There’s a recurring problem I have seen time and again that is agnostic to the type of company I have worked for, whether it’s a software company, a professional services company, or a software and services organization. That problem is the reorganization … and then stall problem.
How many times in your career have you ever walked out of a reorganization announcement and thought, “Okay, but what just happened?” You sat through the all-hands call. You saw the new org chart. You heard the words about alignment, collaboration, and working together as one team. And then you went back to your desk and realized nothing about your day-to-day actually changed.
If that sounds familiar, you’ve experienced what I call the incentive problem. Leadership says one thing, but the goal structure rewards something completely different. And when that happens, people don’t follow the words on the slide. They follow the incentives. Every single time.
The specifics of how this has played out vary depending on whether it’s a software-only company and/or the organization’s size, but the dysfunction is identical. Let me give you three examples of how this plays out.
The Sales Goal Problem
A classic pattern you may have seen is when professionals are measured by sales goals rather than hours. When the goal is X in revenue allocation, and it doesn’t matter where X comes from as long as they get there, then incentives are misaligned with the company’s real goal: continuously bringing in new clients to create a diversified portfolio.
If part of the goal were current clients, and a larger piece were net-new clients, that should drive business development. People would be out networking, prospecting, and closing. But without that distinction, here’s what actually happens.
Professional C has already met its sales goal by retaining two or three legacy clients. Why would they chase new business? They’ve already met their sales goal by sitting on one, two, or three legacy clients. For them, why would they go out and chase new business? Why would they invest time and energy into prospecting when they can just maintain the installed base and hit their number? If the goal can be achieved with less risk and less effort, that’s the path they’ll take.
This creates a situation where you’re paying professionals who should be driving growth to sit still. Revenue stagnates. The client base ages. You lose market share. And when one of those legacy clients finally leaves, you’re in crisis mode because there’s no pipeline to replace them.
If new logos matter, they need to be measured and rewarded separately. You cannot expect people to pursue new business when their goals can be fully satisfied by maintaining the status quo. The incentive has to be explicit.
The Utilization Trap
You have two professionals in the same role. Professional A is highly efficient. They’ve figured out a better workflow, a better tool, a better process. They deliver the same quality work in significantly less time. Professional B grinds through the work the old way, or may not be as proficient or efficient as Professional A, and bills twice as many hours.
At the end of the year, who gets the bonus and promotion? In some organizations, it’s Professional B. Why? Because they are measured on utilization, and the company celebrates hours billed, which only reinforces a cultural issue: the company rewards the number, not the substance.
Professional A gets dinged for underperformance. Their utilization is too low. The company says they’re hardworking, maybe next year. If it continues, we quietly walk them out. The problem is that we just got rid of the exact person we should have been celebrating.
This is self-inflicted. When leadership says we value efficiency but measures raw hours, people act rationally by slowing down. The slower they go, the more hours they bill, the better they perform on paper.
Clients notice this. They see the invoice. They see the hours climbing. They know when inefficiency is being billed. And every time that happens, trust erodes. They start questioning whether you’re working in their best interest or maximizing your billable hours. That continues until they decide to cancel the contract.
But if efficiency and substance really, truly matter, then we need to measure them. That might mean tracking project margin instead of raw hours. It might mean evaluating professionals based on client satisfaction and problem-solving effectiveness rather than utilization percentages. Most of all, this requires admitting we’ve been measuring and rewarding the wrong behaviors.
The Collaboration Paradox
Every organization says they want collaboration. I’ve seen organization’s all-hands calls include a slide about working together, breaking down silos, and acting as one team. And yet, collaboration remains elusive.
Why? Because individual incentives are misaligned with collaborative behavior.
If each person’s goals are entirely individual (”my” origination, “my” utilization, “my” client portfolio), there’s no structural reason to collaborate. Collaboration takes time. It might mean sharing credit or splitting revenue. If none of that helps me hit my goals, why would I do it?
Leadership gets frustrated. They show another deck. They talk about values. Nothing changes. Words don’t change behavior. Monetary incentives do.
People will not naturally seek to collaborate simply because of a deck shown at an all-hands call. They’ll act rationally to meet their goals, hoping there’s enough money to provide them with a bonus, a raise, or a promotion. Until the firm behaviorally incentivizes professionals differently, people will not act differently.
If collaboration matters, the expression holds: companies need to measure what matters and reward accordingly. That might mean joint goals for cross-functional teams. It might mean attributing revenue to multiple contributors. It might mean evaluating professionals based on how well they enable others to succeed, not just on individual output.
The Three-Question Goal Audit
If you’re wondering whether your goals are driving the right behaviors, here’s a simple three-question audit:
What behavior does this goal actually incentivize? Not what you hope it incentivizes. What does it actually reward when people act rationally in their own self-interest? If the goal is utilization, it incentivizes hours billed rather than efficiency. If the goal is revenue with no distinction between installed base and new logos, it incentivizes maintaining the status quo. Be brutally honest about what behavior you’re actually rewarding.
Is that the behavior we need to achieve our stated purpose and values? This is the alignment question. If your core values say you prioritize efficiency and collaboration, but your goals reward hours and individual achievement, you have a mismatch. If the answer to this question is no, you’ve identified the problem.
What would we need to change about the goal structure to align incentives with desired outcomes? Whatever the change is, it’s going to feel uncomfortable. People who thrived under the old system might struggle under the new one. That’s okay. If the old system was producing the wrong behaviors, you’re making a deliberate choice about what matters most.
The Monthly Check-In Framework
Most organizations set goals in January and don’t revisit them until December. For eleven months, those goals sit in an HR system, ignored. By December, it’s too late. Good people have already left.
If goals matter, monitor them monthly and review them quarterly. Once a month, answer three questions:
Are we tracking progress toward the goals we set, or are we just reacting to whatever fires pop up?
Are you clear on what success looks like this month, this quarter, or are you guessing?
Are we rewarding the right behaviors as they happen, or waiting until December to figure out who deserves recognition?
Quarterly reviews are where you course-correct. Circumstances change. Priorities shift. A goal that made sense in January might not make sense in April. It is okay to ask whether this goal is still the right one and whether we need to reallocate time, resources, or focus.
Monthly and quarterly check-ins aren’t micromanagement. They’re proof that the goals matter. They build trust. They show people that leadership cares about the goals throughout the year, not just at the beginning and end.
The Bottom Line
People rationally act in their best interests to meet their goals. If you want different behaviors, you need different goals. This isn’t complicated. It’s just hard. It requires admitting you’ve been rewarding the wrong behavior. It requires changing systems and incentives.
The good news: this is fixable. It requires introspection. It requires hard work. It requires leaders who are willing to align their actions with their words.
So here’s my challenge: run the three-question goal audit with your team. Be honest about what behaviors your current goals actually incentivize. Identify the misalignment. And then commit to fixing it.
The question is: are you willing to do the hard work?
