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Study finds final year individual bonuses are counter-productive
24 November 2015 Leicester, University of
Rewarding teamwork or group efforts enhances business performance
‘Not only did the best individuals emerge under group rewards but also the worst performers. They are not shirkers but self-sacrificers, whose value isn’t captured by individual performance measures. They play an important role in boosting the performance of others. You have probably run across such people in your own work groups, the nice guy who helps everyone else but whose own work may suffer. If they get sacked the group falls apart. These people don’t seem to have attracted much research attention in real groups, but they should.’
A new study by researchers in the UK and Australia has found it makes better business sense to reward team performance rather than provide individual bonuses – and that group rewards generate the top-performing individuals.
Researchers from the University of Leicester in the UK, University of Sydney and Western Sydney University in Australia carried out research that has been published in the Journal of Business Research.
Dan Ladley, Senior Lecturer in Finance in the Department of Economics at the University of Leicester; Ian F. Wilkinson, Professor of Marketing, University of Sydney; and Louise Carley Young, Professor of Marketing, Western Sydney University found group rewards can produce more cooperative, better performing groups and also better performing individuals than individual-based reward systems.
“We also established that poor performers may not be free riders or shirkers but may be essential to the effective functioning of the group. We call them self-sacrificers and believe their role is underappreciated and misunderstood,” say the researchers.
The study was inspired by theories of group versus individual selection in biology and especially experiments to breed better egg-laying hens. The norm in the industry has been to do this by breeding from the best egg-layers, which increased egg production but also produced cages of aggressive “mean bad birds” with short life spans, raising serious animal welfare concerns. William Muir tried another approach by breeding from all the hens in the best laying cages, not just the best layers. This quickly produced “kind friendly chickens” who got on well, had normal life spans and better quality eggs.
“We applied these ideas to work groups by building computer models that allowed us to consider all types of group situations,” the study authors said. By modelling group interactions as games, the researchers examined the effects of individual and group rewards for more than 14,000 games so as to mimic different types of group situations
They conclude: “Group rewards generate the top-performing individuals because of supportive group ecology, a mix of strategies that supports and sustains them. Individual rewards produce non-cooperative groups of individuals bent on exploiting each other. No strategy, like tit-for-tat dominates, and different mixes of strategies can emerge to support high performing groups.”