An in-depth guide to team effectiveness

Team effectiveness must be clearly defined, delineated, measured, and rewarded if you want to give your team a fair chance of being effective at work.

Interestingly, in our years working with teams to improve their effectiveness, when we ask “what is team effectiveness?” there is either an awkward silence or answers that only cover part of what team effectiveness actually is. Many teams are simply not knowledgeable of what effectiveness actually means for them. It thus comes as no surprise that we have seen many teams failing to improve or even sustain their effectiveness.

To improve your probability of working in or leading an effective team, we set out to define team effectiveness, identify its key dimensions and measures, and outline a step-by-step guide on how to define, evaluate, reward, and improve team effectiveness. We also ran a survey study to give you an idea of how many teams are actually being effective.

What is team effectiveness?

Team effectiveness is defined as the extent to which a team meets the expectations (for example, goals, objectives, deliverables, and by-products) of relevant constituencies from within and outside the team and the organization (such as team members, direct supervisors, top managers, other teams, suppliers, and customers).

This definition highlights the two most important aspects that every team should consider while thinking about, delineating, or measuring team effectiveness.

First, it suggests that team effectiveness encompasses a set of different, but related, dimensions^{[1] [2] [3]}. Team performance, team viability, team satisfaction, and team reputation are some dimensions of effectiveness. Team effectiveness is thus multidimensional and multifaceted.

Second, the definition also suggests that team effectiveness can mean different things to different people^{[4] [5]}. For instance, team members may emphasize how satisfied they are with the team. In contrast, leaders may focus on performance, and customers may care mostly for how reputable a team is. Depending on your relationship with or positioning within the team, you may weight each dimension of team effectiveness differently.

In practical terms, your team is an effective one if it is able to identify the effectiveness dimensions that are most relevant for both internal and external constituencies, as well as to satisfy their expectations on each dimension of effectiveness.

Dimensions and measures of team effectiveness

Team effectiveness can be organized as a three-level hierarchical structure^{[6] [7]}. At the top lie the global dimensions of team effectiveness. These include several specific dimensions, each assessed with well-developed measures.

The global dimensions give you a big picture of the core aspects that tend to be important for the effectiveness of most teams^{[2] [8]}. The specific dimensions give you a range of manifestations that allow you to delineate and further define each global dimension of team effectiveness. The measures of team effectiveness are the methods used to evaluate how effective your team is on each dimension (global or specific).

The specific dimensions and measures you use to delineate and assess team effectiveness largely depend on aspects like the type of work your teams does^[9]. For example, in your team the key aspect of interest for team performance (global dimension) might be productivity (specific dimension), as assessed by the number of closed sales (measure).

Global dimensions of team effectiveness

There are numerous models of team effectiveness, each one highlighting a different set of global dimensions. For instance, Sundstrom’s team effectiveness model focuses on performance (degree of fit between the team’s output and recipients’ expectations) and viability (members’ satisfaction with and willingness to keep working in the team)^{[7] [10]}.

Mathieu’s model of team effectiveness also consists of two global dimensions: performance (including productivity, quality, and efficiency), and influences on team members (including team states like cohesion and psychological safety, as well as individual outcomes such as turnover and absenteeism)^{[3] [6]}.

Other models consider three global dimensions of team effectiveness. Hackman’s model of team effectiveness focuses on performance (including expected standards of quantity, quality, and service), viability (the extent to which team members are willing to work together in the future, and how much is the team improving as a result of the collaborative work), and team members’ growth and well-being (how much team members are growing, learning and achieving their goals while working in the team)^[2].

Similarly, Cohen and Bailey’s model suggests that team effectiveness is defined by three global dimensions: performance (including the quality, quantity, and innovativeness of team’s outputs), members’ attitudes (including how satisfied and committed team members are); and members’ behaviors (for example, levels of absenteeism and turnover)^[9].

Although each model highlights different global dimensions of team effectiveness, all models have something in common. In all cases, team effectiveness is not a synonym of team performance (the latter is only a component, facet, or dimension of the first). Team performance is of critical importance to virtually all teams^[1], but if your team wants to sustain long term effectiveness it will have to consider other global dimensions.

