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July 16, 2008 | Volume 2 | Number 4
July 16, 2008
In today’s dynamic business environment, organizations often turn to work teams to stay flexible and maintain a competitive edge. A 2006 Ken Blanchard Companies survey found that more than half of employees spend 30 percent of their time in a team setting, with a third spending 50 percent of their working hours in groups. Although teams are prevalent in the workplace, several challenges can impede their success.
Management and HR leaders ranked team-building skills as one of the top five employee development challenges in 2007 and projected that it will remain a priority through 2010. In addition, 44 percent of respondents in the Blanchard study cited keeping morale and momentum high as one of the largest barriers to team effectiveness. Although a growing investment in team skills training begins to address this need, effective strategies for motivating and rewarding teams are far less developed.
For team-driven strategies to truly take root in an organization, group performance must be recognized in a way that both highlights the team’s accomplishments and reinforces the process of working together. A reward program not only serves as an incentive for productivity, it can also encourage skill building, support company structure and shape workplace culture. As a result, recognition efforts that align with the organization’s overall strategy can advance both business and HR goals.
Successful reward programs build on existing infrastructure and depend on clearly defined evaluation methods, so that incentives target improvement in weak areas, help maintain and build upon strengths and drive specific goals. This is where rewarding teams poses a challenge. Although measures for individual appraisal are plentiful, there are few equivalents for groups where team efficiency and results, as well as individual work expectations come into play. Traditional HR and organizational support systems are also typically designed to recognize milestones and contributions based on individual performance. For example, increases in base pay, additional benefits, promotion and titles aim to boost recruitment, retention and personal motivation. These strategies are less applicable to work teams in which job roles are interdependent and outcomes are the result of collaborative effort.
The diverse skills, personalities and motivations of team members contribute to the group’s success but also pose challenges to establishing a reward program. Should employee compensation reflect individual contributions or should all members be rewarded equally based on the team’s performance? A recent study found that employees were more productive working under equity conditions, but speed came at the cost of reduced quality and cooperation (Sinclair, 2003). Individual rewards may be a good strategy for meeting deadlines and short-term projects; however, this model can encourage a cut-throat mentality that undermines teamwork and damages group performance and morale in the long run. In addition, depending on the assignment, it may be difficult to judge individual contributions.
Alternatively, distributing rewards equally among team members can lead to lower productivity, but builds a more cooperative group that makes fewer mistakes and produces better quality results (Sinclair, 2003). For long-term projects where accuracy is a priority, equal rewards may be preferable. However, if the employer doesn’t already have a standard measure for team performance in place, they must develop instruments and processes for conducting group evaluations. Team leaders may also have to manage competing interests in a group that includes both freeloaders who don’t contribute adequately and high performers who tend to prefer individual rewards.
Some organizations compromise by opting for mixed programs where, for example, 70 percent of reward resources are shared equally by team members and 30 percent of the pool is set aside to recognize the efforts of individual members. In this case, a formal system for allocating rewards can help avoid favoritism and prevent resentment.
Recognition programs can take various forms, ranging from cash rewards and public acknowledgment to prizes and group celebrations. The timing and frequency of rewards is another variable — some rewards can help maintain morale throughout an assignment while others celebrate a project’s completion. Regardless of the strategy, the shared goal of reward programs is to acknowledge the role of teams within the organization, reward team performance and keep members motivated and committed.
Financial Incentives. Performance-based bonuses and profit or gainsharing group incentives were traditionally based on large work units, such as a whole department. However, these strategies can be applied to smaller teams where members earn payouts for meeting group goals. This approach can boost cooperation and productivity and helps teams stay focused on pre-established goals. Goalsharing is another financial incentive that rewards continuous improvement toward strategic business unit goals, encouraging creativity, innovation and judicious risk taking.
Recognition. Both formal and informal recognition reinforce the value of individual members and the team as a whole. Public recognition can occur at a formal department or organization-wide event and be commemorated with a plaque or posted on the company Web site or public bulletin board. It could also take the form of a sincere “thank you” from upper leadership. Recognition can also come from a team leader giving one-on-one positive feedback or highlighting team players in a group email or meeting.
Team Building. Group retreats before the project begins can help set a tone of collaboration and trust, while an out-of-office activity can re-energize a team and boost morale. Work team celebrations like a thank-you lunch can mark smaller achievements during the course of a project. Offering prizes for team accomplishments or top contributors can also help maintain productivity and keep employees engaged. Providing tools like technology upgrades, increased access to on-site resources, additional staffing or financial resources, or expanded decision-making authority are other ways to reward a team and increase their efficiency.
The type of team, its specific members and the group’s role within the organization also influence the effectiveness of a reward plan. For example, with management teams that coordinate work, aren’t as interdependent and are rated on overall organizational success, a group gainsharing reward plan might be most effective. For members of a project team who use their diverse knowledge and skill sets to work toward a defined goal, pay-for-performance strategies in conjunction with rewards that maintain morale could yield the best results. For permanent work or service teams who work closely together, collaboration is a priority, making equality-based rewards and group recognition essential. Parallel teams whose collective efforts are evident at the completion of a project also benefit from equality-based rewards that reflect the team’s overall work.
Employee buy-in and acceptance of a reward program also influences its effectiveness. Individual employees will prefer different rewards based on their work habits, backgrounds and priorities. For some, the intrinsic rewards of a job well done or belonging to a highly regarded team take priority over financial rewards, while others value tangible rewards or public recognition. Keep in mind that while independently successful and productive employees may be resistant to team recognition, they will view equal rewards more positively if the organization’s culture supports the value of teamwork (Haines & Taggar, 2006). Take the time to make sure your system is designed in a way that employees will view as fair and keep communication lines open for feedback.
Organizational characteristics also affect the goodness of fit between a team and the reward system. A team-oriented culture that provides work groups with administrative support and training demonstrates that the organization values teamwork while also encouraging employee buy-in. The commitment and follow through of upper managers, as evidenced by their own active participation in the reward program, is a key element of success. With globalization and the prevalence of multicultural teams, explaining the reward plan clearly at the start of a project and administering it fairly is also critical. This not only avoids perceived injustices, but also builds team unity by creating a collaborative partnership that provides incentives to drive the team’s goals.
The success of a team reward program, like any recognition or incentive plan, depends on tailoring the program so that it provides rewards the members value. Ultimately, an effective reward system reinforces work team performance at the individual, group and organizational levels by motivating employees, strengthening their commitment to the team and acknowledging the team’s contribution to the mission and goals of the organization.
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