Stephen Bevan: Do team incentives really work?

Most organisations believe in the power of team working, and there is strong evidence that effective teams deliver high performance.

You might imagine this would be supported by team-based pay or incentive systems, but these are not as common as you might think. Why is this?

For a start, there is no point trying to incentivise a team unless it really is a team. Does it form a natural grouping in a workflow?

Does it have interdependent skills and tasks? Does it have well-defined boundaries, distinct from other teams? Does it have transparent and measurable targets that relate to the work individual team members do as a group and over which they can have some effect?

In fact, determining the level and frequency of incentive payouts is much simpler than establishing that you have a stable team structure to support team-based incentives.

The most effective team incentives are usually a function of management and culture, rather than remuneration. Pay systems are rightly used to change organisational culture and team pay may play an important part in this. But the chance of getting it wrong is perhaps even greater with team-based pay than with individual performance-related pay.

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Trying to create a team culture through team-based pay is fraught with danger. It is much easier to reinforce a team culture with appropriate rewards than to lead with pay. The team structure has to be in place, the targets clear and self-evident, and the participants sufficiently skilled. There are no off-the-shelf solutions to team-working systems.

Stephen Bevan is director of the Centre for Workforce Effectiveness at The Work Foundation