Teams are a pervasive fact of organizational life. Organizations whose performance management systems include team performance must design them to reward team performance. Organizations can reward team performance in ways similar to those in which they reward individual performance.

An organization can have a variable pay system in which an individual is eligible for a bonus if her team achieves specific results. This reward would be in addition to any performance-based rewards allocated according to individual performance.

There are several success factors specifically related to team rewards. First, a study consisting of a review of 30 separate investigations concluded that team rewards are more potent in smaller teams. In smaller teams, it is easier for everyone to see others’ effort, motivation, and performance. Second, studies have provided evidence in support of team-based contingent pay plans. But similar to the case of individual rewards, in implementing team rewards, we need to be aware of the factors that make rewards fair.