Article / Topic: Low-Trust Teams Prefer Individualized Pay

Written By: Kimberly Merriman

November: 2008

Summary

The article is based on this question should managers base team members pay on individual or collective performance. The recent researches suggest that a fundamental factor is often overlooked in this decision: the degree of trust within the team. Evidence suggests that members of low trust teams should be paid according to individual effort. Many companies accept the conventional wisdom that team based pay is the best way to encourage cooperation.

Over the life spans of the teams in our study, trust increased and team members began to care less strongly about whether their reward performance would actually be implemented. One U.S based global company that supplies manufactured parts for other companies products has found useful approach to design rewards for teams. It follows these guidelines: listen to employees, identify specific rules, be consistent about evaluation, and unite teams through recognition.

The company realized that many employees find it unfair to have a significant portion of pay tied to the performance of team members they don’t fully trust. As a result, it avoided the pitfalls of low trust team reported by the organizations in another study I completed: team member de-motivation.

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