Choosing Between Individual and Team-Based Incentives

Incentives are a great way to keep your workforce motivated, but knowing what kind of incentive program to implement can make a big difference in terms of results. For many companies, everything boils down to individual versus team-based incentives. What are each option’s strengths and weaknesses and which one is a better fit for your company? A better understanding of both types of incentive programs should help you choose the right option.

Incentivized and motivated business team

Before you start, you also have to remember that implementing any kind of incentive program requires the right tools to make sure it is properly implemented. Managing pool bonuses, overseeing cash rewards based on performance, and keeping track of payouts and promotions manually can be a huge challenge, especially as your workforce grows. You’ll need a reliable incentive compensation software to manage your incentive programs if you want to avoid problems such as inaccurate payout and pay disputes later on.

Individual Incentives

Individual incentives, as the name suggests, are designed to reward individual employees based on how well they perform according to established metrics. The main intent of this kind of incentive program is to encourage top performers to keep on doing great while also encouraging other employees to follow the former’s example and earn their own bonuses.

Individual incentives provide top-performing employees a personal sense of achievement because they are directly getting rewarded for their own efforts. Since employees rewarded by this kind of incentive program earn bonuses based on their own performance, those who have yet to qualify for the bonus will see that everyone has a chance of getting rewarded if they put more effort into improving their individual tasks.

Nevertheless, individual incentives have their own set of disadvantages as well, the most glaring one being the unnecessary competition it could create. Although having more competitive workers is good for the company, the rivalry could reach a point where some individuals would resort to cutting corners or even undermining the performance of other workers just to qualify for the incentives.

Team-Based Incentives

Instead of having a few top-performing individuals receive rewards, a team-based incentive program focuses more on rewarding the team as a whole. If a team finishes a big project sooner than expected or if they go well above their quota within a given time, all members of the team get rewarded for their collective effort.

Perhaps the greatest strength of a team-based incentive program is that it gives everybody an equal chance of being rewarded despite some employees being more skilled than the others. Furthermore, workers will be more motivated to go above and beyond because they wouldn’t want to be the person that weighs down the group and cause them to lose their rewards. On the other hand, it also encourages employees to work together by picking up the slack in case members of the team are having problems.

However, the team approach also has its downsides. Top performers may feel cheated because underperforming workers get rewarded just as much as they are, regardless of their contribution to the team. On the other hand, bottom-tier employees might end up just caving to the pressure of failing their teammates.

Why Not Both?

It is possible to implement a hybrid of individual and team-based incentive programs. With a hybrid incentive program, individuals will still feel properly rewarded for their own efforts, while the team-based aspect of the program still gives low performers a chance to be rewarded as they contribute to the team in their own way.

That said, managing a hybrid incentive program will require even more effort when it comes tracking its individual components. This makes the use of a proper incentive management software even more important.

Making sure workers are properly rewarded goes a long way in ensuring your business runs smoothly. As long as your employees know that your business is worth going the extra mile for, you can expect a more productive workforce, better employee retention, and a better employee-employer relationship.


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