Ideally, an organization is a set of people who work together to achieve certain goals. There are many ways to get the organization functioning and make use of various management control measures to achieve the desired goals. Reward system is one such management control method which means to pay rewards or incentives to employees based on their performance.
Although reward systems are introduced to serve multiple aims, the main aim however is to motivate and encourage the employees to perform better and beyond expectations. These rewards have to be externally competitive and must be in proportion to the market value of the performance achieved. While framing their reward plans, organizations must keep in mind whether their work environment supports individual or team based performance rewards. Employees can work both individually and as teams but, the way they are rewarded plays a big role in their overall performance (SEFTON, M. and STEINBERG 1997).
Why choose team-based rewards over individual rewards?
According to experts from an HR consulting, team-based rewards ensure that the entire group performs well. The groups with star performance ratings can motivate other groups to work harder. Although there will be some employees in every company who will perform better and even beyond expectations, such people when work in groups with other employees give them the reason to perform as a team and be noticed by supervisors (FREY and JEGEN 2001). With group based incentives managers find it easy to monitor performance both at team level and at individual level. It is also most preferred when group work is most critical to achieve the desired organizational goals. There may also be a cluster of interdependent teams and the deliverables of each team are equally important. These teams can be monitored for accuracy, speed and quality. Each member’s significant contribution is required to complete the tasks within the given timelines and at budget. The rewards given to a group are typically derivative of the percentages of their maximum pay scale based on how well and how soon the team accomplishes the given tasks. Individual reward system on the other hand is difficult to monitor and the wages are strictly calculated on the basis of individual performance (FREY and JEGEN 2001) These are more comprehensive and time consuming as they involve conducting one on one sessions with the employees, viewing their sales performance, periodic reviews on each performance etc. This kind of reward system is most suitable for sales positions and typical labor positions. In organizations with bigger goals and objectives, teamwork plays a significant role and must be rewarded in the same way. If a group performs well, definitely the contribution of each and every member is rewarded equally.
Team based reward systems, if managed efficiently can positively impact the association between co-employees in the form of sharing knowledge, expertise, tips and advice. As none of the contributors would ever want their team to perform poorly because of them, it’s expected of each group member to put in their best efforts to make the most of the reward system and thereby benefit the organization. It’s also less cumbersome for the management to reward their best teams than individual star performers on a monthly basis.
Additionally, team-driven incentives tend to foster a collaborative work culture where each and every member is focused on helping each other to achieve best results as a group. The focus shifts from performing regular duties to how to make a group work together and achieve best results. Such a framework is extremely productive for the organization. It is the most efficient and in adherence to the company’s organizational measures. The results can also be periodically measured.
Conclusion
An increasing number of organizations today believe in developing an incentive plan that rewards workers for their successful team performance as it implies a high degree of synergy with the company’s working model. There are myriad approaches to value team based performances such as organizing team based rewards, profit sharing, recognition, gain sharing and group incentives. Human resource departments that make use of these plans pave way for an excellent reward system based on team performance but, must ensure to be extremely watchful of all these activities so as to meet the right business objectives (GNEEZY and RUSTICHINI 2000). With a mixed balance of team management and monetary reward systems, the much desired outcome of excellent performance and improved employee retention can be achieved.
Works cited
SEFTON, M. and STEINBERG, R. “Reward Structures in Public Good Experiments”, Journal of Public Economics 61(1997), 263-287.
GNEEZY, U. and RUSTICHINI, A. “A Fine is a Price”, Journal of Legal Studies 29(2000), 1-17.
SELTEN, R. and STOECKER, R. “End Behavior in Sequences of Finite Prisoner’s Dilemma Supergames”, Journal of Economic Behavior and Organization 7(2005), 47-70
FREY, B. S. and JEGEN, R. “Motivation Crowding Theory”, Journal of Economic Surveys 15(2001), 589-611.