The rhombus model of team effectiveness

In our years training and researching teams, we have found that team effectiveness tends to be more sustainable over time when teams attend to four global dimensions:

• Performance (including efficiency, productivity, quality, and innovation);
• Viable teamwork (including teamwork quality, process improvement through learning, ability to continue working together as a team, and ability to deal with difficulties);
• Team’s influence on members (including team members’ well-being, growth, and development, and the influence teamwork has on team members’ behaviors and attitudes);
• Reputation (including outsiders’ impressions of the team).

According to the rhombus model of team effectiveness, effective teams perform as expected (performance), prosper over time (viability), support members’ growth and learning (influence on members), and are credible to others outside the team (reputation).

These four dimensions tend to be a source of sustainable competitive advantage for two main reasons. First, they address the effectiveness expectations of most teams’ constituencies. For instance, performance is particularly important for team supervisors and top management, reputation for clients and other teams in the company, viable teamwork for the team as a whole, and team’s influence on members for each individual team member. Sacrificing one of these dimensions will likely frustrate the expectations of people who are important for your team.

Second, research has shown that these four dimensions sustain one another over time. For instance, teams with viable teamwork in place tend to perform better, and high performing teams tend to see themselves as viable^{[8] [11] [12]}. Likewise, teams with burned out members tend to see decreases in performance^[13], and sub-optimal performance can lead to additional teamwork demands that further reduce team members’ well-being^[14]. The relative importance of each dimension may change due to circumstances, but teams who are able to consistently sustain their effectiveness never fully ignore one of these dimensions.

Specific dimensions and measures of team effectiveness

Specific dimensions of team effectiveness are used to further define and delineate each global dimension of team effectiveness. For instance, depending on the type of work your team does, you may appraise team performance based on the quality of a product or service, the productivity of your team, and/or the number of innovations implemented.

In turn, measures of team effectiveness are the most fine-grained delineations of team effectiveness. They tell your team what really matters, give concrete goals for your team to adhere to, and provide the information that is necessary to assess how effective your team is. For instance, the focus of your team might vary depending on whether you measure productivity with the number of calls made to try to sell something or with the number of actual closed sales.

Let’s look at the specific dimensions and corresponding measures that are most commonly used to appraise each global dimension of team effectiveness.

Team performance

Team performance is the extent to which the team’s outputs are aligned with the expectations of the organization and the clients, in terms of efficiency, productivity, quality, and/or innovation^{[3] [9] [15]}.

Here are the most commonly used measures for each specific dimension of team performance:

• Productivity is the number of deliverables a team produces over a given period of time (illustrated by statements such as “This month we made 100 sales”).
  • Productivity measures – number of closed sales, pieces produced, articles written, clients served, calls made, customer response times, financial ratios (such as return on investment, return on assets, net worth to total assets, market share).
• Efficiency is the team’s productivity compared to a given standard, expectation, or benchmark. If you say something like “This month we increased our productivity by 10%” you are saying that your team was more efficient this month, compared to last month.
  • Efficiency measures – sales growth, adherence to budgets and schedules, speed-to-market, queue time reduction, call duration reduction, reduction of materials used to produce a given number of pieces, reduction of time to write an article, increased return on investment, increased market share.
• Quality is the value and worth attributed to a team’s output by those who receive it (for example, “Our customer satisfaction survey indicated that 90% of our customers saw their needs met with our product”).
  • Quality measures – customer satisfaction; customer complain rates; product return rates; error/failure rates; rate of flagged products, services, or processes by quality control analyses.
• Innovation is the generation and implementation of ideas that are both new and potentially useful for those who receive the team’s output^[16]. If you state something like “During our team meeting we discussed new product ideas” you are talking about the first stage of innovation, idea generation or team creativity. If you say “Last week we launched a new line of products” you are describing the end result of the implementation process undertaken to turn creative ideas about a line of products into reality.
  • Innovation measures – number of creative ideas generated, number of new products or services launched, number of patents, number of technical reports, ratio of ideas implemented to ideas developed, level of proficiency with a new product or service.

