People may withdraw time and effort from collective interests they believe aren't rewarding
The Lone Ranger is a fictional character who fought outlaws in the American Old West. He first appeared in 1933 in a radio show, where there was no need for him wearing his iconic black mask. The mask was brought in later as the radio series hit success and spawned successful comic books, films and a television series lasting from 1949 to 1957. To individualists, it does not surprise that only the Lone Ranger became an enduring icon of American culture. But the Lone Ranger was part of a two-man team, the other one being a native by the name of Tonto. Had the Lone Ranger play been a business and not entertainment, Tonto would have left early, because the Lone Ranger got all the credit.
The trouble is that most businesses are run the same way even today; because the culture that created large audiences for the Lone Ranger is the same one which offers much of the managerial compensation philosophy.
From people-oriented to collaborative groups, the winner-takes-all reward system breeds frustration and disengagement. The social dilemma approach to teamwork explains this by stressing that there is an inherent tension between self-interest and collective interest; because self-interest may lead people to withdraw time and effort from collective interests they believe they will not reap the benefits from.
For all to win, all must choose to collaborate, but if some are perceived to be untrustworthy, some of the rest might choose not to collaborate to the necessary extent, diminishing the overall disposition to take part in the collective endeavor. This means that there must be mutual trust for a system to succeed, which requires individual and collective incentives to coincide. Obviously, the Lone Ranger case offers a poor example of a long-standing voluntary successful association.
Trust cannot arise in systems which perpetuate unfair rewards, like bonuses only for star performers. The challenge lies in designing reward systems for satisfactory collective performance which also recognizes some desire for protagonist roles. Protagonist roles are easily perceived. It is more difficult to perceive the contribution to success of good citizenship roles within effective teams.
The team’s contribution to the whole is more readily ascertained than individual contributions within the team. This happens because effective teams require and build recognizable team boundaries, and these are likely to preempt accurate individualized performance appraisals by outsiders. For instance, Nucor, a steel company headquartered in Charlotte, N.C. operates in a shrinking industry. To survive, it must stress productivity, and it distributes team bonuses following that premise. The bonuses are allotted equally to all team members. It is a step forward but it still relies in performance appraisals external to the group, i.e. production; and is unable to discern who deserved most within a team, choosing the apparently fair equal-pay bonus distribution.
Team-based incentives should not be a religion. Fairness should be. When the team’s contribution is above expectations, a reward is due; but fairness for the distribution of the exceptional reward is best left to the team’s interpretation. Only the team really knows who deserves what and due to what circumstances. Some team members may be grieving to a family situation – their performance may be temporarily suffering, but not for the lack of effort. Only team members know what is going on within a team. Outside payments equal for all do not reflect realities within the team.
Should team members systematically receive an unsatisfactory reward, they will want to leave the team and that should be, to higher placed managers, sufficient indication of poor team management, possibly poor judgment on the distribution of benefits. And it is not all about money. Compensation has many dimensions and may take many guise, including time-off. Learn from David Marquet’s recommendation on deciding who can take holidays; it is rarely the nuclear submarine captain who is the best person to decide who or when, but it’s the team leader who knows best.
Fair team compensation practices generate trust, affability and collaboration. These induce people to stay on the job to preserve their workplace relationships, despite poor relationships with the group’s outside supervisors. Time on the job fosters the sense of community, facilitating collaboration within teams and lowering turnover. In the real world Tonto would have dropped the Lone Ranger early.