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Rewards: How to Structure Rewards in the Team

Team performs better with group-based incentives

· team,to-sort

You can reward people in the team according to:

  1. Individual-based or team-based performance
  2. Competition-focused or cooperation-focused performance

Then define if these rewards are effective.

Addressing Folly A / Folly B
Typically you seek to reward one behavior but you rewarding in reality another one.
Ex: Want teamwork but reward individual performance

  • Understand what behaviors you are rewarding
  • Reward systems should reinforce desired behaviors
  • Alter the reward system

Cooperative vs. competitive rewards
Do you need quantity (speed) or quality (accuracy)?
The effectiveness of competitive and cooperative reward structures depends on the dimension of task performance: quantity or quality.
Choose competitive rewards for quantity but cooperative rewards for quality.


Source: Beersma et al., Academy of Management Journal, 2003

Be careful: switching is not simple

  • Switching from competitive to cooperative reward structures is difficult: Norms from competitive structure carry over.
  • Switching from cooperative to competitive reward structures easier (preserve cooperative norms)

Source: Johnson et al., Academy of Management Journal, 2006

Mixed rewards = mixed evidence

  • "Nor do hybrid groups experience the benefits... Their cooperation norms are weak, and the quality of their interpersonal processes is relatively low. They work alone, with loose and ineffective coordination... (they) rarely cross territories to help other technicians..." 

(Wageman, Administrative Science Quaterly, 1995)

  • "... (hybrid reward structures) prove most advantageous for such highly interdependent teams, as teams operating under a hybrid reward structure performed better than teams with either cooperative or individual rewards." 

(Pearsall et al., Journal of Applied Psychology, 2010)