Team Based Pay

Team-Based Pay
• Companies offer team-based incentive pay to
encourage team members to work together
effectively.
• Team-based incentives encourage
collaboration and cooperation to achieve
shared goals.
 Team-Based Pay
• Collaborative teams will structure the work to
ensure that each team member is able to use
his skills and abilities most effectively.
• For example, a team member with planning
skills will organize the work flow while team
members with technical skills will focus on
completing the work
 Aim of Team Based Pay
• To reinforce behaviours that lead and sustain
effective teamwork
• To encourage group endeavour and
cooperation, rather than to concentrate only
on individual performance
• Design for team based pay will be contingent
on requirements and circumstances of
organisation, and these will always differ
Types of Team Based Pay Team Based Pay are of
three types:
• Gain-sharing
• Profit-sharing
• Employee stock ownership plans (ESOPS).
 Gain-sharing
• Gain-sharing refers to a compensation system
which divides between the employer and
employees the results of improved
performance consequent upon the better use
of human resources resulting in productivity
gains.
• Sharing is according to an agreed, pre-
determined formula.
 Profit Sharing
• These schemes are linked to the profits of an
enterprise, a part of which is paid as bonus to
employees
• It may be a cash payment, or a deferred
payment kept, for instance, in a special fund
for a particular period.
Employee Stock ownership plan (ESOP)
• Employee stock ownership plan (ESOP) - an
employee benefit trust linked to share participation
scheme
• Trust receives contributions from company and then
buys shares in company and allocate to employees
• Stock option schemes - permit companies to grant
share to directors and employees in tax- effective
manner
• They are given opportunity to buy shares in their
companies at a future date, but at the current price
 Advantages of Team Based Pay
Team pay can:
➢Encourage team-working and co-operative
behaviour
➢Act as a lever for cultural change in the direction of
quality and customer focus
➢Enhance flexible working within teams and
encourage multi-skilling
➢Provides an incentive for group collectively to
improve performance and team process
➢Encourage less effective performers to
improve in order to meet standards
➢Serve as a means of developing self-managed
or directed teams
 Disadvantages of Team Based Pay
• Effectiveness depends on well defined teams,
difficult to identify and they need to be motivated
by a purely financial reward
• Team pay may seem inappropriate to individuals
whose feelings of self-worth could be diminished
• Distinguishing what individual team would be
rewarded may be difficult to identify   
Non- Financial Incentives
 Non- Financial incentives
• Appreciation of Work done
• Knowledge of the result
• Worker’s participation in management
• Opportunity for growth
• Suggestion system
• Job enrichment
• Job rotation
• Job enlargement
• Delegation and empowerment
Thank You