Canadian HR Reporter

In today's business world, teams play an integral role in the day-to-day operations of many, if not most, organizations. This widespread use of teams in organizations is partly due to a common assumption among organizational leaders: teams are 'better' at completing complex tasks in the modern, knowledge-based economy (Lafasto & Larson, 2001). Whether this assumption is true or not (cf. Allen & Hecht, 2004), the utilization of teams in organizations does not seem to be waning. Nonetheless, this dependence on teams, and teamwork, creates other challenges in the work- place, especially in regards to the appropriate compensation of team members. REWARDING TEAMS The goal of rewards in any compensation system is to effectively mo- tivate employees and to reward them for good performance (Lawler, 2000; Rynes, Gerhart, & Parks, 2005). With the increased use of teams in organizations, it has become widely accepted that organizations need to incorporate a method of rewarding teams (DeMatteo et al., 1998; Gross, 2000; Lafasto & Larson, 2001; Lawler, 2000; Levi, 2011; Welbourne & Gomez-Mejia, 2000). Nevertheless, companies have been struggling to do this effectively, and understandably so. What is more effective, rewarding team members separately (i.e., equity-based reward) based on their individual performance in the team? Or, provid- ing a reward that is shared equally between team members (i.e., equal- ity-based reward) based on the team's overall performance? Sadly, there is no clear answer, and both approaches have their advantages and disadvantages. REWARDING INDIVIDUALS IN A TEAM It is inevitable that, when working on a task, some team members will contribute more than others. Is it fair, therefore, to provide a shared re- ward? Some researchers and practitioners argue that because individ- uals' performance will vary across team members, the fairest approach is to continue rewarding individual performance. This is advantageous when individuals' knowledge, skills and abilities (KSAs) vary across team members, and also when individual performance can clearly be measured within a team. But, this approach is not without disadvantages, and major ones at that. Providing individual rewards can create competition between team members within a team, resulting in a decrease in communica- tion, cooperation, and team cohesion. At its worst, individual rewards in a team can even lead to team members sabotaging the work of fel- low team members. Thus, it is often recommended that, to motivate truly interdependent behaviour, a shared team reward is required. SHARED TEAM REWARDS As previously stated, the goal of a reward is to motivate employee behaviours. It is seems reasonable, therefore, that research and theo- ry generally recommend the use of a team reward over an individual reward when rewarding teams. In general, a shared reward – that is one that is distributed equally between team members – is believed to increase teamwork behaviours (e.g., cooperation and knowledge sharing) among employees and to increase commitment to team goals and tasks (DeMatteo et al., 1998). Although research on shared team rewards has demonstrated that, in general, they are more effective than individual rewards in a team, shared rewards also come with some disadvantages. A shared reward may lead to individuals putting in less effort and becoming a "free rider" who puts in minimal effort and still reaps the benefits of his or her team's performance (see Kerr & Bruun, 1983). Moreover, a shared reward may produce conflict within a team if team members believe some members are not pulling their weight (Price, Harrison, & Gavin, 2006). Where does this leave us? It appears that both methods of rewarding team members have their ups and downs. Are team rewards a situation where we have to take the bad with the good? More importantly, is re- warding team members an "either or" scenario, or is there something in between? HYBRID REWARDS Recently, it has been argued that by combining both individual and shared rewards – and creating a hybrid reward system – organizations can benefit from the advantages of both reward techniques and avoid their disadvantages. In accordance with this argument, recent research by Pearsall, Ellis, & Bell (2010) found support for the use of hybrid re- wards. The authors found that teams whose members received a com- bination of both individual and team rewards outperformed teams in which members received either an individual reward or a team reward. This suggests that hybrid rewards effectively motivate both individ- ual performance within the team, and the performance of the team as a whole. Thus, when compensating team members, a strategy that includes rewards at both the individual and the team level may hold some promise. Although a hybrid reward system may be ideal, it may not be feasible for all organizations to implement. It is therefore important to note that Pearsall and colleagues found that although the teams who received a hybrid reward performed the best, the teams who received only a shared team reward also outperformed teams who received individual rewards. Thus, if a hybrid reward system is not possible, a shared re- ward may well be your next best option! Written by: Dr. Hayden Woodley & Dr. Natalie Allen CPHRPEI.CA Chartered Professionals in Human Resources of PEI (CPHR PEI) • 101 Kent Street, PO Box 2151, Charlottetown, PE C1A 8B9 Team Rewards: One-for-all, all-for-one, or something in between?

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