Many organizations have become more team-based, but they have not changed their performance management systems to accommodate this new organizational reality, which presents a unique challenge. If the organization is based on teams, but performance is still measured and rewarded at the individual level, team performance will suffer. In fact, some of the existing individual rewards may motivate people to not contribute to team performance, and instead, to focus on individual performance only.

In general, organizations that choose to include a team component in their performance management system must ask the following questions: How do we assess relative individual contribution? How much has one member contributed in relation to the other members? Are there any slackers or free riders on the team? Is everyone contributing to the same extent, or are some members covering up for others?

How do we balance individual and team performance? How do we motivate team members to support collective goals? How do we hold team members accountable individually? In other words, how do we achieve a good balance between measuring and rewarding individual performance in relation to team performance?

How do we identify individual and team measures of performance? How can we identify measures that indicate individual performance versus those that indicate team performance? Where does individual performance end and team performance begin? Finally, based on these measures, how do we allocate rewards to individuals versus teams?