Rewarding and Compensating Discussion Paper.

Rewarding and Compensating Discussion Paper.

As a leader, I have been tasked with building a team whose purpose is to recommend a new performance evaluation system, the current system is outdated and greatly reduces employee morale each year. As the leader of this problem-solving team, I am tasked with educating staff on the methods and systems used for team rewards. The following is my report summarizing how and why teams are compensated.Rewarding and Compensating Discussion Paper.

When developing a team, it is essential to first outline the team’s goals and objectives, then sort through candidates to find those who’s skill sets best fit the team’s objectives. While in the process of developing teams the compensation and rewards that will be implemented must also be determined. Compensation and rewards are an essential function of teams due to their motivating factors. When properly rewarded, individuals are proven to work harder to achieve optimal results. There are a multitude of compensations and rewards that can be utilized in team experiences. The type of reward system put forth depends highly upon the type of team being comprised and the individuals involved within it.


There are two types of motivational factors that drive individuals to perform, either intrinsic or extrinsic. Individuals who exhibit intrinsic motivational factors are motivated by internal feelings such as desire, pride, or satisfaction. Whereas extrinsic motivated individuals are motivated by external factors such as pay rates or other things offered to us for our services. When shaping the compensation and rewards detail for a team it’s essential leaders understand their team members and determine whether they are intrinsically or extrinsically motivated, thus allowing for better suited compensation methods. McClelland’s three needs theory can be evaluated at this stage to determine what motivates team members. The three motivational factors found within this theory include ones need for achievement, a need for affiliation, and ones need for power. This theory believes individuals are motivated by one of these three factors under different circumstances however, each individual has one factor that is more predominant.

If the team being developed had members whom were intrinsically motivated the compensation and rewards plan being developed would vary from that of an extrinsically motivated team. Leaders of an intrinsically motivated team may develop a compensation plan that utilizes techniques of nonmonetary rewards or incentive programs.Rewarding and Compensating Discussion Paper. Nonmonetary rewards could include employee evaluations that provide individual recognition such as employee of the month or quarter, some organizations even offer an “employee of the quarter” parking spot. This type of recognition is an extremely beneficial reward for intrinsically motivated members because it not only shows them appreciation from the organization itself but also allows them to have something physical to showcase for their efforts. Dependent upon the goals needing to be achieved trophies or items with the company logo could also be offered as a reward incentive. Trophies would be more for larger project completions whereas products with company logos could be utilized when on boarding employees or for prizes for those whom participate in company functions or meetings.

Some of the most common compensation techniques used by organizations is an employee discount, some even provide gift certificates to individuals as a form of reward. An employee discount is a compensation that keeps giving, it can be used as a “selling tactic” when onboarding employees and also keeps members motivated throughout their time with the company because let’s face it, every penny counts. Both the organization and members benefit from an employee discount in that 9 times out of 10 if the company sells products the member needs, they are more likely to purchase it where they get a discount than to travel to a competitor to purchase products. Gift cards are another simple way to reward an intrinsically motivated employee, it can cost very little for the organization to provide this type of reward and give the individual freedom to reward themselves how they please.

Incentive programs are another tactic a leader can utilize as a compensation technique that would motivate an intrinsic team. These are typically outcome-based incentives meaning, the reward given is dependent upon the results achieved. Incentivizing employees through this method is typically most beneficial for positions such as sales, where results are easily measurable. The best part of this option is that the reward can be implemented either for the team as a whole or at an individual level. The incentive program for a sales person may have three levels in which each has a different compensation reward. The first level may be a minimum sales that must be achieved and then the team or individual will receive a 5% commission of sales. The second level could be a higher sales requirement and increases the reward to a 7% commission of sales. And the third level to achieve would be a sales amount needing to be achieved or higher and then the team or individual would receive a 10% commission of sales.

