Organizations are recognizing that some individual incentive systems can do more harm than good, particularly in those situations where team-work and coordination among workers are becoming more important. A pay system that encourages competitive behaviour may find that the competitor is often a worker’s colleague, not an external business competitor. When a situation such as too much competition begins to disrupt operations or when a new team-building programme such as Total-Quality Management (TQM) is implemented, team-based incentives need to be considered. Team or group incentive plans, pay incentives to the team-based on the team’s performance
(Hamblin, 2000). One way to do this is to set work standards for each team member and then
calculate each member’s output.
Members are then paid based on one of three formulas:
1. All members receive the pay earned by the highest producer
2. All members receive the pay earned by the lowest producer, or
3. All members receive the pay equal to the average pay earned by the group.
Accordingly, team-based pay plans should emphasize cooperation between and within teams, compensate employees for additional responsibility they often must assume in their roles as for the team (Kanin-Lovers and Cameron 1993).
Team-based organizational structures encourage team members to learn new skills and assume broader responsibility than is expected of them under traditional pay structure that are geared toward individuals. Usually, a pay plan for teams emphasizes cooperation, rewarding team members for the traditional responsibilities they must take on and for the skills and knowledge they must acquire.
In agreement with Hamblin (2000) Martocchio (1998) states that: group incentives programmes rewards employee for their collective performance rather than each employee’s individual performance. Group Incentive programmes are most effective when all group members have some impact on achieving the goal, even though individual contribution might not be equal.
Armstrong and Ryden (1996:25) posited that:
Team pay is usually paid in the form of a
bonus that is shared amongst team members
in proportion to their base rate of pay
(much less frequently, it is shared equally).
In a team-based pay, performance may be measured in terms of outputs and /or the achievement of service delivery standards. The quality of the output and the opinion of the customers about service levels are also often taken into consideration. While the more
reward team structure certainly is promising one, there are many loose ends to its success, one major flaw being how to reward them; (members and teamwork). Sequel to the above Gerber (1995:180) puts things into context when he noted:
It’s a struggle trying to persuade many employees
that working cooperatively with others is in their
best interest. It’s an epic battle teaching them how
to collaborate, especially when it means they
must resist a lifetime of seeking personal glory.
And it’s truly exasperating trying to get non-teamed
parts of the organization, as well as customers and
suppliers to work harmoniously with the team.
Unfortunately, there’s another problem waiting just around the corner, it is the issue of compensation. To wit: Now that people are working closely together to produce jointly, how do you pay them in a way that encourages collaboration and spur the team to produce its utmost, but does not ignore the individual’s innate desire for personal recognition.
The biggest single barrier to effective administration of team-based pay is cultural, especially in a higher individualistic culture such as Nigeria. (Trompenaars 1994). Team-based pay is a direct assault on the cultural tradition of putting the individual above the group
Another culturally rooted problem of team-based pay system is a general lack of team work skills. Members of high-performance teams are skilled communicators, conflict handlers, and negotiators: they are flexible, adoptable and open to change. Employees accustomed to
being paid for personal achievements tend to resent having their pay dependent upon others’ performance and problems. The combination of poor interpersonal skills and an individualistic work ethic can breed conflict and excessive peer pressure, as Levi Strauss & Co. learned at its El Paso, Texas, Pants factory. The El Paso plant was one of 27 sewing operations in the United State, where Levi’s switched them from traditional assembly lines to 20-to-30-worker multitask teams responsible for complete batches of pants, from start to finish. Eighteen months into the new team structure, orders were being processed in only three days, as opposed to a seven –day turnaround under the old system.
But Levi got more than improved productivity in Mitchel, 1994 and Shaw et:al; 2001:104:
Under the team system, a worker’s incentive
pay is tied to a team performance. A poor
performer or absent worker affects everybody’s
pay cheque. When someone is perceived to be
faking sick days or lollygagging on a sewing
machine, tempers flare, says (team member Salvador)
Salas: “Somebody’s fooling around, and somebody
else calls attention to that, and the first guy will
just flip him off”. Supervisor Gracie Cortez says that
“it gets tough out there”, She find herself intervening
to prevent “big fights” says a plant manager Edward
Alvarez. In line with the above: ‘peer pressure can be
vicious and brutal’
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