What Founders Reward Eventually Becomes the Culture

Over the last few articles, I have been writing about purpose, values and culture. Now, after almost twenty years of working across companies and building my own businesses, I have started seeing a simple connection between all three. Employees may listen to what management says, but they understand the real culture of a company by watching what gets rewarded.

A company can say that ownership matters, customer experience matters and collaboration matters. But people will still look at who gets promoted, who gets appreciated, whose mistakes are ignored and what kind of behaviour helps someone move ahead in the organisation. That is where the real message comes from.

I can remember something from the middle of my career, when I was managing a technology team. We were responsible for applications used by clients, and many times an issue in the application would actually be caused by something outside our immediate team. It could be infrastructure, network, database or some other technical layer managed by another team.

In such situations, I often saw a very predictable pattern. Each team would first try to establish that the issue was not caused by them. Someone would explain why their application was working correctly, another team would show that their server was healthy and eventually everybody would try to point towards the team where the actual failure had happened.

Technically, there was nothing wrong with identifying where the problem came from. We obviously needed to know the root cause. But I always looked at it a little differently. The client was facing a problem in the application that we were responsible for. The client did not really care whether the issue was in our code, the infrastructure or somewhere else inside our organisation. From their point of view, the application was not working.

My natural approach was that if the issue was somewhere within our reach and control, then we should own the problem until it was resolved. Ownership, for me, did not mean accepting blame for something another team had done. It simply meant not walking away from a customer problem because technically it belonged to somebody else.

Now imagine I am working with that approach, and at the same time I see one of my peers getting promoted for a very different type of performance.

His team may be resolving thousands of incidents every month. On paper, the numbers look excellent. Maybe they resolved three thousand or five thousand issues. Their ticket closure numbers are strong, response times look good and every month the dashboard shows a large amount of activity.

But sometimes there is another story behind those numbers.

Imagine similar failures are happening across different servers. Every time the problem comes up, a ticket is raised. The team responds quickly, fixes that particular issue and closes the ticket. An RCA is prepared, the immediate reason is identified and the explanation is shared with management or the client.

A few days later, something very similar happens on another server. Again the ticket gets resolved. Again an RCA is prepared. Again the team adds another successful closure to its monthly numbers.

Individually, every incident may have been handled correctly. But nobody has stepped back and asked whether all these RCAs are actually pointing towards one larger problem in the environment.

Maybe there is one common configuration issue. Maybe there is a process failure affecting multiple systems. Maybe there is something which, if fixed once properly, can prevent hundreds of future incidents. But if we only measure how many problems the team solves, the team can look extremely productive while the same underlying problem keeps producing more work.

Now imagine being an employee watching this happen.

I may naturally believe in taking ownership, preventing repeated failures and solving the larger problem. But if I see my peer getting promoted because his team has impressive ticket closure numbers, while nobody really looks at how many of those issues could have been prevented, I also receive a message.

The message is not given to me in an email. Nobody has to tell me that numbers are more important than the real outcome. The promotion has already told me.

Over time, even someone who naturally works differently can start adapting. I may begin asking myself whether I am wasting time trying to prevent problems which nobody is measuring. Maybe instead of spending time connecting ten RCAs and fixing the common cause, I should also start focusing on producing larger numbers. Maybe it is better for my career if incidents keep coming and my team keeps resolving them.

Of course, nobody would design a system and openly say that we want more failures so that teams can resolve more tickets. But sometimes our measurement and reward systems can quietly create exactly that behaviour.

This is why I feel what a company rewards matters so much.

People are smart enough to understand how the system works. If promotions depend heavily on the number of tickets resolved, people will optimise for ticket closures. If sales incentives are only connected to revenue, salespeople will optimise for revenue. If managers are rewarded mainly for protecting their own team's metrics, they will naturally become very good at proving why a problem belongs to another team.

Once enough people begin behaving this way, collaboration starts getting affected. Every incident becomes a discussion about whose fault it was. The application team points towards infrastructure. Infrastructure points towards deployment. Deployment points towards an application dependency. Everybody comes prepared with data showing why their team did what it was supposed to do.