Viable teamwork

Viable teamwork is the extent to which a team has in place the processes and states necessary to achieve its goals, to improve daily, and to boost its ability to deal with obstacles. This dimension of team effectiveness focuses on how well the dynamics of the team are functioning.

Here are the three main specific dimensions of viable teamwork and their corresponding measures:

• Team processes covers how team members get along and the way they work together to achieve collective goals^[17]. Overall, processes are about the behaviors, actions, and interactions that you see in a team. If you say something like “We had a productive meeting to define the next quarter goals”, you are talking about a team process.
  • Team processes measures – Gantt charts assessing how well the team is progressing toward goals, ratio of coordination failures to successes, rate of role overlap among members, rate of personal clashes in the team, ratio of time spent in meetings to coordination returns, ratio of cooperation to competition, helping behaviors, anonymous surveys on key team processes.
• Team states (also called team emergent states) are the thoughts, feelings and motivations shared among the members of the team^[18] (an example could be a statement such as “We are confident that our team will meet the next quarter goals”).
  • Team states measures – anonymous surveys on, for example, how clear and committed team members are to goals, how safe members feel in sharing ideas, and how much teammates trust one another. Indirect measures can also be informative, such as ratio of team lunch invitations to number of members present (as an indication of cohesion), and intense signs of frustration to day-to-day challenges (as an indication of a negative social climate).
• Team viability is the extent to which the team as a whole can deal effectively with the challenges that may impair its stability and longevity^[19].
  • Team viability measures – team tenure, level of stability in membership, how easily are new members integrated in the team, success-failure ratio of the team, response time of adaptation to unexpected changes in the team’s environment, level of improvement or deterioration of team processes through time.

Team’s influence on members

Team’s influence on members captures the impact that working in the team has on each member in terms of attitudes, behaviors, well-being, and professional growth^{[2] [9]}.

The main specific dimensions of team’s influence on members and respective measures are below.

• Team members’ attitudes and behaviors refer to the impact teamwork has on how members view the team and on how they act at work.
  • Measures of attitudes and behaviors – turnover rates, unjustified absenteeism, social loafing prevalence, horizontal transfer rates (move to a similar team in the organization), tardiness rates, grievance rates, anonymous surveys on job satisfaction and commitment to the team, level of safety measures adoption, injury/accident rates.
• Team members’ well-being is the extent to which the team provides opportunities and conditions for the optimal psychological functioning of its members. This means that team members are both happy to work in the team and look forward to each new day because they believe they are in the process of reaching their full potential.
  • Measures of well-being – sick leave rates; sickness absenteeism rates; presenteeism rates (working while ill); burnout rates; changes in insurance and medical costs due to deterioration of team members’ psychological well-being and physical health; rates of substance abuse; rates of premature retirement; pace of health and psychological recovery; anonymous surveys on how happy, enthused, and energized team members are, as well as how well their psychological needs are being satisfied or frustrated.
• Team members’ professional growth refers to whether the work in the team is a source of opportunities for team members to develop and grow professionally, expand skills, and learn continuously.
  • Measures of professional growth – number of formal certifications each member has, level of autonomy of team members, pace of career progression in the company.

Team reputation

Team reputation covers the subjective opinions of others on the character and value of the team, and the expectations others have on the future behavior and performance of the team^{[20] [21] [22]}. When third parties (like clients) have contact with your team, they develop a sense of what is happening inside the team and of what the team is doing. Third parties can pick up signals on, for example, how well members get along, whether a team should be trusted, the quality of work produced, and how ethically things are being achieved. Based on this information, third parties ascribe a reputation to a team and develop a set of expectations for future work, interactions, and values.

Below are the two most common specific dimensions of team reputation and corresponding measures.

