So far, we've talked about two formal structures that are important in teams. One is departmentation, how are you going to group different tasks or activities in the team? And the second dimension of formal team structure that we've talked about is centralization. How centralized or decentralized will decision making be in your team? The third dimension or type of formal team structure that I want to discuss and share with you, is the reward structure that you're going to put in place. When I travel all around the world and work with senior management teams and sports teams of all different flavors. And the reward structure is one that often teams wanna talk about, in terms of, well, what is the best structure? In terms of rewards for team performance? And as you might expect, it's not a simple answer. And so, I'd like to start this session with you thinking about the team that you're in working currently, or the team that you have worked in most recently. And I want you to reflect on the reward structure that was present in that team. How were people rewarded in the team? Now when I say rewards, there's all kinds of different rewards that you can imagine. The obvious monetary rewards, but also things like recognition and status, positive reinforcement and those sorts of things. So think about this team. How were people rewarded in the team? Were they in Individual based rewards or were they team based rewards? Individual based meaning the rewards were focused on individual performance. Or, were the rewards distributed based on how well the team overall did? That's an important question for you to think about. Were the rewards focused on competition or cooperation? I work with some companies where they want to drive competition among their employees, especially in sales, is often the case. And so they'll focus rewards on competition among team members. Versus more innovation or creative teams. And they will focus more on cooperation in a lot of cases, not all. But the rewards often will focus on cooperation. And then I want you to think about now that you've assessed or diagnosed what types of rewards present in this team, I want your intuition in terms of, were these reward structures effective in the team? And most importantly, why or why not? And so, as you think about this, I want you to go to the discussion forum on Rewards, Structures and Teams. I want you to share your experiences with your classmates. And help your classmates understand why you think these different reward structures were effective or not. And then also listen and learn from your classmates' experiences. How are those experiences similar to or different from your own? And what can we learn from that? Go to the discussion forum, engage with your classmates, and then come back to me ,and I'll share with you some of the latest concepts, ideas, and best practices that we're finding in our work on reward structures and teams. All right, welcome back. So you had a chance to engage with your classmates on the discussion forum. Really looking at the reward structures in your teams. Now let me share with you some of these concepts in the research that we've been doing on reward structures and see what you can learn from those studies and that research. So, the first is a concept that we actually talked about in one of our earlier courses on inspiring and motivating individuals. It was called Folly A, Folly B. And the basic idea here is often times what we find is that teams or organizations, say they're going to value and reward one thing, maybe that's team work, and they actually reward something else like individual performance. With public companies in the United States, for example, often times we say we wanna value long-term growth, or long-term performance. But with the market it's actually reward is short-term performance. Those are classic examples of the concept of what we call, Folly A, Folly B. You say you're gonna reward one thing, but in reality you're actually rewarding something totally different. And in our earlier course we offered these three ideas, about how to assess whether you have a Folly A, Folly B problem. Understand what behaviors are rewarding. And then think about the alignment of the reward system to those behaviors. And if you need to alter the reward system to align with those behaviors. So we talked a lot about Folly A, Folly B in that earlier course. Again, classic example, we want team work. We actually reward individual performance. That's the most common Folly A, Folly B problem that we see in team's around the world. So as you think about rewards structures in your team, maybe sort of diagnose, do I have a Folly A, Folly B problem? And how would I alter or adapt the rewards system to better align the rewards with the teamwork behaviors that I'm looking to drive in my team? So that's one idea I wanna share with you. The other is really around cooperative or group-based rewards versus competitive or individual based rewards. I get a lot of questions from executives around the world asking, do I wanna reward people based on individual performance? Or do I wanna reward people based on cooperative, or group based performance? And my answer always is, it depends. And then the question is, well, what's it depend on? And the study I'm showing you here, to me, is one of the most fascinating studies that we've been able to do. And it shows at least one element that it depends on, in terms of, do you want competitive versus cooperative based rewards and teams? And it comes right back to something we talked about earlier, the task environment and the goals that you have. If your goal is speed. If your goal is efficiency. That speed and efficiency, what we find, that yellow bar that you see here, is that if your goal is speed and efficiency, a competitive individual based reward system is going to result in the highest team performance. But if your goal or the task itself lends itself to accuracy in decisions or quality in a production manufacturing process, you actually want group based, or what we would often call cooperative based, reward systems. So again, what do you want? Do you want speed and efficiency, or do you want quality and accuracy? Depending on your answer, you're going to come