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Leadership and Team Management

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Turning Individuals into Team Players
We have already discussed the importance of right type of team members and their training and
learning organization concepts. To day we will focus on third important components of turning
individuals into team players the “Reward”. Rewarding or compensation of employees/team members
plays important roles in managing a team and performance.
Compensating Teams:
An employee's total compensation has three components. The first and the largest element is base
compensation (i.e., salary). The second component of total compensation is pay incentives (i.e.,
bonuses and profit-sharing). The third component is benefits or indirect compensation (i.e., insurance,
vacation, unemployment, and perks.

Reward and Recognition Systems
o Team-based reward and recognition systems can promote teamwork
o Focus should be rewarding teams for achieving specific goals

Why People Leave Their Jobs?
o They feel they do not make a difference.
o They do not get proper recognition.
o They are not learning anything new or growing as a person.
o They do not like their coworkers.
o They want to earn more money.
People leave organization due to many reasons but one of them might be the improper compensation

Compensating Teams:
Reasons for tailoring compensation to individuals:
o Motivation comes from within the individual as opposed to the group.
o The development of skills and behaviors is an individual undertaking.
o Fairness in dealing with teams does not mean equal pay for all.
o Team compensation is not a payoff but a means of nurturing behavior that benefits the team.

Rewards and other Employee Behaviors
Starting from attracting the good team members/employees to retain every thing is revolving on the
reward system of organization. Three important HR related behaviors like turnover, absenteeism and
attendance is directly linked with the reward system of organizations.
With better reward system we can minimize the turnover, absenteeism and attendance and vice versa.
Reward is also used to reinforce positive behavior and reduces the undesirable behaviors.
Total compensation comprises of direct like wages, salary, commission, gain sharing etc while indirect
benefits, vacation, insurance, etc. Even positive behavior of manager/leader also play important role in
modifying the behaviors of the team member/employees. We can see a wide range of benefits
organization use to attract, and retain the employees.
Objectives of Reward Systems
o Attraction and retention (employees compare to other firms in the market)
o Motivating performance (contingent on expectancy & equity)
o Getting employees to gain skills and knowledge
o Reinforce the organization’s culture
o Not cost the firm too much!!

Designing Rewards
o Always remember your basic motivational theories
o Options for reward systems
o Objectives of reward systems
o How rewards impact organizational effectiveness
o Implementing a reward system
o Appropriate rewards practices sometimes vary between countries

Individual or Team Rewards?
Individual rewards
o fosters independent behavior
o may lead to creative thinking and novel solutions
o encourages competitive striving within a work team

Team rewards
o emphasize cooperation & joint efforts
o emphasize information sharing
Both have same purpose.

Types of Team Pay
o Incentive pay
o Recognition
o Profit sharing
o Gain sharing
Variable Pay (Incentive Pay):
There are several plans that can be used: Merit pay, bonus programs, and awards. Advantages of
individual-based pay-for-performance plans include rewarded performance is likely to be repeated,
financial incentives can shape an individual's goals, they help the firm achieve individual equity, and
they fit in with an individualistic culture. Disadvantages include they may promote single mindedness;
employees do not believe pay and performance are linked, they may work against achieving quality
goals, and they may promote inflexibility.
Variable pay fluctuates according to some pre-established criterion. For select employee groups, such
as sales, variable pay can be as high as 100 percent. The higher the form of variable pay, the more risk
sharing there is between the employee and the firm. Executives and sales personnel are usually treated
very differently than other types of workers in pay-for-performance plans. A number of plans are used
to link executives' pay to a firm's performance, but there is little agreement on which is best. Sales
professionals may be paid in the form of straight salary, straight commission, or a combination plan.
The relative proportion of salary versus incentives varies widely across firms.

Guidelines for Variable Team-Based Pay:
o Tie rewards to performance
Make sure employee has control
o Balance team & individual pay.
o Make sure team compensation system consistent with rest of organization
o Make it clear who is eligible
o How to divide it up?
o Decide on compensation criteria (pay for bottom line results? Contribution? Behavior? Attitude?)
o Are you rewarding for past or projected performance?
o Develop a budget
o Decide on measurement periods & timing of payout
Shorter periods & faster payout motivate more but also increase administrative costs!
o Share financial information with team members.

Recognition of employee’s efforts is also very important motivational factor and part of reward system.

General Rules:
o Not everyone should get it
o Give in timely manner
o Publicize it
o Tie it to team performance
o Personalize awards
o Nomination should be simple
o Recognize performance linked to org. goals

Gain sharing Plan: A percentage of the value of increased productivity is given to employees
(prearranged formula).
These plans reward all workers in a plant or business unit based on the performance of the entire plant
or unit. Plant wide plans are generally referred to as gain sharing programs because they return a
portion of the company's cost savings to the workers, usually in the form of a lump-sum bonus.
Advantages include eliciting active employee input, increasing the level of cooperation, fewer
measurement difficulties, and improving quality. Disadvantages include protection of low performers,
problems with the criteria used to trigger rewards, and management-labor conflict.

Profit sharing: Corporate profits are distributed to all employees.
This is the most macro type of incentive program and is based on the entire corporation's performance.
The most widely used program of this kind is profit sharing which differs from gain sharing in several
important ways: no attempt is made to reward workers for productivity improvements, they are very
mechanistic, and typically they are used to fund retirement programs. Advantages of this plan are
financial flexibility for the firm, increased employee commitment, and tax advantages. Disadvantages
include risk for employees, limited effect on productivity, and long-run financial difficulties.
Team-based plans attempt to support other efforts to increase the flexibility of the workforce within a
firm. These plans normally reward all team members equally based on group outcomes. The
advantages of team-based pay-for-performance plans include they foster group cohesiveness and they
facilitate performance measurement. Disadvantages include possible lack of fit with individualistic
cultural values, the free-riding effect, social pressures to limit performance, difficulties in identifying
meaningful groups, and inter-group competition leading to a decline in overall performance.

Team Performance Appraisal
Performance appraisal involves the identification, measurement, and management of human
performance in organizations. Organizations usually conduct appraisals for administrative (a decision
about an employee's working conditions, including promotions and rewards) and/or developmental (a
decision concerning strengthening the employee's job skills, including counseling and training)
purposes. Dissatisfaction with appraisals is rampant. HR professionals, line managers, and employees
voice dissatisfaction. Many workers have difficulty with appraisal, which may account for the short life
span of the average appraisal system.

360-Degree Feedback
360 degree feedback is a tool that gives individuals a clear view of their performance at work. Opinions
are gathered from the person being assessed; people that work for them, their peers and their manager.
All views are grouped together to form the full picture. In most cases opinions are expressed by the
completion of a questionnaire covering different aspects of expected performance factors.

Effective Benefit Administration
There are two critical issues in the administration of employee benefits: the use of flexible benefits and
the importance of communicating benefits to employees. A flexible benefits program allows
employees to choose from a selection of such employer-provided benefits as vision care, dental care,
health insurance coverage for dependents, additional life insurance coverage, long-term disability
insurance, child care, elder care, more paid vacation days, legal services, and retirement plan. Benefits
communication is essential. Many employees with excellent benefits packages have never been
informed of the value of these benefits and are likely to underestimate their worth.

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