You get what you reward: the architecture of incentives and hidden risk

My professional insights · Lyudmil Karaulanov · 13 min read

Published: 3 August 2026 · Version 1.0

When someone brings in a major deal, delight is entirely natural. Behind it may lie months of conversations, rejections, travel and hard work. We want to thank that person, show them that we see their effort and provide a good example for everyone else. The bonus seems deserved.

Let us stay with that deal for a moment, though. What have we promised the customer? Can the team deliver within the agreed time? Have we left enough money for high-quality work? And if payment is delayed, who will handle the conversation and the tension?

These questions do not detract from the salesperson's achievement. They help us see the whole result. It is possible that, in good faith, they have achieved exactly what we asked of them, while we neglected to agree the rest.

For me, this is where the conversation about incentives begins. Before explaining someone's behaviour as a lack of loyalty or excessive ambition, it is worth examining what we have made rewarding, visible and valued in our own organisation. Sometimes the answer is uncomfortable: we expected one thing while consistently encouraging another.

What people hear behind our words

Integrity, quality and good treatment of customers have a place among the principles of every responsible company. I would not underestimate those words. They provide a shared direction and, for many people, a personal reason to choose a particular workplace.

Trust in them, however, is built through the decisions that follow. If we speak of respect between colleagues but overlook humiliating behaviour by the most successful salesperson, others notice. If we insist on quality but thank only the person who finished fastest, they notice that too. The person left to correct the work afterwards feels it particularly clearly.

We do not need to assume that management is deliberately misleading people. The owner may be under pressure to make payments, an important customer may not tolerate delay, and the company may depend on a few specialists who are difficult to replace. At such moments, the exception seems justified. Repeated often enough, however, it begins to be perceived as the actual rule.

There is also something very human here. Everyone wants to know whether their effort matters. When careful work goes unnoticed while a rushed result brings recognition, disappointment is not overcome by another conversation about values. People need to see a change in the decisions themselves.

A bonus begins to work before we pay it

We usually think about remuneration at the end of the period, when a result already exists. Its influence begins much earlier. People know what they will be assessed on and adjust their daily choices accordingly: which customer to give time to, which task to finish first, whether to help a colleague or return to their own objective.

If a salesperson's bonus depends solely on signed contracts, we should not be surprised that they push to sign. They may negotiate discounts and deadlines that make selling easier but delivery harder. Production then has to catch up, the finance team has to find funds, and colleagues serving the customer have to explain the delay. Everyone individually works hard, but the overall arrangement has left part of the cost invisible.

A similar mismatch can arise with a manager assessed only on quarterly results. Deferred maintenance or an unfilled position improves current expenditure. Whether that is a sensible saving also depends on what happens in three or six months. If we never return to check, the short-term improvement easily receives more recognition than it deserves.

For a specialist, the dependency may look different. They alone understand an important system, everyone seeks them out and their opinion carries weight. We invite them to train a replacement but do not show them what their own next role will be. Sharing knowledge may then look to them like giving up the security they have spent years building. This does not justify withholding information, but it helps us understand what we must change to make passing on experience desirable.

What remains after a good result

Numbers are necessary. Without them, assessment can easily become a personal impression and recognition begins to depend on closeness to the manager. But even the most accurate report shows only what we have decided to measure.

I would therefore add a simple question to the conversation about achievement: what remained afterwards? After the major sale, do we have a satisfied customer able to pay, or a series of promises that cannot be fulfilled? After the project, is there documentation from which the next team can start, or must everything be learned again? After the strong quarter, can people continue at the same quality, or are they exhausted by an effort that cannot be repeated?

This does not mean devaluing exceptional effort. There are times when it is necessary and deserves particular gratitude. But when we rely on it constantly, we must honestly acknowledge that we are using personal dedication to compensate for an organisational shortfall.

