Individual Performance vs. Teamwork in pay strategies

There are companies that have smart people in charge of implementing the business strategy. They look also at the long-term goals of company. It is the same with human resources specialists that understand what organizational development is about.

Individual performance is important, but a company is not formed from one individual. A company is a team and its strategic needs can be supported by group-oriented pay plans.

Profit sharing is one of the most used incentive systems. Money-wise it might not make a difference in a big company because the impact on profit from one individual is small. But in a small company it matters and in time, when most small companies will become partnerships, and the notion of employee will be history, this will represents the only form of compensation.

Employee Stock Ownership Plans (ESOPs) and Employee Stock Purchase Plans (ESPPs)
An ESOP allows employees to own stock in the company without having to purchase shares. An ESPP allows employees to use after-tax wages to purchase stock in their companies, usually at a discounted price.
Implementation of such incentive plans is not easy. There are taxes implications, private companies are required by law to purchase ESOP share from the employee that leaves the company, and so on.
But as motivational factor, ownership remains in the top of the list. For start-ups, especially in this period of economical crisis, it can also be used as partial replacement for money that constitutes the salary.

Gainsharing incentive schemes have usually as goals: improved productivity, quality performance, customer service, cost reductions, etc. It differs from profit sharing by the fact that is not related to the company’s performance.
The employees participate in the decision-making process and the gains obtained when reaching the goals are shared between the company and the employees. Gainsharing requires a team oriented management style and can lead improvements in performance as well as increased commitment to organizational goals.
Some of the most known schemes are: the Scanlon Plan, the Rucker plan, and Improshare.

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