up with different reward systems. So again, the conclusion. Quantity speed, quality accuracy. Quality and accuracy? You want cooperative or group based rewards. Speed and efficiency? Competition individual based rewards on average. But again, just like some of the other concepts that we talked about, you have to be careful, because switching between those reward structures is not as simple as it may seem. You may be in an individual rewards based system today, and you say well, I want to move my team to a group based cooperative based reward system or vice versa. You have to understand that one direction is easier than the other. For example, n teams who were in group based, cooperative based reward systems, and they stayed in cooperative based reward systems, speed and efficiency suffers, to be expected. But their accuracy, the quality, improves. Again, to be expected. But look what happens when they switched, when they switched from individual based competitive rewards, to cooperative based rewards. Look what happens to the impact on accuracy and quality. It drops dramatically. All those benefits that you originally gained from being in a group based, cooperative based rewards system that really improved and drove accuracy and quality. You lose those benefits if you're starting in a competitive reward structure, and you move to a cooperative group based reward structure, well why is that? Similar to our earlier conversation, reward structures create norms. They create patterns of behavior. Those patterns of behavior, those norms, carry over, even if you change the structure. So, you start in an individual competitive based reward system, we create norms associated with competition. Individuals learn to compete with one another. And then you try to create a more group based, cooperative based environment by switching the reward system? Those norms don't just change overnight. Those norms persist. They carry over. And so switching from competitive to cooperative reward system is actually quite difficult. However, what we find is going the opposite direction, cooperative to competitive is actually quite a bit easier. Because you already created norms for cooperation, and those norms continue to carry over as well. So even though you've created a competitive based reward system to drive that speed, to drive that efficiency. You get some of those benefits when you switch from cooperative to competitive. But you also preserve some of the cooperation and the cooperative norms that are created from that cooperative reward system to that group based reward system. So, going from competitive individual to cooperative group rewards, quite difficult. Going from cooperative group based rewards to competitive individual rewards, a little bit easier. So, as you think about where is my team today? What is my reward system? Is it competitive individual? Is it group? You have to think about Is that the right fit for what I need? Efficiency or quality? And if I need to switch, what are going to be the norms that I'm going to have to reinforce or change to capture the benefits of that new rewards structure? Again, fascinating data, hopefully it helps you think about where your team's at today, what are some of the benefits and then what are some potential costs if you choose to switch over? Lastly, one of the most common questions I get. When I share our prospective on individual rewards verses group rewards is, well, why can't I just mix them? Why can't I have some percentage of people's rewards be individual based and some percentage be group based? And there are plenty of examples of companies all around the world who have these hybrid or mixed reward systems. But the reality is, that we've been studying these mixed reward systems or hybrid reward systems now for over a decade. And the evidence still today is highly mixed. For example, this is one of the classic studies, I think one of the first studies on hybrid reward systems. Ruth Wageman, she published, nor do hybrid groups experience the benefits. So, in her study, she found that hybrid groups, they didn't experience the benefits that were associated with cooperative. Their cooperation norms are weak, the quality of their interpersonal processes are relatively low, often times the team members work alone with loose or ineffective coordination. And they rarely cross territories to help other, in this case, technicians, she was studying. So, again, here, the hybrid rewards system did not actually drive the group behavior. Individuals just kept doing their own things, even though a portion of the reward system was based on group overall performance. Now there are studies that have found positive effects. Matt Pearsall and his colleagues published in the Journal of Applied Psychology a study that found that hybrid reward structures, these mixed structures, proved most advantageous for teams that are really highly interdependent. Teams operating under these hybrid reward structures perform better than teams with either group based, cooperative based reward systems, or competitive individual based rewards systems, in this single study. Again, really focusing on teams, where the interdependence among team members, which Maxim talk at length about with you in one of the upcoming sessions, this concept of interdependence. Here, Matt and his colleagues found that hybrid reward structures were actually quite effective. But again, my colleagues Chris Barnes, myself, and a few others, we published more recently another study that showed these hybrid, mixed incentive systems in teams simply hurt overall team performance. And the overall summary I think from our research, when we look across all of the data, is that on average, teams perform better when they are given group based, cooperation based incentives, to really work together as a team. And so if you're looking to drive teamwork and you're looking to drive steam success, you want to think a lot about, do I have group based incentives in place? And if you don't, that might be something that you really want to think hard about. Understanding that the switching has some challenges associated with it. But the long-term benefits of moving to those group based incentives can be quite powerful for your team.
