HR MANAGEMENT - The Advantages of Offering a Team-Based Incentive Pay Plan

The Advantages of Offering a Team-Based Incentive Pay Plan

by Lisa McQuerrey, Demand Media

Group efforts challenge team members to be at their best.

A team-based incentive pay plan financially compensates employees for the goals they meet as a collective group, rather than as individuals. Employers who use this method find the approach brings a sense of urgency to the group effort and results in greater performance and goal reaching than when individuals work on their own. It also results in a greater sense of camaraderie among coworkers.

Financial Incentive

A team-based incentive plan is much like a commission sales job: If you don’t perform well, you don’t get paid. Taking this concept to the group level, employees operating under a team-based incentive pay plan recognize that the greater their collective performance, the greater payday each will enjoy at the project’s completion. Employees are often motivated by the fear of letting down their team members.

Group Effort

When a team paycheck is riding on the collective performance of several individuals, the stakes are such that a sense of camaraderie develops and team members feed off one another’s energy and enthusiasm for the project. Knowing that performance is tied to payment, team members are more likely to find ways to work together effectively as a group. There’s little room for in-fighting and disagreements when all participants are working toward a collective, common goal.

Strength-Based Contributions

In a team effort approach, each employee brings a unique set of skills and experience to the table. When each member works in her own comfort zone, it creates a dynamic and effective team. One team member’s weakness may be another’s strength, which creates an overall balance.

Peer Pressure

Employees working on salary-based solo projects are usually held accountable to an immediate supervisor, whereas a member of a team-based incentive pay plan is held accountable to an entire group of people. Individuals who are not pulling their weight or contributing to the group in an equitable manner will usually be put on notice by team members that their performance level is unacceptable. This level of peer pressure prevents slacking.

Employer Advantage

Employers benefit from a team-based incentive plan in much the same way they benefit from using a commissioned sales staff. If performance goals are met, both the team members and the employers make money. If the goals go unmet, the employer loses less than he normally would paying employees a straight salary or hourly rat