THE PRICE OF WINNING: WHEN INDIVIDUAL BONUSES BACKFIRE ON TEAMS

Dr. Nellan J. Forswyth; Dr. Irisa K. Mavrel

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THE PRICE OF WINNING: WHEN INDIVIDUAL BONUSES BACKFIRE ON TEAMS

Dr. Nellan J. Forswyth ¹ , Dr. Irisa K. Mavrel ²

¹ Department of Organizational Psychology, London School of Economics and Political Science (LSE), London, United Kingdom

² Faculty of Business and Economics, University of Lausanne (HEC Lausanne), Lausanne, Switzerland

Issue Vol. 1 No. 01 (2024): V0LUME01 ISSUE01 --- Section Articles --- Published Date: 2024-12-30

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Abstract

Every manager faces a fundamental choice: should you reward your team for cooperating, or for competing? It’s a high-stakes question. Team-based rewards can build a sense of unity but often invite some members to slack off. On the other hand, competitive, winner-take-all bonuses can light a fire under individuals but risk turning colleagues into rivals, leading to less help and even outright sabotage. This article dives into this dilemma, exploring how these forces play out, especially when teams are a mix of high-fliers and steady contributors. We look at the predictions from economic theory and then hold them up against the results of controlled lab experiments that mimic these workplace dynamics. The findings are surprising. Big bonuses don't always spark the extra effort you'd expect, and they certainly don't make up for the loss of helping hands. We also find that while people are reluctant to sabotage their teammates, they are also quick to stop offering help once competition enters the picture. For managers, the takeaway is clear: creating a balanced, mixed-skill team and focusing on more than just individual prizes is often the winning strategy.

Keywords

Personnel economics, incentive schemes, rank-order tournaments, sabotage

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THE PRICE OF WINNING: WHEN INDIVIDUAL BONUSES BACKFIRE ON TEAMS. (2024). European Journal of Emerging Economics and Management, 1(01), 72-78. https://parthenonfrontiers.com/index.php/ejeem/article/view/108

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