Payroll Manager Tutorial | Team Based Compensation

Team Based Compensation

• Teams have become a popular way to organize business because they offer companies the flexibility needed to meet the demands of the changing business environment. While many companies have been quick to organize their workforce into teams, they have not been as eager to implement team-based compensation systems. However, if team-based organizations continue to utilize old, individually-oriented pay systems, they will not fully realize the benefit of highly cooperative and motivated work teams.
• Team compensation is a way of rewarding performance in team settings. That is, individuals are rewarded based on the performance of the team as opposed to individual performance. There are different kinds of compensation such as a portion of base pay, other financial rewards such as gain sharing, and non-financial rewards such as movie passes and gift certificates.
• Teams are defined as groups of individuals who work together to develop products or deliver services for which they are mutually accountable. Because of this new shift in organizational structure, employees are being Organizations have been using teams more and more to carry out different functions in the asked to work with others and their collective performance is evaluated. Traditionally, employees have been compensated based on their individual performance, but now they are being evaluated based on how their teams perform. Therefore, it does not seem to make much sense to compensate employees individually based on how their whole team performs.
• Therefore, organizations are moving toward compensating individuals based on team performance. Team compensation is a way of rewarding performance in team settings. That is, individuals are rewarded based on the performance of the team as opposed to individual performance. Team compensation is often referred to as team-based rewards or team-based pay. People learn to behave in certain ways based on the rewards they receive.
• Therefore, in order to convey to people that they want them to produce more in teams, reinforcement of behaviors that lead to and sustain team performance is necessary. Individual bonuses work against the team, thus lessening the team spirit.
  

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