TEAM PAY
Rewarding teams under scrutiny
Team pay looks good in theory, although its adoption and use is rarely painless. What’ s more, it’ s vital that you don’ t rely on team pay alone to transform the effectiveness of your teams. That’ s what Michael Armstrong’ s says in a new report for the Chartered Institute of Personnel and Development. Merit pay misgivings
As organisations become uneasy, some deeply so, about the efficacy of individual performance-related pay, increasing attention is supposed to be turning to schemes that link rewards to the performance of teams.
Although take-up is still limited in the UK, continuing interest is being expressed in team pay, says Armstrong, managing partner of e-reward.co.uk, because it is seen by many as a means of supporting effective teamwork in team-based organisations.
One of the common reasons for developing team rewards is the perceived need to encourage group endeavour and co-operation rather than to concentrate only on individual performance .
According to received wisdom, individual performance-related pay schemes undermine team performance by encouraging employees to focus on their own interests rather than those of the team. As Armstrong explains: They result in managers and team leaders treating their team members as individuals rather than relating to them in terms of what the team is there to do and what they can do for the team.
Treat team members as individuals
But elsewhere Armstrong adds a note of caution: Members of teams still like to be treated as individuals. They may feel that they are contributing more than their fellow team workers and should be rewarded accordingly.
So, from the employers perspective, it could be disadvantageous to neglect the impact of individual contribution, initiative and innovation.
What is team pay?
For Armstrong team-based rewards consist of payments or non-financial rewards provided to members of a formally established team. They are linked to the performance of the team as a whole, and are awarded in addition to the individual pay received by each team member.
The case for team pay
Organisations with team pay report a variety of far-reaching advantages. According to Armstrong, at its best, team pay can encourage closer teamworking and co-operative behaviour. It can also help clarify team goals and reinforce organisational change in the direction of increased emphasis on teams.
Stumbling blocks
Team-based reward may well offer some important advantages, but in the words of Michael Armstrong, it can be difficult to operate . The relatively small take up of formal schemes is probably explained by the fact that many companies feel unable to meet the stringent conditions which need to be applied for the successful introduction of team pay.
Some drawbacks . . .
Team pay may undermine organisational flexibility. Where the least successful teams receive only modest rewards, there is little chance of them wooing the best staff. The reverse may also be true — with the strongest performing employees drawn to highly-rewarded teams. As a consequence, staff may be reluctant to move between teams, thereby making it more difficult to reassign work among teams and create new teams in response to changing business needs.
Armstrong points to further problems when it comes to identifying teams. Its effectiveness depends on the existence of well-defined and mature teams — but they may be difficult to identify and, even if they can be, do they need to be motivated purely by financial reward?
The development of group norms may also impede corporate performance. Pressure to conform could result in the team maintaining its output at lowest common denominator levels — sufficient to gain what is thought collectively to be a reasonable reward, but no more.
Want to know more?
Title: Rewarding teams, by Michael Armstrong, Chartered Institute of Personnel and Development, Good Practice Guide.
Availability: contact the CIPD, tel: 020 8971 9000. Please remember to quote e-reward.co.uk in any correspondence.
Tale a look at the CIPD web site . . . www.cipd.co.uk