2017 has brought so many leadership trends and reevaluated team incentives are one of them. This pertains to the reward system of companies on teamwork, especially since more emphasis is given toward team projects. Forbes shared that you receive what you reward, and if you want to reward collaboration, learning and shared wins, you have to incentivize it.
Science Direct explains that to effectively work with teams, an organization must know to make, use, and keep them and their members. They have researched teamwork productivity and effectiveness based on rewards and other factors. The results show that the bigger the reward, the more satisfied and motivated a team is. This leads to better and more efficient work output from the team. The team learns to work together more efficiently and do the job quicker to get the team incentive.
A good reward system for teams makes them competitive and motivated. Harvard Business Review explains that “the power of a compensation plan to motivate salespeople not only to sell more but to act in ways that support a start-up’s evolving business model and overall strategy.” This means that when a team succeeds, they are given compensation accordingly. When they fail, they will feel a decrease in earnings as well. The reward or punishment must be on the heels of the success or failure to have a bigger impact on the team.
But what is the right amount of team incentive? Many companies believe they’re paying their employees for performance according to Gallup. They even made a poll and more than 4 in 10 employees (43%) say that part of their total compensation includes some type of incentive pay. Incentive pay may be a commission or a bonus. But if the difference between top performer pay and non-contributor pay is less than 50% of the top performer’s pay, you may be driving away your best people warns Gallup. Make sure employees know what’s expected of them and how they will get the team incentive so there will be no confusion. Simple metrics and engaging team incentives make for a more productive team.
It is now clear that team incentives are designed to encourage good work from teams in the company. Team incentives can be monetary and non-monetary, to boost productivity and earnings, at the same time rewarding effective teams. But what are the different types of team incentives? Chron shares some team based incentive plans:
- Profit Sharing – a team-based incentive plan in which you pay your employees a percentage of your company’s overall profits
- Gain Sharing – a team incentive in which you reward employee groups for measurable, non-financial achievements in pre-established areas
- Goal-Based Incentives – a team incentive in which you reward employees for reaching specific goals
- Merit-Based Incentives – a team incentive in which you reward employee teams for effort, regardless of outcome
- Financial VS Non-Financial Incentives – If cash rewards are too much for your small business budget, other incentives to extend include paid time off, free company services or merchandise, or preferred parking or office space.
A great incentive plan for teams is important to avoid fiascos like what Wells Fargo went through last year. For teams to work under intense pressure and not get ample rewards can cause bad behavior in the teams. Communication is key here, as long as everything is clear between leaders and their teams in terms of expected output and the equivalent rewards, a company shouldn’t worry about following in Wells Fargo’s footsteps.