Monday, November 17, 2008

Why Leaders Don’t Pay for Teamwork Unless There’s Trust

Have you ever played on a team where one of the team members was a low performer? How did you handle it? If it was near the end of a game and the stakes were high (e.g., you bet big bucks that you could beat the other team), did you pass him the ball? Probably not. If you analyzed why you did not pass the ball, you'd probably conclude that it was because you didn't trust his ability. In other words, when trust is low you do not want your “payoff” to be based on team performance, you want it to be based on your performance. Yet, what is common sense in sports does not always play out as common practice in business.

According to the University of Southern California Center for Effective Organizations, 85% of Fortune 1,000 companies used team-based pay in 2005, up from 59% in 1990. Most of these companies believe that team-based pay is the best way to encourage cooperation. However, recent research reveals that few of these companies consider trust among team members as a key factor regarding how to pay. (1) Do you?

Professor Kimberly Merriman and her colleagues studied 49 teams, who collaborated on four-month projects. They found that team members who reported lower levels of trust in their colleagues’ ability, honesty, or dependability had a greater preference for individual-based rewards. The lower the levels of trust the more the team members cared about whether they were paid individually or collectively. This is consistent with the findings of other researchers, who have reported that people will forgo higher compensation to avoid having their pay tied to unproven team members.

The good news is that over time, as teams continue working together, trust tends to increase and their preference for individual rewards diminishes if the teams follow a few simple guidelines:

1. Listen well. Survey team members prior to implementing any change in compensation to find out how open they are to team rewards.

2. Clarify roles. Each team member must understand exactly what their role is and what the performance expectations are on the team.

3. Evaluate consistently. Have all team members evaluated by one manager instead of various functional managers.

4. Reward performance. Encourage teamwork by applauding and rewarding each individual team member’s contributions to overall team success.

Next time you're playing a team sport think about the role trust plays in how you play. I also invite you to adapt these ideas to increase trust among teams that you lead at work. Let me know what you think and how they work for you.

Keep on eXpanding,


1. Kimberly Merriman: Low-Trust Teams Prefer Individualized Pay, ‘Harvard Business Review,’ November 2008, 32.

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