REWARDING and RECOGNIZING TEAMWORK
REWARDING & RECOGNIZING TEAMWORK
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
plays important roles in managing a team and performance.
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
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
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
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
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
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
o Reinforce the organization’s culture
o Not cost the firm too much!!
o Always remember your basic
o Options for reward systems
o Objectives of reward systems
o How rewards impact organizational
o Implementing a reward system
o Appropriate rewards practices
sometimes vary between countries
Individual or Team Rewards?
o fosters independent behavior
o may lead to creative thinking and
o encourages competitive striving
within a work team
o emphasize cooperation & joint
o emphasize information sharing
Both have same purpose.
Types of Team Pay
o Incentive pay
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
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
o Develop a budget
o Decide on measurement periods &
timing of payout
Shorter periods & faster payout motivate more but also increase administrative
o Share financial information with team
Recognition of employee’s efforts is also very important motivational factor
and part of reward system.
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.
Gain sharing Plan: A percentage of the value of increased productivity is
given to employees
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
Advantages include eliciting active employee input, increasing the level of
measurement difficulties, and improving quality. Disadvantages include
protection of low performers,
problems with the criteria used to trigger rewards, and management-labor
Profit sharing: Corporate profits are distributed to all employees.
This is the most macro type of incentive program and is based on the entire
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
include risk for employees, limited effect on productivity, and long-run
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
advantages of team-based pay-for-performance plans include they foster group
cohesiveness and they
facilitate performance measurement. Disadvantages include possible lack of fit
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
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
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 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
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
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,
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
informed of the value of these benefits and are likely to underestimate their