When Incentives Turn Deadly: A Leadership Lesson from the Edmund Fitzgerald

On November 10, 1975, the Edmund Fitzgerald, one of the largest and most respected freighters on the Great Lakes, vanished beneath the waves of Lake Superior. I just finished John Bacon’s excellent book, The Gales of November, and one lesson hit me like a rogue wave: even seasoned, highly competent leaders can be pushed into bad decisions when the system around them rewards the wrong things.

Captain Ernest McSorley wasn’t reckless. Quite the opposite—he was known for calm judgment forged over decades on dangerous waters. But the environment he operated in had been quietly rewired.

The Perverse Incentive Trap

Columbia Star, the company behind the Fitzgerald, set aggressive targets for faster taconite deliveries. Captains who beat other ships to the Soo Locks gained status, recognition, and future opportunities. Those who didn’t risk falling behind in a race they never volunteered for.

So when a monstrous November storm began building—one that any prudent mariner would normally avoid—McSorley pressed on. Not because he lacked judgment, but because the system signaled that slowing down was losing.

Speed had become the metric. Safety became the assumption.

That’s the exact recipe for catastrophe.

Why This Matters for Leaders Today

You and your team aren’t sailing iron ore across Lake Superior, but you are navigating storms—market volatility, operational pressure, talent shortages, and relentless expectations.

Here’s the hard truth the Fitzgerald reminds us of: Even your best people will make poor decisions if the incentives quietly push them in the wrong direction.

Not because they’re careless. Because they’re human.

When leaders tell me about breakdowns, I often find the “bad decision” wasn’t a failure of character or competence. It was a predictable outcome of the incentives—spoken or unspoken—that shaped behavior.

Where the Danger Shows Up in Business

When leaders incentivize results only, people start bending the world to fit the number instead of delivering the truth you need. A few familiar examples:

• Sales: Reps overpromise delivery dates or inflate forecasts because hitting the quarterly target is celebrated, while honest realism feels punishable.
  
• Safety: Supervisors skip a step in the safety checklist to keep production on pace, signaling to the team that output matters more than returning home uninjured.
  
• Quality: Operations teams let small defects slide or postpone scheduled maintenance so the week’s throughput looks good on the dashboard — until a breakdown forces a shutdown.
  
• Reporting: Managers “smooth” bad news or delay raising concerns because the culture rewards green lights, not accurate ones.

Each of these actions comes from good people trying to meet expectations in a system that unintentionally encourages shortcuts. When you reward results instead of behaviors, even seasoned professionals can drift toward risk.

A Better Way to Lead

Great leaders—leaders like you—build enduring systems where people can make the right call even under pressure. That means:

• Clarifying what you value more than speed: Reliability, safety, long-term advantage—whatever it is, make it explicit.
  
• Naming the tradeoffs: “If we need to slow down to get this right, slow down.”
  That sentence alone prevents more disasters than any policy manual.
  
• Aligning incentives with the behavior you actually want: If you celebrate only the end result, people may take dangerous shortcuts. If you celebrate sound judgment, they’ll use it.
  

The Leadership Takeaway: Aligning Incentives 

Shortcuts and silent risks disappear when leaders align incentives with the behaviors that create lasting strength. The 3-Discipline Leadership System™ provides the structure to do exactly that.

• Unbeatable Positioning: When your team shares the truth about risks, timelines, and constraints, your company becomes known for reliability. Encouraging honest behaviors instead of rosy forecasts strengthens your market position in ways competitors cannot easily copy.
  
• Unstoppable Workforce: Disciplined behavior around safety, maintenance, and quality keeps your people strong, focused, and confident. Rewarding the practice of doing things the right way builds a workforce that does not rely on heroics or shortcuts to perform.
  
• Unwavering Inspiration: People follow leaders who value integrity more than optics. When you celebrate sound judgment, prudent pause points, and accurate reporting, your culture becomes a place where trust grows, and your best people rise even higher.

When you incentivize the right behaviors, the right results follow. That is how leaders like you keep the ship upright in stormy conditions and build organizations that grow stronger, not weaker, under pressure.

About Author

Chris Kolenda

I work with leaders who want to build unshakeable business endurance.

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