• Team character expectations captures the integrity, honesty, and trustworthiness of the team, as seen by third parties.
  • Measures of team character expectations – anonymous surveys on the integrity of the team (from other teams and clients, for example), ability to attract highly talented team members, assessment of the integrity of those with whom the team is associated, perceived environmental and social responsibility of the team.
• Team performance expectations captures the extent to which third parties consistently expect the highest quality, efficiency, productivity, and innovativeness from the team.
  • Measures of team performance expectations – level of repeated business (such as repeated sales), number of new clients coming from word of mouth, ranking position in transparent and honest reviews, social media comments on the quality of products and services.

How effective are teams? Results of a survey study

To better understand how effective teams are, we surveyed 96 team supervisors, and asked them to rate their teams on the four global dimensions of the rhombus model of effectiveness: performance, viable teamwork, influence on members, and reputation. Team supervisors were from the US and worked on multiple sectors (for example, management, finance, engineering, education).

We found that 21% of teams were truly effective, as they were rated above average in all global dimensions of effectiveness. We also found that 22% of teams were rated below average in all dimensions, and that 57% had mixed profiles (that is, with some dimensions above and others below average). Thus, 79% of teams had sub-optimal ratings in one or more dimensions of effectiveness.

However, not all teams with below average ratings are at risk of failing. For example, a team may have a sub-optimal rating because it is learning how to deal with an unforeseen change in the environment, or strategically focusing on one dimension of effectiveness over another due to a deadline.

To better understand how many teams were actually at risk of jeopardizing their long-term success, we checked how many were severely neglecting at least one dimension of effectiveness. We found that 45% of teams were rated extremely low in, at least, one global dimension of effectiveness (that is, they were rated below percentile 25 in at least one dimension). This tells us that, in real life, almost half of the teams out there may be largely unsuccessful or are at risk of becoming unsuccessful because they are overlooking one or more pillars of their effectiveness.

A step-by-step guide to define, measure, and reward team effectiveness

To improve the probability of promoting effectiveness in your team, here is an evidence-based guide, laid out in five steps, on how to define, measure, and reward team effectiveness.

We note, however, that it is important to distinguish between delineating well the effectiveness of your team and obtaining improved results. While the whole point of delineating, measuring, and rewarding team effectiveness well is to increase the probability of improved results, there are many other factors affecting your team’s results. In some cases, you may even delineate and reward team effectiveness poorly and still have enhanced results due to luck or good fortune.

Step 1: Identify the effectiveness dimensions that matter the most to your team and organization

Throughout this article we have seen that team effectiveness has a hierarchical structure: measures of team effectiveness at the base, specific dimensions of effectiveness in the middle, and a small number of global dimensions at the apex. The first step of the guide entails delineating this hierarchy in a way that makes sense to your team and organization.

The key point here is to build a balanced profile of effectiveness dimensions that are critical to your team’s functioning and to the multiple constituencies of your team (for example team members, company, clients).

Identify the most relevant global dimensions of team effectiveness

Most teams start at the apex of the hierarchy, by identifying the global dimensions that are most important and aligned with the nature of their work. Although we advocate that most teams should consider all four global dimensions, in some cases a simpler approach may suffice. For instance, dealing with reputation issues can be a major concern to management teams, but partially irrelevant to time-limited project teams, assembled to produce a one-time product or service.

Note that building a balanced profile of team effectiveness takes practice and is not always intuitive. For instance, given that project teams disband once the project is concluded, team performance tends to be the more obvious dimension to consider. However, members’ professional growth can be equally important, because it sustains the long-term success of the company^[23] – if team members grow professionally in one project team, they will likely perform better in the next project team (team performance), and even share their knowledge with their new peers (viable teamwork).

Go through the team effectiveness models we outlined above and ask yourself why you would need to consider each global dimension of team effectiveness. While doing this, keep in mind that these dimensions are in constant interplay. Thus, even if a global dimension seems irrelevant to your team, make sure it does not have hidden implications for the dimensions you care most about.

