How to a Create a Business Culture that Promotes Teamwork

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I remember my first sales job years ago as a teenager, selling frangrances out of a bedtruck during a hot summer month. My first day on the job, and I was out on the frontline -- with absolutely no knowledge to go on. I had co-workers, but they were busy trying to please the boss by selling their own wares. Of course, I couldn't blame them. We all worked on commission, and that commission was solely dependent on how much we individually sold. Too bad that summer month didn't end too well for me. I earned $5 the entire summer, and that was from company charity. If you structure your company's compensation based solely on individual performance, take note: you may be causing more harm than good to your bottom line. Says Boston University's Marshall W. Van Alstyne:
We found, as predicted by economic theory, that the people rewarded for individual performance shared information least; the people rewarded for team performance shared more; and the people rewarded for company performance shared most.
He goes on to describe the influences of different compensation systems:
If compensation is linked to one's performance relative to others, then employees are likely to hoard information to both maximize their own performance and undermine (or, at least, not benefit) others. But if rewards are tied to firm performance, then individuals stand to gain most from activities -- like free knowledge sharing -- that benefit the company.
If you want a company that works together, make your compensation based on promoting teamwork.

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Posted on April 24

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