How Leadership Rewards, Shapes True Company Culture
Key Takeaways
- Company culture is shaped by daily actions, not slogans.
- Rewarding the wrong behaviors will discourage high performers.
- Leadership must align rewards with true company values to build trust and accountability.
The Scene: When Reality Conflicts With Culture
08:00, Friday, New York, Broad Street: I couldn’t believe what I was hearing. I could see my teammates swaying uneasily at the back of the crowd, shifting their weight left, right, left, right… We all felt uneasy at what we were witnessing.
The executive was standing to the side of the 150-person congregation at the weekly department meeting. They stood there, avoiding eye contact with the team. This was a leader who had been with us for over a year but hadn’t bothered to learn everyone’s name. Half the crowd looked like strangers. The executive never seemed comfortable, a non-leader thrust into a senior leadership role, confused about what it meant to truly lead. They couldn’t understand why the team wouldn’t follow simply because they were told to.
Standing just outside their office—oh, how they loved that office—this was their symbol of power, their safe space, a place to close the door and hide away. Right now, standing just outside in front of the team, they felt exposed and vulnerable.
I looked at my teammates, an amazing group of people. We were labeled the ‘crazy ones,’ and we wore that like a badge of honor—because we were the crazy ones who customers raved about. Our service, our product, and the speed at which we delivered solutions had set us apart. Right now, however, the team was uncomfortable with what was unfolding before us.
This executive was old school—relying on Gantt charts and status reports, most of which were in the red. Our “new crazy ways” of leading—empowering, trusting and caring—scared them. It represented the end of an old, outdated way. Our green status and glowing customer reports confused them.
The Misaligned Rewards: Celebrating Failure Over Success
My eardrums burned from the words I was hearing. “Last month, we spent the most we’ve ever spent!” They paused awkwardly, looked up, and started a group clap. I often felt that a public reprimand was about to happen, but it then turned into a celebration.
Apparently, spending a lot of money was considered a good thing. I was confused. My team was confused. “Was spending money really the measure of value?” Our Lean-Agile philosophy drove us to do more with less. Being under budget was a good thing for us. It gave us more time to deliver even greater value to our customers. Year-to-date, we were tracking $200k under forecast spend and had delivered more value than was forecast. The rest of the company was saying they needed more delivery like ours—and here we were, listening to this.
“We missed our ‘spend goal’ by $200k,” the executive said. Then they shot me a death stare. “Otherwise, we would have had a perfect month.”
Wow.
We were delivering a $175 million change portfolio. Every other program was massively over budget, delayed, and cutting value from their plans as fast as they could. Hey, they had spent a lot of money, and apparently, that was a good thing.
“Last weekend, we had another company-wide systems outage. Would the following people please come to the front?” Uh-oh, here comes the public execution. One by one, they walked to the front, like puppies waiting for dinner.
“Let’s all thank these people for a wonderful job. They worked hard on the weekend to restore the system,” they said.
Applause and back-patting ensued.
This was the third company-wide system outage in six months. The last one brought the entire company of 2,500 people to its knees. The 32,000 customer calls we received each week were routed to a recorded message because we couldn’t help. Half the company was sent home with nothing to do. No invoicing was produced. The company had been brought to its knees. In 30 years, I had never seen outages like this.
Now we were all confused. This team’s job was to keep the systems running, to do everything they could to achieve uptime. Instead of accountability, they were rewarded for simply showing up. Had they been rewarded for implementing improved controls through continuous improvement, or upheld company values, we would have understood the reward. To us and to the other high performing teams it just looked like these people were being rewarded for turning up.
A team member spoke up: “I’d also like to present an award. Would so-and-so please put their hand up?” The person being celebrated had worked hard recently, and this was the same individual responsible for a project that was millions of dollars over budget, four years late (it was originally a six-month program), and had just slipped another 12 months… and t hey, let’s reward busyness.
Again, the congregation cheered and clapped. I could hear agile fairies dying, entire agile communities groaned in disbelief. This had gone from bad to worse. I checked the time on my phone: five minutes until the meeting was over. 35 minutes until the markets opened and we could do our magic again.
I could feel my team staring at me, “Get us out of here, Steve—just say the word.” They were like racehorses at the gate, longing to get going, to see how good they could be today.
We had just been scorned for being ahead of schedule and under budget, while failures were being celebrated. The meeting ended with the call, “Any more business?”
Silence.
“Great meeting, everyone. Let’s see if we can spend more next month!”
“Great meeting?” “Spend more next month?”
Wow, wow, wow.
The Real Impact of Poor Recognition
We were the first to get to the lifts. No one said anything. It was a quiet ride back to our floor.
The rest of the morning, I noticed a few exceptional performers from other teams had lost their spark. These were the people who should have been rewarded. “Be careful what you reward, I thought.”
The rest of the team, the average performers and the under performers had all just been given a lesson that distorted their definition of high performance. I felt sad for them because a clear definition of high performance is the first step in becoming a high achiever.
Our team tried hard to educate the other teams, to demonstrate and explain how a few simple changes in mindset and actions can make such a huge change in team and individual performance but all they saw was us getting smacked and the wrong behavior receiving praise. I don’t blame them. Their leadership was letting them down.
I was so proud of my team as we walked into the project area. They all looked at the guiding principles on the wall. It had been a long road; this team got it. That’s when I knew we had to share our ways with the rest of the world.
That afternoon, we celebrated our own awards—specifically designed for peer recognition based on exceeding expectations aligned with our principles. It was an extension of the Agile Manifesto, Agile principles, and Lean methodology.
The Lesson: Culture Is Defined by What You Reward
Culture is not what is written on walls. Culture is what you do every day and how you do it. Culture is determined by what you reward.
Enron had “Integrity, Communication, Respect, Excellence” chiseled into marble in their main lobby. After their collapse, analysts determined that rewarding “getting the sale” rather than “getting the sale by following company values” was a major contributor to their downfall. Integrity declined, communication ceased, respect failed, and excellence waned—then it all went bust.
Reward the wrong things, and you’ll eventually pay the true price.
As Robert Barron of RoundAbt said…”The board got what they recruited.”
Actual company values are created and embedded by what is rewarded.
Aligning Rewards with Values
How does your organization align its rewards with its true values? Share your experiences in the comments below or explore our insights on creating a culture that delivers real value to your customers.
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