It is also useful to examine how a target can be met in an undesirable way. A bonus for new customers can focus attention on their number while pushing their ability to pay into the background. A reward for cost savings can encourage the postponement of a check we will need later. And a bonus for the absence of incidents requires particular care: people must know that reporting a problem promptly will not automatically deprive them of recognition.

Before introducing such a scheme, we can discuss it with the people who will work under it. What is within their control? What depends on another department? When will the measure force a choice between their own remuneration and good performance? Such a conversation often reveals omissions that are invisible from the management office.

The people whose work is rarely noticed

Some contributions are difficult to showcase in a celebratory announcement. Someone noticed an unfavourable term before we signed. Another carefully introduced a new colleague instead of finishing their own tasks faster. A third organised the documents so that work could continue smoothly in their absence.

In these cases, there may be no major event at all. That is precisely the good result. We did not reach the point of dispute, did not lose the information and did not need someone to rescue the situation urgently.

If we recognise only a crisis brought under control, we risk noticing people who act at the last moment more often than those who consistently reduce the need for such interventions. Over time, this affects both behaviour and willingness to work.

We do not need to invent a monetary value for every problem prevented. We can, however, include this contribution in assessment, name it before the team and take it into account in the person's pay and development. Gratitude does not replace fair pay. Yet good pay does not always compensate for the feeling that no one understands what you actually do.

A promotion is a promise too

When we want to retain a strong specialist, we often think first of a management position. They have earned trust, know the work and are respected by colleagues. The offer may seem a natural form of recognition to both parties.

Before making it, however, it is worth discussing the future work itself. Does this person want to manage others? Are they ready to spend time on other people's difficulties, allocating tasks and conversations in which there is no unambiguous professional answer? Or is their greatest strength precisely the in-depth specialist work for which the new position will leave increasingly little time?

Declining a management position does not show a lack of ambition. A person may want more autonomy, more complex assignments and better remuneration without wishing to manage a team. If the only route forward passes through management, we present them with an unnecessarily difficult choice.

Where the company's size and activities allow, two respected development paths can coexist: management and specialist expertise. What matters is that the second does not remain an honorary title without real influence and remuneration. And when a specialist genuinely wants to become a manager, recognition for their previous work should be accompanied by preparation for the new work.

Fairness does not fit into an identical form

Individual contribution needs to be visible. Someone who assumes greater responsibility and creates a better result has reason to expect recognition. An identical bonus for everyone may seem convenient but leave the most committed feeling that their effort does not matter.

At the same time, almost no one achieves their result alone. The salesperson relies on delivery, the designer on a good brief, the manager on information from the team. If individual assessment ignores these connections, helping a colleague can easily begin to look like wasted time.

I would therefore look for an understandable combination of individual contribution, team results and the quality of collective work. It will not be identical for every position. The financial controller must be able to stop a risky decision even when that makes a sales target harder to achieve. And employees need to understand what they are accountable for and have the ability to influence it.

Even the best-designed scheme needs review. If people constantly dispute how remuneration is calculated, if entire departments feel disadvantaged or if good figures coincide with increasing complaints and corrections, there is reason to revisit the arrangements. Not to change the rules for our own convenience, but to correct for the next period what practice has revealed.

Where is the point of instability?

What this concept means →

It appears when a lasting gap opens between our expectations and our decisions. We want candour but greet bad news with accusation. We want shared knowledge but reserve the best terms for the indispensable person. We want quality, but the conversation about remuneration ends with how quickly the work was done.

People do not respond identically. Some continue working conscientiously despite their disappointment. Others adapt; others leave. It is important for the owner to understand this before assuming they simply have not found a good enough team.

I would begin the review with a few actual decisions on bonuses and promotions. What did we want to recognise through them? Whose contribution did we see, and whose remained in the background? How were they understood by the people who continue to work with us?

The answers need not be comfortable. We need to be able to discuss them honestly. That is where the possibility begins for people to feel that attentiveness, responsibility and care for the collective work have a place in our decisions too, rather than only in our expectations of them.

This material is of a general analytical nature and does not constitute individual legal, tax, financial or investment advice.