Extrinsically motivated teams have very differing motivating factors than that of those whom are intrinsically motivated. These types of individuals are highly motivated by the dollar amount they are compensated in exchange for their work. As a leader determining how to compensate and reward an extrinsically motivated team monetary options such as bonuses, commissions, or pay raises should be considered. Many organizations use a strategy of offering less for a position in the beginning and then providing additional funds for taking on new tasks or accomplishing objectives such as making it through a probation period or receiving a positive employee review.

The following are a few options leaders could consider for extrinsically motivated teams. Annual bonuses that are determined based upon accomplishing specific organizational objectives can be beneficial if the company is needing to accomplish specific sales goals. This will provide members with a goal to work towards throughout the year that will aid the organization in having motivated members working towards goals and motivate members to work effectively to receive their compensation. Another option that could aid in accomplishing this organizational goal would be to offer members a percentage of annual sales if they are able to reach specified goals. Incremental pay increases are a wonderful motivating factor, especially if the organization intends on keeping long terms employees (which should be the goal of any organization).Rewarding and Compensating Discussion Paper. Incremental pay raises can be done when an individual shows they have the ability to perform successfully in one position and begin training in a new area, or even simply moving from a sales associate position to a leader in sales.  Many times, if members learn new tasks to add onto their acquired skills a pay raise can be introduced as a motivating factor.

Corporations can utilize the stock exchange as a compensation method for organization members by implementing profit sharing or other stock options to members. These processes allow for members to buy shares of the organization and receive profits from the shares they’ve purchased. Some can even purchase shares at a discounted rate for being apart of the organization. This stock method is highly motivating for extrinsic individuals in that it gives them the power to determine their profits, this is due to the fact a stock is worth more when the company does well. This works in the favor of the organization as well in that it encourages efficiency within organizational members due to the responsibility they now feel for the organizations success. Profit sharing is another great option for an extrinsically motivated team because it encourages members to work harder to make the company more profitable because the higher the profit margins the higher the end payout of profit sharing.

Motivation is the key component to receiving efficient performance from a team and in order to motivate a team, the leader must understand what their team members value and what they determine as priorities. Leaders must take the time to understand if team members are intrinsically or extrinsically motivated and then reward and compensate them based upon this information. These methods of compensation act as the motivating factors that help to drive the team’s overall performance. Implementing performance-based programs can incentive members and encourage higher performance rates. Intrinsically motivated members may be encouraged by receiving rewards such as plaques highlighting their performance whereas, extrinsically motivated members may want to receive a dollar amount reward for successfully accomplishing objectives. Either way the end results of objectives being completed are what determines the compensation teams will receive and leaders can choose to do so either at an individual or team level. Providing organizational members with incentives is a major factor in motivating them to successfully accomplish organizational objectives because it gives them a sense of responsibility and accomplishment. When a task or assignment is attached to a reward it motivates members to accomplish them efficiently, they are in control of receiving the reward they believe they deserve. This drives higher levels of quality and performance.

Designing a compensation plan is one thing but how do leaders evaluate the teams overall results? First thing is first, in the beginning phases the leader must provide clear expectations, attainable objectives, and implement the right pay or compensations necessary to motivate and encourage team members to work through tasks and accomplish objectives. Once the team’s objectives have been completed a leader can then begin to look at production levels to evaluate the team’s performance. Reviewing the output of the team can aid in establishing if the team has reached the appropriate production levels, over achieved, or fell short. Once production levels have been determined the leader can then begin to evaluate the team as a whole by contributing factors of how they performed certain tasks, if members worked efficiently together, and if they had the appropriate knowledge and skills needed to perform task adequately. Rewarding and Compensating Discussion Paper.

When developing team reward there can be difficulties however, if a leader takes the time to understand their team members values and needs it can make the tasks easier. Rewards should be tailored to the business, meaning beneficial to both the organization and the members being rewarded. Organizations should express the role of teams and associated rewards in ways that increase commitment, loyalty, and performance. This can be done during onboarding phases, information individuals of the benefits received for working efficiently within teams and accomplishing objectives. Rewards should be fitting to both intrinsically ad extrinsically motivated individuals due to diversity factors. Clear expectations of the team should be evaluated to ensure individuals are armed with the proper knowledge and resources necessary to be successful and have the ability to obtain outlined rewards and compensations.

