Anita* was a model employee. As CEO of my previous tech company, I had hired her to take charge of our bookkeeping and administrative affairs. When Anita came aboard, I asked what she wanted in order to feel fulfilled at work. "Harish, I want to do such a great job that you'll want to pay me a six-figure salary and feel great about it." This was a bit of a stretch--it was hard for me to conceive of bookkeeping as a six-figure position. After doing the math, I saw how with the right mix of hard work from Anita and better systems, she could indeed earn a justifiable six-figure salary. I wrote a work-incentive plan that had Anita making her target salary after 18 months, if she hit the right benchmarks. "You'll be worth every penny if you make these goals," I told her. I gave her a lot of autonomy and leverage to get her work done well. Anita exceeded expectations, and hit every one of her targets within 14 months instead of 18, earning the six-figure salary she richly deserved. A success story, right?

Sadly, no. Two years after her initial success, Anita was fired. Despite clear subsequent targets and pay incentives, along with new assistants to support her, Anita’s ability to deliver declined. The once-star employee had deteriorated into an employee who filled only the basic job description and fought with me over minute details of her work plan, just so she could claim the monetary incentives. What happened to Anita? It took me several years of making the same mistake with others to figure this out. And it happens in all sorts of places, not just in entrepreneurial startups.

Archan* is a a guy that I've worked with in the past and think highly of. Archan just quit his $150,000+ per year job as a full-time search-engine expert for a well-known and growing web company. He had been working in his spare time for more than a year on a brilliant mobile app, something that could be a boon to business travelers. Archan had finally raised enough money to pursue this more fully. What did he have to lose? "If my product's not a success," he said, "I can always go back to the corporate world and get a job pretty easily.”

Archan’s quitting represents the same category of mistake I made with Anita a few years ago, and both are insidious because they represent a failure of understanding on the part of both parties--the employee and the employer. It represents a failure in relationship-driven leadership.

At the core of these failures is how leaders and entrepreneurs, and employees in turn, typically ask for accountability and are then rewarded. Money is the carrot (or some proxy for money, like vacation time, or a trip, or a bonus, that sort of thing). That works in an industrial operation where there are fairly time specific goals to be achieved. But the reality is, money isn’t as important as the relationship. This charming and insightful video from RSA talks of the research underscoring why this true. The long and short of it is, "pay enough so that money isn’t an issue, then give your employees high recognition, autonomy, and the opportunity to learn and grow," and watch them excel. Reflecting on this, I immediately understood my mistake with Anita, and I’ve started to see more of these mistakes in others today.

The six-figure salary threshold Anita wanted was the level at which she stopped worrying about money. Sadly, though, both Anita and I were conditioned to think of money as the main motivator, so we wrote her subsequent work plans with money as a continued focus. Had I known about the research in the video, I would have changed Anita’s work-incentive plan and oriented it towards those factors.

In my new company, I emphasize a relationship where I'm supporting the growth and personal goals of each team member, like getting them to a point (since I can’t always afford six-figure salaries for all!) where a team member is achieving compensation where they feel secure, and then spending a lot of time insisting on learning and growing, recognizing them for their results, and giving them the space to fulfill some of their entrepreneurial visions. I adore working with entrepreneurs and try hard to find those people who have big ambitions.

What about Archan? This one’s a little harder. Archan has a brilliant mobile app idea and demo, but all brilliant ideas and demos are worth little without execution. The missed opportunity is that his mobile app concept is aligned with a forward-thinking strategy for his old company. They could have both grown together. Unfortunately, as Archan himself told me, "My old company doesn’t care about me and my work, they just care about meeting short-term revenue targets." Although it made sense for Archan to leave and pursue his dreams, the alternative would have been for Archan to find a way to stay in his old company and bring his mobile app to the table there in some sort of symbiosis. Sure, this is a stretch, but a workable one.

In the past year, I've had a half dozen of my friends quit or prepare to quit their jobs in a bad economy--well-paying, high-profile positions--to pursue their entrepreneurial vision. These friends have all contemplated taking tremendous risks and are brave to face the high odds against success. I'm feeling sad that each, had they had had a better relationship with their companies and comrades, could have found success and support for their visions within the context of their old companies.

I’ve changed the way I operate, and I’ve been (so far) successful at supporting the entrepreneurial visions of the people I’m working alongside, going so far as to keep them on payroll and working and making introductions to ensure the success of their product idea. I’m also trying actively to find ways to integrate what they want to do with my company’s services and products. I figure that if they’re stronger, have autonomy, and are learning and growing, their being successful will ultimately help me. This has been a difficult and uncomfortable shift in thinking, but so far, it’s been good to see the results. My work is more meaningful, and more profitable, as is theirs.