Business situation
The target is reached, but the company becomes weaker
A sales team may hit volume while discounts expand and customer quality declines. Marketing may produce more leads while sales receives less relevant demand. Customer success may protect retention by accepting commitments that damage delivery cost. Each department can perform against its own target while the company loses value.
Leaders often respond by changing the bonus formula. That may shift behavior, but it does not answer the deeper question: which decisions create profitable customer value, and can the people being measured actually influence them?
Hidden mechanism
The real incentive system is larger than compensation
Employees pay attention to what leaders celebrate, what managers inspect, which exceptions receive approval, and what happens when targets conflict. A stated priority can be neutralized by the way meetings, reporting, promotions, and daily pressure operate.
Metrics also simplify reality. Revenue may ignore margin. Conversion may ignore customer fit. Retention may ignore the cost of support. When one number becomes the dominant signal, people rationally optimize it even when the company needs a more balanced outcome.
Consequence
Local optimization moves cost into another department
Poor-fit customers move from sales into onboarding. Discounted deals move from revenue into margin. Ambitious promises move from commercial conversations into delivery pressure. The initial result looks positive because the downstream cost is measured somewhere else or appears later.
This damages trust between departments. Each team believes another one is creating the problem. Leadership sees several performance issues but lacks one view of the commercial decisions connecting them.
Leadership response
Reward the complete commercial outcome
Begin with customer value and unit economics. Identify the few behaviors people can control that improve acquisition quality, price, margin, retention, and expansion together. Measure the outcome close enough to the decision that people can learn from it.
Balance individual and shared measures where departments jointly shape the customer result. Give managers enough visibility to distinguish sound judgment from a favorable outcome produced by luck or an unsustainable exception.
Incentive design is complete only when compensation, reporting, management routines, and leadership behavior reinforce the same commercial priorities. Otherwise the formula changes while the operating system continues to reward something else.