What Are the Advantages & Disadvantages of Group Incentive Plans?

Employee incentive plans can help encourage staffers to work toward particular objectives. Knowing they will be rewarded for above-and-beyond efforts -- such as reaching earning goals -- can motivate staffers to push their limits. To be effective, group incentive plans should be clearly defined, easily measured and achievable. Plans should also take into consideration the personalities, skill sets and interpersonal communication skills of each member of the team that will be participating.

Creating a group incentive plan can help foster relationships between staff members, encouraging them to find ways to work together in a collective environment in order to achieve group goals. The approach can build a stronger team, encourage brainstorming and create a vested sense of project ownership across the board. Staffers know they each must pull their own weight in order for the team to be successful, which can prevent slacking or underperformance. Encouragement and even some degree of positive peer pressure can help ensure everyone's strengths are utilized toward achieving stated objectives.

If team members perform at vastly different levels, creating a group incentive can set the stage for drama in the workplace, particularly if some staff members feel compelled to work harder than others to carry the workload. This can lead to resentment, infighting and even a hostile work environment. Low-performing employees may feel pressure from both the boss and their colleagues to perform at levels above their comfort zone, whereas high performers may feel they're doing all the work for the same amount of reward as their less-motivated colleagues.

To make a group incentive plan work without creating tension or infighting, clearly outlined objectives and individual work parameters should be set within the group. If all individuals understand the specific roles they are expected to play in the group’s performance, you’re less likely to create an environment in which 10 percent of the group does 90 percent of the work. Request both individual and group progress reports during the duration of incentive projects and troubleshoot potential underperformance issues before they get out of hand.

Consider creating a hybrid approach to incentive plans that includes an overarching group incentive as well as individual bonuses for exceptional performance by individual staffers. This will help ensure that your top performers will give it their all, resulting in high-level group performance, while simultaneously rewarding stellar individual work. This can help encourage friendly competition and increase productivity and motivation without creating resentment.