Identify the specific dimensions that better delineate each global dimension of team effectiveness

Each global dimension of your team’s effectiveness can then be delineated into unique specific dimensions, depending on factors such as:

• Type of work currently performed (specific dimensions of team effectiveness most relevant in the short run);
• Forecasts of the work that will be required from your team in the future (dimensions of team effectiveness that are most relevant in the long run);
• Type of team (such as production team, top management team, project team, customer service team);
• Team constituencies for whom the output is relevant (such as team members, managers, clients);
• Goals, objectives, and strategy of the company.

For example, the performance of a top management team may be delineated in terms of the financial results of the firm. In contrast, a customer service team may delineate team performance based on customer satisfaction and productivity. Likewise, if a customer service team will deal with a new product in the near future, you might want to temporarily tone down the importance of productivity and focus on collective learning (from the “viable teamwork” global dimension). This would give room for team members to familiarize themselves with the new product and to actually share that knowledge in the team.

An important consideration in this step is whether the goals of all parts are aligned^[24]. That is, whether the goals of team members are aligned with those of the team, whether team goals contribute to the success of the company, and whether the company goals add value to customers. Attending to the four global dimensions of team effectiveness of the rhombus model helps you consider the goals of most teams’ key constituencies, most likely exposing the extent to which their goals are aligned.

In most instances, teams benefit from assessing multiple specific dimensions for each global dimension of effectiveness. Take the case of the global dimension of team performance, which can be delineated based on team productivity, efficiency, quality, or innovativeness. A productive and efficient team, delivering low quality outputs will see its overall effectiveness undermined, and will lose clients over time. Similarly, a team meeting quantity and quality standards, but failing to innovate may be unable to keep up with times and will eventually stop meeting customers’ needs.

Challenges associated with selecting and delineating effectiveness dimensions

On the surface this first step appears to be simple. You look at your team and identify the effectiveness dimensions that reflect the critical success factors for multiple constituencies.

However, unveiling these success factors can be challenging for at least two reasons. First, what is said and what is done are sometimes two different things^[25]. Take the case of Hewlett-Packard. In the 1980s they touted “The HP Way” to promote company values such as collaborative teamwork and trust. However, engineers found that politics and fierce competition were the success factors to get ahead and get along in the company. So, make sure the espoused dimensions of effectiveness are those that are truly and actually in place when important decisions are made.

Second, in some cases, it is almost impossible to conciliate contradictory dimensions of team effectiveness. For example, achieving the highest quality at the lowest cost is likely unfeasible. Likewise, having the highest concern for all team constituencies may be challenging. In ambiguous or contradictory circumstances like these, successful CEOs reported benefits in taking the time to collect more information, reflect, question what truly is in place, and think creatively about how to solve or dissolve the contradiction^[26]. This questioning and reflection process may give you the opportunity to discover common ground among your team’s constituencies that would dissolve the contradiction.

Step 2: Measure and assess team effectiveness accurately

Once you have identified the dimensions of effectiveness that matter the most for the relevant constituencies of your team, it is time to develop measures, collect accurate information for each effectiveness dimension, and use those measurements as key effectiveness indicators for assessing how well your team is doing in its critical success factors.

This is the final stage of team effectiveness delineation, and ultimately will define what really matters for your team. It is at this stage that you turn an abstract effectiveness dimension into a concrete and measurable goal to be accomplished.

Clearly defining how to measure team effectiveness has the benefit of leaving your team members on the same page regarding, for instance, what to accomplish, what to prioritize, the means to achieve goals, and individual roles and responsibilities. In turn, being on the same page boosts your team’s confidence in itself, effort, proactive behavior, and ultimately effectiveness^{[27] [28]}.

To have an entire team on the same page, it is important to open the door and ask team members to have an active role in the selection and development of the team effectiveness measures that will be used. Team supervisors tend to have a better knowledge of the specific dimensions of team effectiveness that matter the most, since they have direct access to the strategic goals of the company. However, team members tend to have a more rich and nuanced view of their work and, as such, can provide valuable information to develop and implement effectiveness measures^[24].

Types of team effectiveness measures

There are three main ways to distinguish the types of measures you can use to assess team effectiveness^{[29] [30] [31]}. Measures can be:

• Objective or subjective;
• Results or behavior based;
• Absolute or relative.

