How do team incentives compare to individual incentives

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FLSA/Wages
How Do Team Incentives Compare to Individual Incentives?
by Stephen Bruce, PhD, PHR
Thursday, October 3rd, 2013
Yesterday’s Advisor featured consultant Katie M. Busch’s tips on incentives for nonexempts. Today, her take on team
vs. individual awards, plus an introduction to the unique guide just for smaller—or even one­person—HR departments.
Busch, whose remarks came at a recent BLR­sponsored webinar, is owner
of HR Compensation Consultants, LLC. Here are her suggestions about
team and individual incentives.
What Are Team­Driven Incentives?
Team­driven incentive are intended to foster a collaborative environment in
which team members are focused on helping one another. They:
Are based on a team’s performance.
Place the focus on how a team comes together to drive the
business.
Types of plans:
Gain­sharing plans
Profit­sharing plans
Earnings­at­risk plans
Types of Team­Driven Rewards
Team incentive carve­out—A broadening of individual performance measures to include team
performance.
Team multiplier—Multiplies the individual’s incentive earning by a factor based on team performance.
Team pool—Typically used in sales; allocates the incentive to team members based on each person’s role
in the sales process.
Unique team measures—Specifically created for a unique team; generally are customer­focused measures.
Individual Performance Measurements
Quantity of work output
Quality of work output
Monthly sales
Work safety records
Work attendance
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Advantages and Disadvantages of Individual Incentives
Advantages
Relate pay to performance of individual.
Help retain best performers.
Provide equitable distribution of compensation.
Suitable for individualistic culture.
Disadvantages
Factors not rewarded may be overlooked.
Factors not in the employee’s control might impact outcomes.
Establishing performance standards is time­consuming.
Unrealistic standards can hamper motivation.
Can lead to mistrust between workers and management.
Advantages and Disadvantages of Team Incentives
Advantages
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Improve organizational performance.
Based on organizational measures.
Periodically measured.
Disadvantages
Line of sight may be lessened.
May not be accepted by high­level individual performers.
Increases to compensation at risk—lack of stability.
Is there a time and place for both types?
Yes, based on the organization’s compensation philosophy.
Individual incentives are focused on achieving work­related performance standards.
Team incentives reward collective performance.
Examples of when team­driven goals may be the way to go instead of individual rewards:
Team­Driven
Use to build a sense of ownership.
Use to recognize increases in performance measurements that move the business forward.
Use to promote teamwork and collaborative efforts.
Individual
Use when the contribution to the business was performed independently.
Use to recognize that individual contributions are part of the organizational culture.
Use if individual competitiveness is desired.
Team incentives, individual incentives, recalculation of overtime—certainly important, but certainly not your only
challenge. From hiring to firing, HR’s never easy, and in a small department, it’s just that much tougher.
BLR’s Managing an HR Department of One® is unique in addressing the special pressures small HR departments
face. Here are some of its features:
Explanation of how HR supports organizational goals. This section explains how to probe for what your top
management really wants and how to build credibility in your ability to deliver it.
Overview of compliance responsibilities through a really useful, 2­page chart of 23 separate laws that HR needs to
comply with. These range from the well­known Fair Labor Standards Act (FLSA), Family and Medical Leave Act
(FMLA), and new healthcare reform legislation, to lesser­known but equally critical rules, such as Executive Order
11246. Also included are examples of federal and state posting requirements. (Proper postings are among the first
things a visiting inspector looks for—especially now that the minimum wage has been repeatedly changing.)
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Prewritten forms, policies, and checklists. These are enormous work savers! Managing an HR
Department of One has 46 such forms, from job applications and background check sheets to performance
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If you’d like a more complete look at what Managing an HR Department of One covers, click the Table of Contents link
below. Or, better yet, take a look at the entire program. We’ll send it to you for 30 days’ evaluation in your own office
with no obligation to buy. Click here, and we’ll be happy to make the arrangements.
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