Team-based organization design is often seen as a way to keep pace with the challenges of a fluid and unpredictable world. A team is in place when two or more people who have different roles or responsibilities interact dynamically and interdependently and share a common and valued goal. Although many organizations choose to structure themselves around autonomous work teams, and teams in general, team-based organizations do not necessarily outperform organizations that are not structured around teams.

Including team performance as part of a performance management system is an extension of a system that has focused on individual performance only. Team performance management must consider the type of team in question before performance measures are put in place. Different performance measurement methods are appropriate depending on the type of team being evaluated.

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.