The interesting part is that all teams may be technically correct, while the customer still has an unresolved problem.

After some time, leadership notices that teams are blaming each other and collaboration is poor. Then we start trying to solve the culture problem. We arrange an offsite, run team-building exercises, organise workshops about collaboration and maybe spend a weekend together so that people get to know each other better.

I have nothing against offsites. They can definitely help people build relationships. But if everyone comes back on Monday and the KPIs, promotions and rewards remain exactly the same, people will eventually go back to the same behaviour.

You cannot reward teams for protecting their own numbers throughout the year and then expect a two-day offsite to remove the blame game created by that system.

I think this is where founders and leaders sometimes look at culture from the wrong end. If people are not behaving the way you want, the first response is often to communicate the values again. We conduct training, remind people about ownership and talk about working as one team.

Before doing that, I feel leadership should first look at what the organisation is actually rewarding.

The same situation can be seen outside technology as well. Suppose a salesperson brings a lot of revenue but keeps making commitments that create problems for customers and delivery teams. If that salesperson continues getting the biggest incentives and promotions because the revenue numbers are good, everyone understands the real priority.

Now imagine another salesperson who walks away from a deal because he knows the company cannot deliver what the customer is asking for. In the short term, he may have lost revenue. But if leadership understands why he made that decision and recognises it, the rest of the sales team learns something completely different.

Neither situation requires a presentation about culture. The reward itself has communicated the culture.

The same is true with managers. A manager may produce excellent numbers but create problems for every team around him. He may protect his own metrics, push issues elsewhere and still appear successful on paper. If that person keeps moving up in the organisation, others will naturally start copying the behaviour that helped him succeed.

This is why I have started feeling that we sometimes confuse activity with performance.

A team resolving five thousand incidents may look more productive than a team resolving one thousand. But if the second team identified and fixed a root cause that prevented four thousand incidents from happening in the first place, which team actually created more value?

The answer looks obvious when we put it this way. But our dashboards may still reward the first team because it has more visible activity.

This is where leadership needs to go beyond the number and understand how the number was created.

I am not saying measurements should disappear. Businesses need metrics and people need accountability. But if a number is important enough to influence promotions and rewards, leadership should also understand what behaviour that number is encouraging.

The same applies to recognition. Reward does not always mean money. It can be a promotion, appreciation in a meeting, a larger responsibility or simply the founder publicly supporting a particular decision. People notice all of this and slowly build their own understanding of what the company really values.

If someone takes ownership of a difficult problem, brings multiple teams together and prevents the same issue from happening again, recognising that behaviour tells the organisation that solving the final problem matters. If someone protects his own numbers while leaving problems for everyone else and still gets promoted, that tells the organisation something else.

Over time, these signals start changing how people work.

This is why I believe culture cannot be fixed only through communication. If there is a blame culture, we need to understand what is encouraging people to blame. If departments are working in silos, we need to look at whether our KPIs are rewarding individual optimisation. If people keep firefighting instead of preventing problems, maybe we are celebrating the firefighters more than the people quietly removing the reason the fire keeps starting.

For me, this is where founders have to be very careful. People inside the company will always observe what helps someone grow. They will naturally move towards the behaviour that seems to be valued, even if that behaviour is different from what is written in the company values.

If enough people start doing that over time, it becomes normal. New employees join, see how things work and begin behaving in the same way. Eventually nobody even needs to explain the culture because people already understand it from what happens around them.

That is why, after almost twenty years, I feel what founders reward is much more important than what founders say. Purpose may tell people what the company is trying to achieve, and values may explain how the company wants to behave, but rewards show people what actually matters when there is a real choice to make.

If ownership matters, reward ownership. If preventing a problem matters more than repeatedly solving it, recognise the person who prevents it. If collaboration matters, don't keep promoting people who protect their own results by creating problems for everyone else.

Because people will eventually behave according to the signals they receive. When the same behaviour gets repeated by enough people for long enough, that behaviour becomes the culture of the organisation.