Objective measures of team effectiveness are typically quantifiable and specific (for example, number of pieces produced). Subjective measures of team effectiveness are typically collected by surveying or interviewing team members, supervisors, customers, or other external observers (for example, supervisors’ ratings of team performance).

Measures based on results focus of the consequences or outputs of teamwork (for example, number of sales). Effectiveness measures based on behavior focus on the actions and processes of teams at work (for example, whether team members cooperate and exchange knowledge to make more sales).

The distinction between absolute measures and relative ones lies in whether the effectiveness of others counts. In relative measures, your team’s effectiveness is compared to the effectiveness of other teams (for example, your team was the most efficient in the company). In absolute measures, others’ effectiveness is out of the equation – team effectiveness is assessed against a standard that your team may, or may not, achieve (for example, the productivity target is 100 sales per day and your team made 102 sales, thus succeeding).

These differences in team performance measures might be subtle, but they have important implications for how you manage team effectiveness. For instance, relative measures tend to increase competition, even in cases where cooperation would be the optimal route. In contrast, absolute measures tend to boost cooperation, even in cases where competition would be expected^[32]. Measures based on objective results may ignore external factors that are outside the control of the team, and create a sense of injustice among team members^[33]. Further, despite their apparent objectivity, the same objective result may mean different things to different teams. For example, while a low number of complains may be a reason to celebrate for a mass production product, it may be a reason for concern if you are dealing with a luxurious product. Finally, while subjective measures are a great source of information on the perceptions of people, these measures can be contaminated by human biases.

In most instances, it is beneficial to triangulate the information derived from different types of measures. Take the case of objective and subjective measures of effectiveness. While the number of certifications can objectively inform you about the growth of your team members, those certifications may be subjectively perceived by team members as a burden with no growth value.

Likewise, collecting subjective measures of team effectiveness from multiple sources is also advisable. For example, while team members may be satisfied with the team’s innovation rate, customers may feel that the new products lack the innovative edge of previous products. In cases like these, discussing the discrepancies between measures and sources can help you gain insights on next steps, the expectations of customers, and the real nature of your team’s work.

While deciding on your team effectiveness measures, keep in mind that there is no such thing as a perfect measure or source. Each measure and source may be more or less accurate depending on the dimension of effectiveness you want to assess, how well the measure fits your team’s work, and the quality of the measure, among many other factors. Thus, the decision on the most accurate measure and source to rely on should be done on a case by case basis.

Challenges associated with measuring and assessing team effectiveness

Given that this final delineation of team effectiveness will focus your team’s attention on the agreed upon and selected key effectiveness indicators, it is paramount that you go through this stage as precisely as possible. However, for multiple practical reasons, you may not always have the resources to access the most accurate and direct sources of information. To this end, there is some scientific evidence that can assist you in dealing with the challenge of measuring and assessing team effectiveness accurately when, in the real world, you do not have infinite resources.

Ideally you should strive for the most direct measures of each team effectiveness dimension. For instance, objective indicators (such as time spent in a call, or percentage of sales growth) are accurate measures of team performance, whereas subjective impressions of team members and supervisors (such as anonymous team satisfaction surveys) are among the most direct and accurate ways to capture teamwork viability.

In situations where it might not be feasible to collect such direct data, you may collect indirect information and still have an accurate and representative assessment of team effectiveness. For instance, research suggests that teams tend to be aware of their performance and reputation levels, as their subjective assessments converge with objective measures^{[34] [35]} and with external assessments^{[22] [36]} of performance and reputation. Similarly, since customers can easily notice how satisfied team members are^[9], a customer satisfaction measure can give you direct information regarding the performance of your team, and indirect information on teamwork viability and team’s influence on members.

A related challenge is whether you should look at the average of all dimensions of team effectiveness, or look at each dimension individually. Each option has merits and demerits, and if you look at both you can cancel out the demerits of each one.

An average measure gives you an overall picture of what is happening in the team, and since most teams nowadays perform multiple tasks, it makes sense to see how effective the team is in all its duties^[6].

