Aligning Incentives

Aligning incentives means ensuring that the goals of different parties involved in a situation or relationship are closely matched so that everyone benefits from working toward the same outcomes. When incentives are aligned, individuals or organizations are motivated to act in ways that support shared objectives, leading to better cooperation, efficiency, and overall success. For example, a company might offer bonuses to employees based on company performance, encouraging everyone to contribute to its success. Properly aligned incentives help prevent conflicts of interest and promote actions that are in everyone’s best interest.