When creating their incentive compensation plans, companies need to consider whether their particular work environment thrives using team or individual performance rewards. While workers should be able to work individually and as part of a group on the job, the incentives provided to workers play a big role in how they perform overall. Since the corporate culture and productivity of a business depends on how workers interact with each other, managers should consider restructuring their incentive compensation to include individual or team rewards.
There are pros and cons to choosing team vs. individual incentive compensation plans. Jeffrey Stibel, chairman and CEO of Dun & Bradstreet Credibility Corp., argued quality is better than quantity as he said stand-out individuals are more effective than good groups in Harvard Business Review. Employers should include individual rewards when they believe workers add more to the company when working independently rather than in groups. Companies could structure their incentive compensation program to include bonuses for salespeople who surpassing their original sales targets. Individual rewards also have the benefit of creating a competitive environment in the workplace where workers are always striving to do better than their previous performance levels.
Pros of team-based incentive compensation programs
There are also positives to offering team-based incentives that ensure the group as a whole performs well, according to the experts at HR consulting firm Sibson Consulting. The firm said incentives can impact the workplace by having star performers motivate other workers, according to the Society for Human Resource Management (SHRM).
“The role of incentives is to motivate and engage employees in order to drive intended business results and reward and differentiate employees fairly for the value they create,” said Jason Adwin, senior consultant at Sibson Consulting, according to SHRM. “Some employees are going to give above and beyond, with or without incentives. But the program, by sharing their success stories and modeling their behavior, motivates the others.”
Companies that are considering changing up their incentive compensation plan may want to determine whether their incentives should be team-based or individual-based. To measure the performance of employees working for certain incentives, companies could install sales performance management solutions to track employee performance. Depending on which type of reward system they use, companies could see changes in employee behavior and productivity once they provide compensation that cultivates competition or encourages workers to have a more cooperative environment.
