TEAM PAY
NHS investigates virtues of team pay
Given the right environment, team-based pay can deliver beneficial results. People will put in extra effort to meet team targets but only if the conditions are right. That is the main conclusion to emerge from a national NHS experiment with team-based pay, the results of which were summarised in a recent issue of People Management.
An evaluation of the 17 pilots at 15 trusts set up two years ago by the Department of Health to see if teamworking could be encouraged by financial rewards suggests that, at its best, team pay encouraged closer teamworking and co-operative behaviour as well as enhancing discretionary effort.
The evaluation exercise, which was carried out by consultancies Institute of Employment Studies and Hay Group, concluded that many of the pilots delivered valuable benefits for patients, for trust management and for staff.
As Peter Reilly, director of HR research and consultancy at IES, explains: "The project indicated that team-based pay may be more effective in working with the grain of an organisation than in challenging its culture."
But not all of the pilots were successful, says Reilly. "The pilots show there has to be a certain level of managerial competence and employee acknowledgment of the fact. Data management processes need to be good enough for people to put faith in the results. Channels of communication must be open, both to keep people informed and pick up feedback. Targets are more likely to fail where they were imposed by agencies outside the trust: there needs to be some degree of local ownership. Finally, ill-defined objectives can bedevil team-based pay, or worse, if senior management declares its aim as one thing , but is really hoping to achieve another."
Criteria for success
The NHS experience suggests that for team pay to work well, five key requirements need to be met:
1. There needs to be a clear purpose to team pay reflected in well-defined and attainable targets, where success can easily be measured.
2. Teams have to be established to deliver these targets, but their size can vary, depending on what is being sought. But they do not have to be pre-existing teams: they can be mobilised for the scheme.
3. While it can be helpful to involve staff and their representatives in the target-setting process, a higher priority is that targets are seen as legitimate.
4. Both employees and unions need to trust the good intentions and competence of managers.
5. Team pay schemes must be managed as projects, with effective monitoring of progress and appropriate communication.
| Team pay -- e-reward.co.uk research |
| Team rewards generally gets a good press. It provides an incentive for the group collectively to improve performance. Team pay can be used to reinforce organisational change towards flatter and process-based structures and it can also act as a lever for cultural change. So why does team pay remain at the margins of mainstream reward practice in the UK? The relatively small take up of formal schemes in the UK is probably explained by the fact that many companies feel unable to meet the stringent conditions which need to be applied for its successful introduction. Team pay may not always be appropriate, and its operation is certainly not always plain-sailing. There are a number of organisations that truly believe that it works well for them, even if they cannot quantify the benefits. And no doubt there are many other organisations for which the culture and the importance of good teamwork make team pay an attractive proposition. Team pay as a means of improving team performance does appear to promise much. But a number of organisations that have expressed interest in developing team pay have gone no further. Indeed this is hardly surprising if the onerous conditions for success and the disadvantages of team pay are take into account. What's more, there are a number of powerful arguments against relying on team pay alone to transform the effectiveness of teams. The case for using non-financial means of rewarding teams to support team pay or, indeed, for relying on such means entirely, is a strong one. |
| For more research on team rewards: "A guide to team rewards", e-research June 2003, issue no. 12. 48 pages -- 21,300 words. Published by e-reward.co.uk. To subscribe visit www.e-reward-data.co.uk/content/ResearchReports.asp Price: £35 + £6.13 VAT = £41.13. |
Want to know more?
Title: "Cheek by jowl", by Peter Reilly, People Management, 30 September 2004.
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Posted 18 October 2004