Culture & Reward: One System That Drives Growth

MM&K supported the ESOP Centre’s 9th Share Plan Symposium, contributing to a panel on the evolving executive remuneration landscape, where Tamsin Howells and Stuart James explored a deceptively simple question: what comes first – culture or reward?

There is a familiar pattern in organisations undergoing transformation. Significant investment is made in engagement, communication, and capability-building to shift behaviour. Yet reward systems often remain unchanged, continuing to reinforce the very behaviours organisations are trying to move away from.

The result is a well-known tension: people are asked to behave differently, but are still rewarded for behaving the same way.  Rather than acting as sequential levers, culture and reward operate as interdependent forces, continuously shaping one another.

Reward as is signal, not as a process

Reward is still too frequently treated as administrative infrastructure – payroll, pensions, and bonus cycles. However, this perspective overlooks its more fundamental role. Reward signals what an organisation truly values. Every organisation already has a reward culture. The only question is whether it is being intentionally designed or passively allowed to evolve. From that perspective, reward is not neutral – it either reinforces intended behaviours or quietly undermines them.

How misalignment plays out in practice

1. Trust and silos: In a private equity-backed business, equity was concentrated at senior levels while collaboration was a stated strategic priority. However, reward structures continued to reinforce individual accountability within business units. The outcome was predictable: low trust, fragmented decision-making, and limited collaboration despite a clear ambition to integrate.
2. Safety and unintended incentives: In a high-risk organisation, employees were rewarded for resolving safety issues rather than preventing them. While safety was a stated priority, the incentive design drove reactive behaviour — fixing problems rather than eliminating root causes. The result was an internal “culture of chaos,” where firefighting was rewarded over prevention.
3. Short-term incentives vs long-term strategy: Many organisations describe transformation programmes spanning five to ten years, yet continue to operate annual incentive cycles. This misalignment matters. Short-term reward structures naturally drive short-term behaviour – often at the expense of long-term capability building and sustainable performance.
4. Equity as an alignment tool:  Equity is often seen as a straightforward mechanism for aligning interests. However, in low-trust environments, it can have the opposite effect. Rather than fostering alignment, it may reinforce perceived imbalances in power and intent between those who hold ownership and those who do not.

From measuring value to creating value

Most organisations are highly effective at measuring value. Far fewer are intentional about how they create it. The distinction is subtle but important: shifting from measuring value to actively creating it. In this context, reward becomes less about distribution and more about alignment – linking ownership, behaviour, and long-term value creation.

A simple analogy

Culture is the organisation’s voice; reward is the microphone that amplifies it. If the culture is strong (built on trust, clarity, and aligned leadership) reward reinforces it. If the culture is fragmented, reward amplifies that instead. Crucially, changing the microphone does not change the voice. It only changes the volume. This is why reward design alone cannot fix cultural misalignment, but it will always reinforce whatever already exists.

Conclusion: one system, not two

Culture and reward are not separate levers; they form a single system. When aligned, they strengthen trust, accelerate performance, and enable sustainable value creation. When misaligned, they quietly undermine even the most well-designed strategies. The opportunity for organisations is not to treat them sequentially, but to design them together – deliberately, continuously, and in full awareness of how each amplifies the other. That is where real performance advantage begins, and where MM&K continues to support Boards, RemCos, and executive teams.

Three questions for Boards, RemCos, and executive teams:

1. Does our culture accelerate our strategy – or slow it down?
2. Are our reward structures reinforcing the behaviours we want – or creating unintended ones?
3. Is there alignment between our stated culture and how it is actually lived day to day?

If you’re curious and want to explore contact Tamsin Howells  (tamsin.howells@mm-k.com).

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