As busy members of the tech industry, it can be tough to gauge the best way to motivate large groups of employees. Within larger companies, different departments often work closely together but are motivated by very different factors.
Last week on his podcast Revisionist History, Malcolm Gladwell presented a really interesting idea about what he calls “weak-link” and “strong-link” approaches to group improvement. Gladwell says when you want to improve the standing of a complex group or system you can either devote your attention to improving the weakest members in your chain, or improving the strongest. 1
Imagine briefly you’re a GM of a soccer team. There are 11 players on the field, and a finite amount of money to spend on player salaries. The allure of signing Lionel Messi (arguably the best player), who costs a breezy €36 Million euros a year might seem like a great investment. However, a group of economists found that this is the wrong approach for soccer. In soccer, the best and most efficient way to improve your team is to improve the weakest links on the field. They note that although there are exceptions, your dollar is stretched the furthest when you devote it to the least spectacular members of your starting 11, not the best. 2 On average improving your worst employee by 40% is better than making your top ones go from 95% to 98% effectiveness.
Basketball, is exactly the opposite. A sportswriter named Neil Paine looked into the relative value of superstars versus “middle-class” players as it relates to generating wins. What he found was that middle class players generated 52% of the wins, but were being paid 65% of the total salary. 3 So if you’re running a basketball team, it makes sense to gear your strategy towards spending all your time, resources, and energy into attracting and improving your “superstar” employees.
What does this mean to you and your incentive program?
As you plan, structure and implement your incentive program there are two types of incentives that align with this theory: individual, and team incentives. If your company is struggling with accountability, and issues of fairness: you might be focused on individual incentives AKA “playing basketball”. If cohesion is a concern within your organization and efficiency within groups, your company is probably “playing soccer”, and team incentives are where your focus belongs. Ask yourself if your organization is playing soccer or basketball, and structure incentives based on the problems you face instead of an article that claims one is the “be all end all.”
First and foremost: despite their effectiveness, almost nobody uses them. Perhaps it’s the fear that team incentives smack of holding hands and singing kumbaya or that team incentives take time away from sales calls. Research shows that a scant 22% of companies with incentive programs include team-based incentives in their strategy. Of those companies surveyed, 66% confessed they aren’t even considering team based incentives. 4
Consultants like Jason Adwin (Sibson Consulting) think that’s a real shame, because team incentive programs that foster sharing of success stories and modeling good behavior motivates the entire team. 5 The idea here is that the weak links in your team’s chain aren’t going to improve by virtue of their managers closing their eyes and clenching their fists. Less successful employees are only going to improve by learning from the successful ones, and being given manageable benchmarks. Let’s not forget the other benefit to team-based incentives: a desire not to let the team down. 6 In addition to professional motivation, team-based incentives put social pressure on the table which can be a really effective motivator.
Although effective, team incentives carry warts too. With team incentives you run the risk of allowing weaker team members to piggyback onto the great work of high performing employees, which can foster resentment among the team. 7 If implemented carelessly, team incentives run the risk of punishing high performing employees for the failures of their peers.
Proponents of individual incentives being front and center in an engagement strategy see the world a little differently. They feel the business world is more like a basketball team then a soccer team.
“Great individuals are not only more valuable than legions of mediocrity, they are often more valuable than groups that include great individuals.” 8
-Jeffrey Stibel Chair/Ceo broadstreet
Individual rewards are based on the idea that competition is good for team cohesion and effectiveness. Workers in offices that have individually focused rewards are often striving to improve upon their previous performances, and don’t settle for average. When participants participate properly individual programs do an excellent job of rewarding performance. In other words they answer the question: “Is exceptional work being recognized, or are workers being rewarded for showing up?”
The danger with individual rewards is that if you’re not extremely clear about your high level objectives (not performance goals), participants can lose sight of the big picture and get lost chasing short term rewards.
What’s the best decision for your organization?
For a majority of companies the best programs probably contain a little of both team-based and individual incentives. Just remember, the key in designing an effective program is to identify the problem and address it head on: a Lamborghini is a beautiful car but won’t be an effective choice if you’re making a trip to Ikea. Ask yourself: is your company playing soccer, or basketball?
1. Malcolm Gladwell, My Little Hundred Million http://revisionisthistory.com/episodes/06-my-little-hundred-million
2. Chris Anderson, The Numbers Game: Why Everything You Know About Soccer is Wrong (2013)
3. Neil Paine, No Matter How Much They Make, The Best Players In The NBA Are Vastly Underpaid http://fivethirtyeight.com/features/kawhi-leonard-like-all-the-best-nba-players-is-vastly-underpaid/#fn-2
4. Gal Rimon, Team vs Individual Incentives? Transparency makes the difference http://www.gameffective.com/team-vs-individual-incentives-transparency-makes-the-difference/
5. Carolyn Jenkins, Individual vs. Team-Based Rewards: Which One Should You Choose? http://iconixx.com/individual-vs-team-based-rewards-which-one-should-you-choose/
6. Mark Applegate, Team-Based Compensation Vs. Individual http://smallbusiness.chron.com/teambased-compensation-vs-individual-17583.html
7. Christopher Cabrera, 5 Tips for Designing Successful Sales Incentive Compensation Plans, https://www.worldatwork.org/waw/adimComment?id=59919
8. Jeff Stibel, Why a Great Individual Is Better Than a Good Team
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