I sat across from a friend last month who could not understand why his team kept chasing short-term wins at the expense of long-term strategy. He had given speeches about vision. He had written memos about patience. He had held town halls about building for the future. And yet, every quarter, the same pattern repeated. The team optimized for immediate results, ignored foundational work, and let technical debt pile up like unpaid bills.
I asked one question. What does your comp plan reward?
He paused, then pulled up the spreadsheet. Revenue this quarter. Deals closed this month. Metrics that reset every ninety days. Clear, measurable, and perfectly designed to teach the opposite of what he said mattered.
This is the pattern I see most often when organizations struggle with alignment. Leadership talks about one thing. The comp plan rewards another. When those two signals conflict, the comp plan wins. Not because people are mercenary or lack integrity. Because the comp plan is the most honest signal in the system. It tells people what matters when the speeches end, and the work begins.
You can talk about collaboration. If your comp plan rewards individual performance and penalizes time spent helping others, you will end up with isolated contributors who hoard information. You can preach long-term thinking. If your comp plan resets quarterly and ignores foundational investments, you will get quick wins and deferred problems.
The comp plan is not only a financial tool. It is a behavioral blueprint. It defines what gets attention, what gets ignored, and what gets rationalized away when pressure mounts. It shapes every decision when you are not in the room.
I have watched teams derail through misaligned incentives. The sales team sold products that the company could not deliver because the plan rewarded closed deals rather than customer success. An engineering team shipped features without testing because the plan rewarded velocity, not quality. A leadership team optimized for their own department. At the same time, the company stagnated because the plan rewarded silo wins rather than cross-functional outcomes.
In each case, the people were not the problem. The signal was. The plan was backed by money, promotion, and recognition, so people believed it. When words and rewards collided, the rewards won. Not because people were greedy, but because the money told the truth about what the organization valued.
This is leadership physics. You cannot wish it away, or override it with better communication, or fix it with more meetings. The comp plan is a force. Either you shape it, or it shapes you.
The best plans are not the most generous. They are the most intentional. They reward the behavior the organization needs, not only the outcomes it wants. They anticipate how people will game the system and close those loopholes. They balance short-term performance with long-term investment. They reward collaboration without punishing excellence. They make it possible to do the right thing without sacrificing personal success.
That takes more than a spreadsheet. It takes clarity about what actually matters. Not what sounds good in a strategy deck or looks impressive to investors. What matters in the daily work when no one is watching? The plan should make that behavior the easiest path. Align personal success with organizational success so tightly that the two are hard to separate.
I learned this the hard way. Years ago, I designed a plan that rewarded speed. We were a startup. We needed to move fast. So I paid for output. Features shipped. Bugs closed. Tickets resolved. It worked, until it did not. The team moved fast in the wrong direction. They optimized for metrics, not the mission. They shipped features no one wanted because shipping was rewarded. They closed bugs without fixing root causes because closing was what counted. The plan taught them to chase the signal, not the substance.
I rebuilt the plan. I added customer satisfaction, code quality, and collaboration. I made it harder to game and slower to measure. It was more subjective. The team hated it at first. It was harder to win. It required judgment and trade-offs. Over time, behavior changed. The questions changed. Not only how fast can we ship, but also whether we should ship this at all. Not only how do we close this ticket, but how do we prevent this class of problems? The plan changed the conversation. The conversation changed the work.
No plan will align every incentive perfectly. There will be edge cases and trade-offs. Some people will still optimize for the letter and miss the spirit. That is not a reason to give up. It is a reason to iterate. Watch how people respond. Close loopholes. Adjust weights. Keep refining the signal until it points in the direction you need to go.
The plan is not static. It is a living system. What worked at ten people will not work at one hundred. What worked while chasing product market fit will not work when scaling operations. The plan has to grow with the company and reflect the present reality, not the past.
Transparency matters. When people understand how the plan works, they make better decisions. When it is opaque, they guess, and they usually guess wrong. They waste energy decoding the system instead of doing the work. A clear plan removes that friction. It shows the map.
Clarity is not enough. The plan also has to be fair. Not equal. Fair. Roles carry different risks, skills, and impacts. The plan should reflect that in a way that feels just. When people believe the plan is rigged or arbitrary, they disengage and start playing politics. Fairness is not about making everyone happy. It is about clear rules applied consistently.
There is a deeper truth. The plan is not only about money. It is about meaning. People want to know their work matters and is recognized. The plan signals that value. When it rewards the right things, it reinforces meaning. When it rewards the wrong things, it erodes it. Over time, that erosion becomes corrosive. People stop caring and do the minimum to hit metrics. The organization becomes a collection of individuals optimizing for themselves rather than a team advancing a mission.
If you want different behavior, start with the plan. Look at what it rewards, ignores, and punishes. Ask if that matches what you say matters. If it does not, fix it now. Every day of misalignment teaches the team to ignore you. The comp plan is the loudest signal in the room. It shows up in the bank account. It shapes promotions and futures. People will follow it. If you want them to follow something else, change the signal.
The best leaders do not fight the plan. They use it. They design it with intent, align it with the mission, adjust it as the organization grows, make it transparent, and keep it fair. When the plan points in the right direction, conversations get clearer, decisions get faster, work gets better, and the team pulls together. That is not a bonus. That is the foundation. Without it, nothing else will stand.
