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Iconixx Insights BlogIncentive Compensation Management

Individual vs. team-based rewards: Which one should you choose?

By June 15, 2014June 11th, 2024No Comments

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.

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Ballast Point Ventures

Ballast Point Ventures is a later-stage venture capital fund established to provide expansion capital for rapidly growing, privately owned companies in diverse industries, with a particular emphasis on companies located in Florida, the Southeast, and Texas. The BPV partners have more than 70 years of combined experience investing in and building high-growth companies in a number of industries, including healthcare, business services, communications, technology, financial services, and consumer goods. BPV has $200 million under management and seeks to make equity investments ranging from $3 million to $10 million.

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Harbert Management Corporation

Harbert Management Corporation seeks to generate superior returns for their investors by identifying and investing in the most promising early growth stage companies in the Southeastern U.S. HMC seeks to capitalize on what it believes are compelling regional dynamics, such as a strong and fast-growing economy, significant research and development activities, and an established entrepreneurial community. The HMC team combines substantial investment, advisory, and operating experience with capital and networking contacts to support great entrepreneurial teams in successfully executing their growth plans. With offices in Birmingham, Alabama; Richmond, Virginia; and Gainesville, Florida, it’s well positioned to partner with entrepreneurs throughout the Southeast.

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KBH Ventures

KBH Ventures was an early investor in Iconixx Software. KBH's investment philosophy plays a significant role in the firm's successful track record. KBH believes in running businesses to be cashflow positive and profitable every month. Startups and companies in a startup mode, such as one that has been purchased in distress, are expected to generate revenue within the first six months and reach profitability within the first 12 to 18 months. KBH also only invests in or acquires companies that are in the startup phase or have less than $20 million in revenues. KBH targets technology companies that offer business-to-business services.

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S3 Ventures

S3 Ventures is an early expansion and growth stage venture firm with $200 million under management. It’s focused on information technology solutions that solve large business problems. S3 also invests in medical devices that improve the human condition. S3 invests in category-defining opportunities. It partners with the team and help focus methodically on what it takes to build a successful company. S3 today helps talented entrepreneurs take their technology and market knowledge and form valuable businesses in a repeatable fashion. Investment sizes start at several million or more for Series A, B, and C financing.