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What Is The Relationship Between Individually Based Merit Pay and Teamwork?
When it comes to team building, teamwork, and merit pay, things get complicated. In our Western society we pay employees on an individual basis, and that's a firmly embedded cultural practice. However, more and more, we expect (and need) employees to act in concert -- as members of team, since work tasks have become so much more complicated that often, no single person can complete a task on his or her own. So, in effect, we need employees to be good team members, sometimes putting the welfare of the team and its goals above their own, but we still pay employees as individuals.
Needless to say this causes a conflict, or an incongruence between what is said (asking people to be good team members), and what is done (paying people for individual accomplishment).
There is no easy solution to this, except to move away from individually based merit pay, when teams are important, and shift to a team based form of merit pay where every members of a particular project team will receive the same bonus or merit pay increase. Of course, every "solution" brings with it a set of new positives and negatives.
From Performance Management - A Briefcase Book by Robert Bacal (McGraw-Hill)
Undesirable Side Effects: If you have a pay for individual performance system and you want to foster teamwork and team responsibility, you have a bit of a mismatch. You need to work really hard to create a sense of tea when rewards systems are set up to encourage "star" performance more than teamwork.
Is it possible? Yes. Is it easy? No. Much will depend on your interpersonal and leadership skills.