I've already posted on some of the other opportunities for innovation that I've addressed in the ATD's Talent Management Handbook. However probably the most important of these is team based, or social reward. This is about transferring the focus of reward from individual employees to teams and reflecting on the necessary innovation to support this change in focus.
Here are my comments from the Handbook:
Team Based Reward
One of the biggest changes underway in many organizations is a move away from hierarchies towards teams, supporting increasing needs for collaboration. Making this shift work requires team based pay.
This is a difficult shift to make work and involves high risks for example it can increase competition between teams just as it reduces this within teams. Supporting this, research on cases where team based reward has been used, particularly where this has involved knowledge workers, tends not to be that favourable. However the results of team based reward will obviously depend upon how it is used and in many of the cases which have been reviewed team rewards had not been designed that smartly. The main problem seems to be that communication has been left too late. Garbers and Konradt’s recent meta analysis of 30 different studies of team rewards also suggests that team rewards work best for smaller teams and mixed gender teams. It also notes the importance of distributing rewards equitably rather than just equally between team members.
The best suggestion I have heard to make team based reward work is to reward a team for the performance of the individuals and divide this reward between the individuals according to their contributions to the team. This ensures individuals focus on collaboration not competition within the team but also that they and the whole team are focused on helping increase the individual performance of each person, avoiding any tendency towards social loafing.
An alternative is to combine team and individually based reward. For example Whole Foods Market provides an individual base pay but further rewards are linked to team performance. To help make this work, employees have some say about the people working in their team.
Anyway just because it is difficult should not be enough of an argument to mean that we should not try to do it. Also the major challenges probably lie out of the reward area itself, for example in developing effective team based performance management which will be a requirement for team based pay to work, and also efective team building.
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