There are a multitude of teams that can be designed each of which have their own performance evaluations that leaders could implement to determine the overall success of the group. Multifunctional teams which are comprised of members from different departments and can have goal or competency-based evaluations. Whereas informal team are better suited evaluated by tasks completed. Leaders of a multifunctional team could evaluate the end results of team project based upon criteria of projected results for example, the team could have been formed to develop a new product that will increase sales by 5%. The leader can provide a specified time frame for the sales increase to be reached once the product hits the market, and once the time frame has been reached the leader can then evaluate the products revenue to determine the successfulness of the team and assess the team’s compensation. The reward system for an informal team would be fairly simple in that a leader can merely evaluate the tasks the team has accomplished and evaluate their effectiveness and then rewards team members based upon their performance. Another task-based performance evaluation that could be performed would be with that of a virtual team. Virtual teams are comprised of individuals from different geological areas whom use technology to communicate with other team members. Goal based evaluations could be implemented as well for virtual teams, leaders of this type of team could award individuals for their part in completing goals because typically with this type of team tasks are given to individuals which must be completed before the next can begin. Rewarding progress is a great way to keep all members motivate to achieve their part in the specified time frame.

Traditional, leadership, and self-directed teams all share similar methods of performance evaluations. Traditional teams are opposite of virtual team in that it is comprised of individuals whom work in close proximity to each other within an organization and work harmoniously together to accomplish objectives. Leader of this type of team can utilize one of three evaluation techniques to assess the team’s overall performance. These can be competency based, which gauges a team’s knowledge on the tasks being performed, task based, or goal based. Intrinsically motivated members may be please with rewards such as a party while extrinsically motivated teams may wish to receive a bonus for successfully completing tasks. For a leader to determine a team has reached a success point to receive compensations for their efforts, they must assess the completed tasks and objectives against the projected end results.

Leadership and self-directed teams also allow for leaders to implement competency-based  performance evaluations. Clear Company defines competency-based performance reviews as an evaluation with primary focus on the developed behaviors of team members and how their actions over time have progressed to aid in either meeting or missing defined objectives. This gives leaders an understanding of where an employee’s skills and abilities lye and how to further develop their abilities for future successes. Leadership teams whom are evaluated on a competency-based level allows for leaders to further develop their leadership skills, these type of teams can be rewarded by receiving gradual pay increase for each additional task they are able to add to their skills and abilities. Self-directed teams are comprised of individuals with different skillsets whom come together without the typical management oversight to accomplish goals and objectives. The leaders whom put these types of teams together may also use competency-based evaluations to determine how each individual utilized their skills to accomplish tasks and also what skills they were able to further develop by working with individuals whom possess opposing skillsets. Pay increases of bonuses may also be a great way of compensating these types of teams.

In conclusion, there are criteria’s that need to be in place for team-based rewards systems to be successful. These include the reward aligning with the outlook of the organization by being controllable and measurable. Having the ability to control and measure performance allow for proper compensations to be provided to teams and members. Rewards must also promote healthy growth for organizational members to further develop skills necessary to move throughout the organization. When members feel as though they are relied upon by the organization it cultivates an environment for encouragement and inspiration to successfully work towards achievement of goals. Many times, teams are comprised of diverse individuals with differing skillsets or cultures it can sometimes be difficult for members to work efficiently together. However, when given the proper tools to achieve goals and being rewarded and compensated appropriately members become motivated to ensure they are developing ways to work effectively together to complete tasks and successfully achieve team objectives.



Clear Company: Understanding the Competency-Based Performance Review. Retrieved from

Rewarding and Compensating Discussion Paper.

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