Should You Reward High Performance and if so How?

By Matthew Emerson, Founder and Managing Director, Blackmore Four 

In our last article – “what do high-performing teams mean?” we identified four enabling conditions – a compelling direction, high accountability, clear expectations and trusting relationships to be the basic platform for high performing teams.  But work teams do not operate in an organisational vacuum. Organisational performance is the key interest for managers and executives; however, organizations only perform efficiently if individuals feel satisfied and committed as well as cooperate with colleagues.

Features of the organisational context, such as the reward system, specific incentives and career development opportunities as well as the coaching and feedback behaviours of team leaders, can have.

a seismic impact on the outcome of the team.  In today’s team-centric workplace, how do you recognise employees’ contributions to team success in the most effective way?

Individual vs. team reward

The problem is that group tasks are usually a mix of group and individual interests, a mixture of cooperative and competitive incentives.  Therefore, is team recognition better? Or is it best to reward individual contributors?

When you reward individuals for their hard work and for achieving results, you incentivise them to keep up the good work.  This recognition can, in turn, influence others to improve their performance.  However, rewarding individuals may create a more competitive environment, potentially undermining any efforts to establish or maintain a collaborative culture within the organisation.

Through a meta-analysis of 30 studies involving more than 7,000 teams, Garbers and Konradt (2014) found that team-based rewards yield moderate positive effects on team performance.  Recognising an entire team encourages greater camaraderie and when people are motivated to work harder for the good of the team, it often results in higher performance.  Moreover, it demonstrates to the team that others in their organisation (specifically, those who designed the reward system and administer it) care enough about a team’s performance that they are willing to expend organisational resources to recognise what it accomplishes.  Effective team rewards should elicit and reinforce collaboration among members as they work together to achieve compelling team purposes.  Recognition for good team performance encourages members to think of “us” rather than “me” and goes a long way in helping to sustain collective motivation.

Both individual and team-based recognition have their pros and cons.  So, what would be a compromise solution? A third option is offering a hybrid recognition program.

By simultaneously rewarding group and individual achievement, you can motivate everyone to work hard toward achieving the team’s goals.  At the same time, you also recognise individual team members who go the extra mile.  These are the people who make outstanding contributions to the team’s overall performance. The work they do is worthy of special recognition and should be rewarded appropriately.  When a team receives something that members collectively value, it becomes more likely that members will do again whatever it is that they did before.

The consequences of excellent team performance, therefore, must be something that team members themselves view as favourable.  Even if leaders think that putting a team’s name on the company intranet is kudos for high performance, that listing will have no effect if team members view it as silly, embarrassing or meaningless.

One kind of recognition that almost everyone cares about is money.  At least in Western societies, people have learned well to “follow the money” if they want to understand what is going on or what is most valued by those in charge.  Although compliments and nonmonetary rewards can go a long way in reinforcing team excellence, they cannot go all the way.  At some point, people want to see some cash—or at least feel they have a piece of the financial action.  What factors do you need to consider when designing your rewards strategy?

Equitable v’s equal

The evidence suggests that equitably distributed rewards are more effective than equally distributed rewards in

Matthew Emerson

affecting team performance.  So, for example, the practice of distributing the same bonus to all team members at the end of the financial year, while it might be easier to do, may yield weaker effects on future performance.  Because fairness violations are processed more emotionally than rationally, even nominal rewards for team performance have implications for fairness perception and must be managed.

Communicate effectively

Communicate how you will distribute rewards: if you want to value individual contributions, you will need to define and say what the indicators of performance are (e.g., the amount of responsibility, hours worked, individual outcomes).  In other words, use equitable pay and be meritocratic.  Giving employees “voice” is an important first step of rewards fairness.  Objectives and performance should be measured among individuals, so that you can show what each team member has done and what they each receive as a reward.

Consistency is key

Finally, we encourage team leaders to make sure they use fair decision-making criteria when they are deciding on who should receive recognition.  Team members need to trust that you are recognising team members who make valuable contributions.  Distributing formal recognition based on arbitrary factors, or simply rewarding “teacher’s pets,” may compromise the positive (and exacerbate the negative) changes found in our research.  Many employees report feeling undervalued at the end of a project.  These less favoured members are usually separated from the favourable team members due to hierarchy or departmental lines.

Conclusion

Team-based rewards have both potential benefits and drawbacks for an organization, especially in the context of team trust. While they can be successful in highly interdependent team environments when reward measurements are fair and clear, they can also result in motivational loss, competitive behaviour and feelings of discomfort by team members who are reluctant to determine each other’s pay when such preconditions are not in place.  It is important for managers to take these dynamics into account when designing a team-based rewards program and remember that there is not a one size fits all approach.

About Author:

Matthew Emerson is the Founder and Managing Director of Blackmore Four, an Essex based management consultancy working with leaders of ambitious businesses to achieve outstanding performance through periods of growth or significant change.

Starting his career at Ford Motor Company, Matthew has developed his expertise in Organisational Effectiveness in key senior HR, Organisational Development and Talent roles, predominantly in Financial Services (Credit Suisse, Barclays and DBS) and most recently as the Group Head of Talent and Performance at UBS AG.

Having worked in and across Asia for six years as well as having ‘global’ responsibility in a number of his roles, Matthew has an appreciation of international and multi-cultural working environments.  He also has a multi-sector perspective, having worked with organisations in Manufacturing, Healthcare, Education and Technology.