When execution starts slipping, leaders tend to reach for familiar explanations. Teams need better training. Managers need sharper accountability. Employees need clearer goals. Culture needs fixing.
Those explanations may be valid. But sometimes people are simply responding to what the organisation rewards.
This is important in energy and power businesses, where teams are expected to deliver projects on schedule, protect capital, maintain safety, meet regulatory obligations, improve reliability and deliver commercial results. These priorities usually compete when decisions have to be made under pressure.
What people do in those moments depends heavily on what the organisation has consistently rewarded, questioned, and tolerated.
That is where incentives become a communication issue.
The message people believe is the one backed by consequences
Leadership communicates priorities through strategy documents, town halls, and internal messages. Incentives communicate them through consequences.
An organisation can celebrate collaboration while rewarding individual performance. It can emphasise safety while recognising managers primarily for delivering projects faster. It can encourage innovation while penalising failed experiments.
The contradiction may be unintentional. Employees still have to decide what to prioritise when those objectives collide.
A project manager trying to meet a commissioning milestone learns from what happens when someone raises a concern that could delay the project. A commercial leader balancing growth with regulatory obligations watches which decisions receive recognition. Teams learn from these outcomes as much as from leadership messages.
People eventually trust the signal that affects their appraisal, compensation, and career.
Incentives tell people what success looks like
Leaders often treat incentives as performance tools. But they also shape organisational judgment. Every metric signals what matters. Every bonus reflects a choice about which outcome deserves recognition. Every promotion indicates which behaviours the organisation wants repeated.
People optimise for what is measured and rewarded because those signals have consequences.
If individual output determines recognition, collaboration becomes harder to sustain. If project timelines dominate performance conversations, schedule pressure starts influencing everyday decisions. If managers are judged mainly on short-term financial outcomes, decisions whose value appears years later can receive less attention.
Employees may be following the system around them even when it pulls them away from stated priorities.
When systems shape behaviour, culture follows
Organisations usually describe the resulting behaviour as a culture problem. Teams become risk-averse. Information stays within functions. Managers hesitate to make difficult decisions. Leaders conclude that the organisation has become political or defensive.
But the behaviour deserves closer examination. If mistakes carry a heavier cost than cautious inaction, people become reluctant to take risks. If sharing knowledge brings little recognition while protecting individual performance is rewarded, information stops moving freely. If accountability appears only after something goes wrong, managers become less willing to exercise judgment.
Repeated over time, these responses become habits. Eventually, those habits look like culture.
Changing the language around culture without changing the incentives that helped create it rarely changes behaviour for long.
The execution gap is usually invisible
The most damaging effect of misaligned incentives is difficult to spot. People continue to agree with leadership’s priorities. Meetings end with alignment. Strategy documents remain unchanged.
The adaptation happens in day-to-day decisions.
Teams follow instructions while protecting themselves from the consequences attached to their performance measures. Managers meet targets even when those targets pull attention away from broader organisational outcomes. Employees learn where discretion is rewarded and where it is punished.
From outside, execution looks inconsistent. Inside the organisation, the behaviour often makes sense.
In energy businesses, the consequences can spread quickly. A decision taken to protect a project schedule can create operational pressure elsewhere. A commercial incentive can influence how regulatory obligations are approached. A short-term performance measure can shape decisions whose operational consequences emerge much later.
The incentive may sit within one function, but its effects rarely do.
Redesigning the scorecard is only part of the answer
The instinctive response to misaligned incentives is often to change the metrics. But before doing that, leaders need to examine what those metrics will encourage under pressure.
→ What behaviour will they reward?
→ What behaviour will become less attractive?
→ What trade-offs will employees infer?
→ If someone follows a stated organisational priority but performs worse against an individual metric, what does that tell them?
→ When rewards are announced, what story will employees tell themselves about what success looks like?
Leaders also need to explain why particular behaviours are being rewarded, rather than simply how they will be measured. That becomes especially important when teams are balancing project execution, safety, capital discipline, reliability and regulatory compliance.
People exercise better judgment when they understand the reasoning behind those trade-offs.
Incentives expose whether communication is credible
Communication is generally associated with what leaders say. But employees also watch what leaders recognise, question, promote, and tolerate. When these signals reinforce each other, priorities become credible. When they diverge, the incentive system becomes the more believable message.
That is why communication failures can surface through execution before they become visible in messaging. Leadership believes it has communicated one priority, while employees experience another.
For energy and power businesses, where decisions cut across projects, finance, operations, safety, regulation and stakeholder relationships, that gap can carry a significant cost.
Before concluding that people are failing to execute the strategy, leaders should examine the system they are being asked to execute it through.
Incentives do not create every behaviour. They reveal what the organisation rewards, and therefore, what it truly values.
When project timelines, safety, capital discipline and regulatory obligations compete, what does your incentive system tell people to prioritise?
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