitment to achieving positive results.
Alignment of Interests: When individuals have a personal stake in the success of a company, their interests are directly aligned with those of the organization. This alignment often leads to a stronger commitment to achieving positive results.
Risk Awareness: Having skin in the game increases one's awareness of potential risks. Individuals with personal investments are more likely to carefully assess and manage risks, as they directly bear the consequences of poor decisions.
Motivation: The prospect of personal gain or loss can serve as a powerful motivator. When individuals have a financial stake, they are often more motivated to work hard, innovate, and contribute to the success of the organization.
Accountability: Personal investment fosters a sense of accountability. Knowing that one's own resources or reputation is on the line can encourage responsible decision-making and a heightened sense of ownership over outcomes.
Entrepreneurial Mindset: Having skin in the game promotes an entrepreneurial mindset, encouraging individuals to think creatively, take initiative, and seek out opportunities for improvement. This can be especially valuable in dynamic and competitive environments.
Long-Term Perspective: Salaried employees may focus on short-term objectives to meet performance metrics, while individuals with skin in the game often have a more long-term perspective. This can lead to more sustainable and strategic decision-making.
Resilience in Adversity: Individuals with skin in the game are often more resilient in the face of challenges. The personal investment can drive them to persevere through difficulties and find solutions, as the stakes are higher for their own well-being.
Innovation: The sense of personal ownership can drive a desire to innovate. Those with skin in the game may be more inclined to explore new ideas and approaches to improve outcomes, as their success is tied to the success of the organization.
If you are a business owner deciding to get in a GM so you can step back you may want to consider instead getting a Business Partner with skin in the game. Skin in the game is a powerful motivator.
Mike Warmington is a Director of Platform 1 NZ Ltd who specialise in using executive search techniques to find people with capability and capital for SME business owners wanting to transition.
