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Do your compensation systems discourage team work?

careers kiron bondale leadership Feb 02, 2021
Has the PMO Leader build a fair compensation plan
Teamwork But - Dilbert by Scott Adams

I’ve previously written about the importance for an organization’s operational capabilities which support delivery capabilities to evolve when there is a move to increase business agility. Whether it is procurement, finance or human resources, all supporting areas will need to align with delivery teams’ new ways of working.

Scott Adams has perfectly nailed one of the biggest impediments to increasing agility in his Dilbert cartoon above. When the Pointy Haired Boss states that good team work will lead to successful outcomes, Dilbert reminds him that their current compensation system is designed to stymy team work by causing individual contributors to vie with one another for a limited amount of funding.

Bad managers can certainly discourage their staff from working well as a team through their own toxic behaviors such as purposely chumming the team waters to entice “sharks” to attack the weaker team members or by playing favorites, but even well intentioned managers can sow divisiveness through recognition tactics such as employee of the week or month awards.

But such poor behavior pales in comparison to the negative effects created by a company’s compensation and performance recognition systems.

If those systems provide people managers with complete authority over compensation evaluations, not only could this encourage biased decision making, but it also provides no incentive for their staff to prioritize team success over their own success.

Mandating the use of tools such as 360 degree feedback might provide some peer-level input into the process, but having this done semi-annually or annually to align with a formal performance review means the data quality will be affected by the same issues as we occur when we wait till the end of a project to identify lessons learned.

This also doesn’t avoid the risk that promotions ignore mounting evidence that someone doesn’t work well in a team setting, especially if the key inputs into the promotion decision come from the people manager and the candidate themselves.

Finally, even if well-meaning leaders want to recognize teams as a whole, they may have no budget to do so as all discretionary funding is fully allocated to individual recognition programs.

To resolve this, systemic changes such as the following ideas could be considered:

  1. Request and evaluate team-level feedback on individual contributors. This could be done at regular intervals or could be tied to specific milestones or phases of a project. People managers should be encouraged to review this feedback and discuss findings during the one-on-one meetings with their staff.
  2. Make team-level feedback a mandatory component of an individual’s formal performance evaluations. Regardless of the weighting given to this factor, it should not be possible for someone to be financially rewarded for acting only in their best interests.
  3. Make team-level behaviors a mandatory component of the evaluation process for promotions to avoid the risk of poor team players becoming worse team leaders.
  4. Balance the allocation of recognition funding between individual and team budgets.

If we want our staff to behave like team players, we need to recognize and compensate them accordingly.


This post was reshaped with the authors permission.  The original was can be found here.