No Reward, No Performance in Construction: The Role of Transactional Leadership in Organizations

I would like to talk about a management model I observed in a British company whose name I prefer not to disclose. This company is known for undertaking extremely high-risk, high-cost construction projects, often in environments with serious safety challenges. Those familiar with the UK industry will probably guess the company already. What I want to focus on in this post is the leadership model they use and the motivation techniques built around it.

The company defines critical milestones in advance, and when those milestones are reached, they reward employees if the expected performance is achieved; if not, the “penalty” is simply not receiving the reward. In the case I observed, an employee would qualify for the reward if they completed the assigned task according to the schedule, kept cost deviation below 5%, ensured zero incidents throughout the process, met quality standards, and maintained proper coordination with subcontractors. The reward was quite significant: a substantial bonus (around £5,000, if I remember correctly), one week of paid leave, and genuine recognition. There was also an added benefit—a positive mark for future promotion.

In my opinion, the reward is highly satisfying. Just think about it: while everyone else is working, you have the opportunity to spend time with your spouse, travel with friends, or simply rest and recharge, along with receiving a meaningful financial bonus. After returning, the employee is given a new target, new rewards, and the promise that the next reward will be greater than the previous one. To be honest, what I observed in that company was an incredibly effective system where everyone operated like part of a well-functioning mechanism. The “penalty” was simply not benefiting from the reward—nothing more.

I am sure that many readers or employees might think this sounds like a utopia. Honestly, I would have thought the same if I had not seen it with my own eyes. In the literature, this “utopia” corresponds to what is known as transactional leadership—a leadership model based on rewards and penalties. It has three forms: reward-only, reward–penalty, and penalty-only. When I look at our context in Türkiye, I have observed that this model is rarely implemented in construction companies in the form of reward–penalty or reward-only. Even in companies that attempt to use it, the focus is generally on the penalty side—meaning deviations from rules are punished, but rewarding is largely absent.

However, the real question we should ask is this: why does this model not work in Türkiye, or more accurately, does it really not work, or are we simply not implementing it correctly? To be honest, many construction sites in Türkiye already operate under a penalty-based transactional system. But in my opinion, one critical component is missing: reward.

In our case, the system usually works like this:

• You make a mistake → penalty

• You fall behind → pressure

• You exceed cost → questioning

• A problem occurs → someone to blame

So what happens when an employee does everything right? Most of the time, nothing. And this is the most critical breaking point of the system. Because human behavior follows a very simple principle: rewarded behavior is repeated, while ignored behavior fades away. That is why systems focused only on penalties make employees defensive, push them to avoid taking risks, kill initiative, and eventually create a “minimum effort” culture. Instead of asking, “How can I do better?”, employees begin to ask, “How can I avoid problems?”

What I observed in that company was very different: people were not just working, they were also chasing targets, and this is a crucial distinction. Because when there are clear targets, ownership increases, performance becomes measurable, and success becomes visible. As a result, motivation is no longer purely external; it becomes partially internalized.

So, can this model be implemented in Türkiye? I believe it can—but under three critical conditions:

1. Setting measurable targets. Not “do a good job,” but clearly defined criteria such as “less than 5% cost deviation, zero accidents, on-time delivery.”

2. Providing real rewards. Not just “thank you,” but rewards that have tangible value in terms of time, money, and career progression.

3. Consistency. If the system exists in one project but not in another, it collapses. Because what we call a system requires continuity.

And perhaps the most critical question is this; do we really want high performance, or do we simply expect error-free execution? Because these two are not the same thing.

What I have seen is this: a properly designed reward–penalty system is not a utopia. But when it is implemented incorrectly, it turns into a penalty-only system, and at that point, it is no longer a leadership model—it becomes a pressure mechanism.

So what do you think? In the projects you work on, is performance truly rewarded? Or do you simply remain invisible as long as you do not make mistakes?