More and more
companies are now applying team-based incentive programs. Here
are some factors that need to be considered when applying
Team-based incentive programs are a meaningful way to link team
performance and pay. Ultimately, a program of this nature can be
successful, given the proper culture and environment. The
challenge lies in properly defining, designing, implementing,
and communicating the plan.
Like any compensation plan, it needs to be developed in support
of a company’s business, HR and compensation strategies.
Companies also must be aware of competitive norms within their
industries and internally whether a plan is applicable and
economically viable. In the process of designing such an
incentive plan, some basic elements need to be considered in the
include, but are not limited to: determination of employee
eligibility, desired results and expected behaviors, types of
measurement and the ease with which these can be measured and
understood, method of performance evaluation, extent to which
individual performance is considered in determining the final
award, schedule/format of plan pay out, and employee buy-in. The
last of these, employee buy-in, cannot be underestimated.
Employees' belief and support in a team-based incentive plan is
critical to the success of the plan. Employees need to believe
that they can control meeting the deadlines and quality. If
other factors will play a greater role in determining the
outcome, this plan will not be as successful.
Additionally, employees must believe that the rewards are
appropriately distributed. For example, if awards are equally
allocated, members of the team may feel one member is not
contributing his/her share and be dissatisfied with the plan
The same is true when an employee feels his or her contribution
deserves a greater reward than another team member with lesser