Company Culture

Pros of Team-Based Incentives

There are a variety of ways that organizations can reward employees to encourage continued commitment and high productivity. And, while employees often vary widely in the level to which they value various types of rewards, bonuses are a commonly used tool that tend to provide value for most employees.teams

In fact, bonuses can be a significant component of employee compensation for many employees. The challenge is often how to properly incentivize employees with those bonuses.

Because many companies focus heavily on teamwork and group objectives, team-based bonus structures are often implemented. But what are the pros and cons of such a bonus structure? First, we’ll look at the pros.

Reward the ‘Unsung Heroes’

Developing a bonus scheme requires determining the right behaviors to encourage, and this often means tying the size of a bonus to financial outcomes of certain behaviors. This is much easier for some jobs than for others.

For example, a salesperson’s bonus can fairly easily be tied to the amount of revenue he or she brings in. But what about an administrative assistant or a project manager? A team-based bonus structure rewards everyone who has taken part in achieving a goal, even if an individual works largely behind the scenes.

Improve Team Cohesion

Unsurprisingly, one of the benefits of rewarding people as a team is that it can help employees work more effectively as a team to achieve desired outcomes. “Creating a group incentive plan can help foster relationships between staff members, encouraging them to find ways to work together in a collective environment in order to achieve group goals,” says one expert. “The approach can build a stronger team, encourage brainstorming and create a vested sense of project ownership across the board.”

Rewards Based on Organizational Performance

Even in relatively individual-focused businesses such as law firms or sales-driven organizations, a company is more than simply a collection of individuals. A well-run business should be more than the sum of its parts. To this end, team-based incentive structures encourage the promotion of organizational versus individual goals.

Hopefully we’ve demonstrated that there are some important reasons many companies pursue team-based incentive structures. There are some legitimate benefits. But this structure doesn’t work in all situations. In a follow-up post, we’ll talk about some of the downsides.