Teams and Team-Based Rewards

By Emeka Ogbonnaya

Many companies have already moved away from functional structures into team-based environments with only 38 percent of all companies and 24 percent of large companies (>50,000 employees) are functionally organized today, according to Deloitte. These seismic shifts among high-performing companies have been attributed to the growth of the Millennial demographic, the diversity of global teams, and the need to innovate and work more closely with customers.

These organisations are operating as a network of teams alongside traditional structures, with people moving from team to team rather than remaining in static formal configurations. Ensuring that these teams are sustained and motivated over time to drive growth across the enterprise has led to the reviewing of team-based reward systems and the argument for it.

The Rise of Teams

In the last decade we have witnessed the steady shifting away from the traditional organisational structures like the top-down, siloed, and insular structures to a flexible, team-based model with the aim of being agile to change and disruptions. This shift towards the team-based model demonstrates the acknowledgement that innovation, growth, and performance depend largely on a combination of a people-focused strategy and collaborative approach towards work.

In a recent study, 90 percent of corporate leaders think today’s problems are so complex they require teams to provide effective solutions. They believe collaboration fuels creative thinking and problem solving, which is critical to positive business outcomes. It is no surprise why progressive organisations led by a new breed of globally minded leaders are building their organisations around highly dynamic networks of empowered teams.

Benefits of Team-based Model

Apart from the overarching theme of being agile to change and disruption, there’s a people-focused strategy in operation. For instance, in Google’s quest to build the perfect team, they highlighted in their research that people working in teams tend to innovate faster, achieve better results, and report higher job satisfaction. The research also showed that profitability is also positively correlated with collaboration.

It is also fact that team-based organizations can leverage best practices while building trust and communities. Studies have also shown that by adopting a flatter, team-based organizational structure, companies can share information rapidly to increase their responsiveness, solve problems faster, and improve customer service, which ultimately boost the bottom line.

Team-based Reward System

In an environment where recruiting and retaining the best talents are increasingly challenging for businesses, incentivising the employees within the team context has become high on the agenda. Individual incentives are good in situations where there are clear performance expectations or where minimal interaction among teams is required and tasks are autonomous and repetitive. Team-based rewards however create, as well as emphasize, the need for collaboration across the company.

The joint study by the International Society for Performance Improvement and The Incentive Research Foundation found that “Incentivized teams increased their performance by 45 percent compared to 27 percent increase in performance for incentivized individuals”.

A team-based reward system is simply a way to incentivize a group of people based on the combined contribution to a project or the organization. It has become a widespread and motivating way to reward teams for their efforts to achieve a common goal. As more companies utilize teams to complete projects, offering an incentive to the members based on the team’s performance has become a more common and acceptable way to encourage team members to collaborate.

Optimal Conditions for Team-Based Reward

While the benefits of team-based rewards are clear, there are certain conditions strongly correlated to trust under which they are more likely to be successful. The first is in teams with a high level of task interdependence (noted by Rousseau et al. (1998) as a pre-condition to trust) and belief in the value of teamwork. When team members are highly interdependent and must rely on each other for support or information to reach their desired goals, they are more likely to realize the value of teamwork.

Consequently, what Haines and Taggar refer to as a high “team rewards attitude” (TRA), reflecting a positive attitude toward receiving team-based rewards, would “flow from the realization that, in situations of high task interdependence, the desired performance or output can only be achieved through teamwork”. Therefore, teams with high trust and task interdependence are more likely to achieve high team rewards attitude.

Any discussion about teamwork and collaboration without highlighting team-based rewards is akin to debating effective diets while ignoring willpower. According to Leandro Herrero, it is a case of a very high dose of decaffeinated espresso. Whether working in teams, groups or as individuals, people respond to recognition and rewards. They also respond to the absence of rewards. And the rewards top management ignore can prove more revealing than the ones they celebrate.

Rewarding a team dramatically improves not only the team performance but also the individual’s experience,” says Michael Mankins, a partner at Bain & Company and coauthor of Decide and Deliver: Five Steps to Breakthrough Performance in Your Organization.

While money is a motivator, it’s short-term and less meaningful than thoughtful benefits, perks and rewards. An effective team-based reward system can improve morale and keep your team focused on achieving goals for your business. Getting the most from your team depends on rewarding and recognizing them collectively.

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