Why do companies reward the fire, and not the person who prevented it?

Every behaviour inside a company is a response to an incentive. Change the incentive and you change the behaviour. Keep the wrong incentive and no amount of values talk will help: the wrong behaviour continues, because the system is working exactly as designed.

The clearest example of this is also the most uncomfortable. Companies reward the fire, not the person who prevented it.

The professional who lets a problem grow and then shows up as the hero to solve it tends to get more recognition than the one who worked behind the scenes so the problem never happened. Credit for what never happened is invisible. And this is not a personal impression: it is a pattern management research has been measuring for decades.

The fire that never ends

Think of the firefighter. They get medals for saving people from a fire, but are almost never celebrated for the inspections that kept that fire from existing.

In companies, the logic is the same. Managers are held to shipping features and solving visible problems, but are rarely assessed on what they managed to avoid.

In 2000, Roger Bohn named this in the Harvard Business Review. In the article “Stop Fighting Fires,” he describes firefighting syndrome: too many problems, too little time, solutions that patch instead of solve, crises that repeat, and urgency running over importance. The more the organisation puts out fires, the less time is left to treat the cause. And then the fire never ends.

Rewarding A while hoping for B

None of this is new. In 1975, Steven Kerr published in the Academy of Management Journal the article with perhaps the most honest title in management literature: “On the Folly of Rewarding A, While Hoping for B.”

The thesis is almost embarrassing in how obvious it is. People do what is rewarded, not what the company says it wants. If the talk asks for quality and prevention, but the bonus goes to whoever ships fast and saves the day, behaviour will follow the bonus. Always.

Kerr points to two traps that explain our case directly. The first is the obsession with visible behaviours: you reward what can be seen and counted, and prevention does not make for a photo. The second he calls, without euphemism, hypocrisy: the organisation rewards exactly the opposite of what it preaches.

Half a century later, the article is still being reprinted. Because the problem was never knowledge. It is the courage to change what gets rewarded.

The metric that becomes a target

Kerr already identified the fascination with “objective” criteria as one of the roots of the problem. Charles Goodhart, an economist at the Bank of England, showed where that leads. In 1975, analysing monetary policy, he noted that any statistical regularity tends to collapse once you press it into service as a control. The anthropologist Marilyn Strathern condensed the idea into the phrase everyone now repeats: when a measure becomes a target, it ceases to be a good measure.

Translating to our case: the moment a company starts measuring and rewarding “incidents resolved” or “features shipped,” that is what people will maximise. Not the absence of incidents, not the quality that prevents the problem down the line. What is not in the metric does not make it into the bonus. And prevention, by definition, shows up on no dashboard: its result is a number that never went up.

The perverse incentive, by name

In 2001, Nelson Repenning and John Sterman landed a title in the California Management Review that needs no summary: “Nobody Ever Gets Credit for Fixing Problems That Never Happened.”

The finding is direct. The more a company depends on firefighting, the more it promotes whoever saves the project in a panic, through heroic effort. And the less it values whoever improves the process and avoids the crisis. Over time, the entire leadership becomes a club of “war heroes,” who promote other heroes who look like them.

It is the academic version of an old metaphor: the hen that lays a small egg but cackles draws more attention than the duck that lays a big egg in silence.

Notice the compounding effect. It is not only that prevention stops being rewarded. It is that the top of the organisation comes to be occupied, generation after generation, by those who shine in the fire.

What the data shows about what we ignore

Here the subject leaves intuition and enters evidence.

Catherine Tinsley, Robin Dillon, and Peter Madsen studied corporate disasters for years and published the result in the Harvard Business Review in 2011. The conclusion: every disaster they analysed was preceded by several “near misses,” and most were ignored or misread.

Worse: the near miss is usually interpreted backwards. Instead of an alarm, it becomes proof that the system is robust and working. “It worked out, so we are safe.”

In their experiments, those who went through a near miss without consequence took between 15% and 30% more risk in the following decision. The relief of having escaped inflates confidence precisely when the danger has increased.

The sociologist Diane Vaughan, who investigated the Challenger space shuttle disaster, called this the normalisation of deviance: over time, the risky anomaly becomes acceptable routine. The worker who climbs a ladder with a broken rung every day feels increasingly safe. That is exactly when they are most exposed.

And what is the study’s central recommendation? Reward whoever surfaces the near miss before it becomes a headline. In other words: pay for prevention. The opposite of what most companies do.

The silent graveyard

Nassim Taleb, in The Black Swan, named the blind spot behind all of this: silent evidence. We decide by looking only at the survivors, because failure disappears from the field of view.

The classic example is the aircraft of the Second World War. The technicians wanted to reinforce the most-hit areas on the planes that came back. The mathematician Abraham Wald showed the error: the reinforcement needed to go to the areas with no bullet holes, because the planes hit there never came back.

The silent graveyard of lost planes, and of lost opportunities, appears in no report.

The real challenge

The challenge is to make visible, and to reward, preventive and high-quality work. Precisely the work that, because it is done well, never draws attention.

The research has already pointed the way: reward whoever surfaces the risk, not only whoever puts out the fire. The rest is a choice. If you want to change your team’s behaviour, start by changing what you reward and who you promote.

Until that happens, we will keep rewarding the noise, and not the result.

References

Kerr, S. (1975). On the Folly of Rewarding A, While Hoping for B. Academy of Management Journal, 18(4), pp. 769-783. (reprinted in Academy of Management Executive, 9(1), 1995)
Goodhart, C. A. E. (1975). Problems of Monetary Management: The U.K. Experience. (original formulation of “Goodhart’s Law”)
Strathern, M. (1997). ‘Improving ratings’: audit in the British University system. European Review, 5(3), pp. 305-321. (the popular phrasing of Goodhart’s Law)
Bohn, R. (2000). Stop Fighting Fires. Harvard Business Review, Jul-Aug 2000.
Repenning, N. P.; Sterman, J. D. (2001). Nobody Ever Gets Credit for Fixing Problems That Never Happened: Creating and Sustaining Process Improvement. California Management Review, 43(4), pp. 64-88.
Tinsley, C. H.; Dillon, R. L.; Madsen, P. M. (2011). How to Avoid Catastrophe. Harvard Business Review, 89(4), pp. 90-97.
Dillon, R. L.; Tinsley, C. H. (2008). How Near-Misses Influence Decision Making Under Risk: A Missed Opportunity for Learning. Management Science, 54(8), pp. 1425-1440.
Vaughan, D. (1996). The Challenger Launch Decision: Risky Technology, Culture, and Deviance at NASA. University of Chicago Press.
Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. Random House.