Increasing Productivity with Group Rewards

Posted by in Featured, Workplace Management | Comments Off on Increasing Productivity with Group Rewards

Americans are the most productive workers in the world. On average, we produce more than twice the annual wealth per worker than any other industrialized nation.  We also work more hours than other workers, have less paid time off and shorter vacations and holidays.

Efficiency is a priority with businesses of any size, as stockholders demand more returns on their investments.  Top managers are always looking for ways to increase productivity through efficiencies. The more efficient the worker, the more he or she earns for the company.

With the drop in prices for computers and other electronics over the past decade, workers have gotten increasingly more efficient in many industries.  But, what if your business is not one that benefits from computerization? Many industries including construction, healthcare, sales and service industries are still very dependent upon workers bringing that added efficiency to their job. How can an employer encourage efficiency in their workforce?

In an interesting study lead by Michael Norton, Associate Professor of Business Administration at Harvard Business School, two sales teams were rewarded for their productivity using two methods. For the first team, each member was given an extra cash reward for meeting a sales goal. The second team was given a cash reward to be spent on the group for meeting the same goal.

The results showed that the team with money to spend on the group out-performed the individual reward team 14 to 1. That’s some impressive productivity gains. To make sure they were accurate, the same study was conducted on sports teams. The result was the same. A group reward consistently resulted in more wins.

How can the information from this study be used by small business owners? 

Creating teams to achieve certain goals and then rewarding the group as a whole will result in more efficiency. To accomplish this, divide your workers in to teams and assign them a challenge, but allow the group to decide how they will meet that challenge. Offer guidance if asked.

Second, establish a series of small cash rewards, but allow the group to decide how that money will be spent. Finally, establish a budget for the final reward, but allow the group to decide how they want to use that money once the goal has been met.

Not only will you increase your company productivity, your workers will be fully engaged in solving problems. You’ll see a boost in energy and enthusiasm from your workers for their jobs.

Here are a few cautions for implementing a reward system: Avoid the temptation to overrule employees on how they want to spend their reward money.  The real goal of this reward is to encourage cooperation among workers. Secondly, avoid the temptation to overrule their solutions for achieving their goal. If there is a safety or legal restriction that affects their solution, make them aware of it and them allow them the opportunity to adjust their plan.

Although American workers are consistently the hardest workers in the world, they have fewer rewards for their labor in both compensation and days off. Small businesses continue to be the exception to the income disparity that has so many workers discouraged. A group reward system can result in surprising increases in productivity that give small businesses that competitive edge.

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.