Why individual incentives compromise team performance

June 3, 2013 | By Neil Ducoff | No Comments

As a leader, you are responsible for harnessing and orchestrating the talents and capabilities of employees into a high performance team. To do so requires an ongoing commitment to training, coaching, evaluating, mentoring, and inspiring individuals to achieve their full potential – so in turn, your team can achieve its full potential. Yes, people work for money, but studies consistently show that money is not the prime motivator for job satisfaction and impressive performance.

Individual financial incentives motivate employees in the short-term picture, but emphasizing financial rewards leads employees to focus on personal gain at the expense of teamwork. Avoiding the short-term and producing the right outcomes over the long-term requires preparation. This means planning, discipline, and execution. Preparation shapes and defines your company’s culture. Preparation pulls a team together into a cohesive entity capable of achieving the extraordinary. It’s about the team, pride, quality, and winning.

Here are some no-compromise thoughts on individual incentives and why they compromise teamwork:

  • “We” thinking versus “me” thinking: Financial rewards come with winning as a team. Winning as a team means a healthier and financially viable company capable of giving raises, team bonuses, and investing in training and personal development. Individual incentives, on the other hand, mean there will be winners and losers at the expense of teamwork. Winning teams bring everyone across the finish line. Which thinking do you want in your company culture?
  • Prepare versus bribe: As stated earlier, it’s the preparation, training, and mentoring of individuals that produces results. Telling someone to “sell more” or “get your numbers up” while backing your command with individual incentives and/or commissions won’t magically improve performance if skills are lacking. There are no shortcuts around preparation, training, and systems development – especially if quality and extraordinary customer service are what your company stands for.
  • Pay based on overall performance: High sales and a bad attitude don’t deserve financial reward. High sales and low client retention don’t deserve financial reward. High sales and not playing by the rules don’t deserve financial reward. But individual incentives and/or commission do reward these things – it emphasizes the performances and behaviors you don’t like paying for. That’s why I have never been a fan of individual incentives or commission. Pay based on overall performance goes far beyond sales to include skill development, culture, teamwork, and individual strengths. It may seem counterintuitive, but just because an individual can sell a lot doesn’t mean he or she is an asset to the company.
  • Team bonus rocks: There’s nothing more inspiring to watch than a team coming together to hit goal. Everyone is pushing and pulling in the same direction. The experienced are helping the inexperienced. Leaks are plugged. Opportunities don’t slip through the cracks. Good decisions are made within the team. Winning activates the bonus pool and everyone celebrates the win. In reality, the win is far more empowering than the bonus. The bonus is simply icing on the cake.

The message here is to focus heavily on the preparation of your employees to achieve the desired outcomes and to weigh how your reward system will positively or negatively impact teamwork. Never compromise teamwork.

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Categories: Business Builders , Compensation , Leadership , Monday Morning Wake-Up , No-Compromise Leadership , Teamwork

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