Different types of organizations follow different kinds of strategies for designing incentive plan. Generally, design of incentive plan is based on nature, size, and policies of the organization. In individual based incentive system, incentives are provided on individual contribution. On the other hand, team based incentive means where incentives are based on the performance of whole team (group of people), instead of individual contribution. This system should be properly defined, designed and implemented to gain higher productivity, better performance and accomplishment of organizational goals.
Here, in this given situation, Alaskan Tire Corporation has redesigned its production which favors team-based incentive system. If individual-incentive system is adopted, it will lead to conflict, competition and distrust between the employees. Thus, by keeping the nature of production facilities in mind, the corporation should adopt the team-based incentive plan which can support productivity of the organization. The discussion points in favor of team based incentive plan are as follows:
First, with the use of team-based incentive based plan, employees will be motivated to work collectively in a team towards common goals. Employees have the potential to encourage one another, participate in brainstorming sessions and support each other in their efforts. This approach also has the potential to effectively use the talents of individual staff members in a group setting. The advantage is the full utilization of collective staff knowledge and experience (Lisa McQuerrey, n.d.). This system will act as a motivating factor for the employees to work in a team and coordinating the efforts of employees.
Second, this system will help in developing mutual trust and understanding between the employees working in a team. Being in a same team, one teammate can relies on another in every aspects. Interpersonal trust is defined as “an individual’s belief that another individual makes efforts to uphold commitments, is honest, and does not take advantage of the given opportunity” (Ferrin and Dirks 2003).This will increase the potential of the employees, unity among employees by which team work can be perform its work in most effective and efficient manner.
Third, it helps in reducing competition and increasing co-operation. When a group of employees is working toward a collective goal, chances increase that ambitious workers will encourage greater levels of participation from their less ambitious colleagues (Lisa McQuerrey, n.d.). This gives a chance to slow or weak performers to perform better and increase their level.
All in all, we can say that the main motive behind selection of incentive plan is to acquire and retain good talent in the organization so that organization can perform better.175 scientists and engineers involved in research and development work found that team rewards were particularly effective in overcoming competition, and encouraging the sharing of results, especially since team progress in the sort of setting tends to go in leaps, and it is difficult to attribute to the success of the work of single individuals ( Gomez-Majia and Balkin,1989)
References:
Lisa McQuerrey (n.d). The Advantages of Team Based Incentive Pay Plans. Retrieved from http://yourbusiness.azcentral.com/advantages-team-based-incentive-pay-plans-7115.html
Courtney Calinog (n.d.). Team-Based Rewards Structures and Their Impact on Team Trust. Retrieved from http://www.sesp.northwestern.edu/msloc/knowledge-lens/stories/2011/team-based-rewards.html
Cummings J, Reilly P, Bevan S (2001). What Does Team Pay Have to Offer? Institute for Employment Studies. Retrieved from http://www.employment-studies.co.uk/pdflibrary/mp6.pd
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