However, averages (even when weighted by importance) can mask specific liabilities in the effectiveness of your team and hinder your ability to improve the situation. We know, for instance, that members’ satisfaction with the team can be enhanced mainly by emphasizing learning and skill development goals, and team performance depends more on emphasizing performance goals and external competition^[35]. By knowing which dimension of team effectiveness is faulty, you improve the likelihood of solving the issue with a targeted intervention.

Although measures of effectiveness can have defects and limitations, it is better to have measures in place than to overlook the evaluation of your team effectiveness. Only by examining how effective your team is now can you reliably and reasonably determine how effective your team should be in the future.

Step 3: Align rewards and incentives with the assessment of team effectiveness

This step is about adding rewards and incentives to the effectiveness measures your team is using. While this is not a required step to delineate team effectiveness, it is an important step to enhance the effectiveness of your team.

There are two main benefits to this step: incentive benefits and sorting benefits^[30]. Incentive benefits relate to the motivation boost your team gets from being rewarded – the more team members believe they can achieve a certain effectiveness level and the more they value the reward, the more they will make an effort. Large scale studies indicate that when teams are rewarded based on effectiveness, their effectiveness tends to be enhanced^{[37] [38]}.

Sorting benefits relate to the impact rewards have on the composition of your team. For instance, by rewarding innovation your team may attract and keep innovative members, and loose those who are unable or unwilling to engage in innovative efforts. How you define and reward team effectiveness influences the profile of the people who are willing to join and stay in your team.

Although there are important nuances in how to put together a team-based reward system, large scale studies^{[37] [39]} indicate that:

• Team rewards tend to be preferred over individual rewards to stimulate team effectiveness;
• Team rewards are more effective for highly interdependent work and individual rewards for highly independent work;
• Rewards distributed equitably (based on the contribution of each team member) tend to be more effective than those distributed equally (all members get the same, regardless of input or effort).

Challenges associated with aligning rewards and incentives with the assessment of team effectiveness

In order to put together a well-articulated reward system for your team, you have to consider multiple, and sometimes conflicting, aspects.

Let’s say that, in an attempt to boost the performance and reputation of your team, you develop a system where team rewards are closely connected to these two dimensions of effectiveness. In principle, this is great. The challenge may come, however, if a reputation criterion clashes with a performance one. For example, you may find that spending more time supporting clients boosts the reputation of your team at the cost of team productivity and immediate profit margins (reduced team performance). As a result, you may have, inadvertently, created a dilemma to your team such that members are faced with a conflict between achieving performance or reputation. If undetected and unresolved, this dilemma may communicate that, regardless of effort, the team will never be able to meet the effectiveness thresholds and obtain the expected rewards.

There is also some evidence indicating that the motivational boost of team reward systems tends to dissipate over time. As time goes by, team members get used to the reward system, begin to take it for granted, and some even start finding ways to game it^[40]. In practical terms, this tells you that revising and updating team reward systems is a must. However, constant updates come at a cost. For instance, the productivity thresholds can become unachievable, and the level of rewards can become unsustainable to the company.

Further, it can also be challenging to calibrate the right level of a reward. For instance, rewards with a raise below 7% are largely unnoticed and can even be detrimental to your team’s effectiveness^{[41] [42]}. You may also notice that high rewards may be so attractive to teams that they start attending only to the effectiveness dimensions that are highly rewarded, and disregard the less rewarded dimensions of effectiveness.

In the video below, the American Psychological Association’s Center for Organizational Excellence shares some additional insights on how to successfully reward and recognize employees’ efforts at work:

Step 4: Revisit the three initial steps and make adjustments as required

Since most work is dynamic it tends to be a good idea to check, on a regular basis, whether the effectiveness criteria you are using are still relevant and accurate. That is, your team will most likely need to change the weight to, add, or even delete dimensions and measures of team effectiveness over time^{[39] [43]}.

Most teams define goals, milestones, and deliverables at the beginning of a project or a task. This tends to be a good practice as it motivates the team to actually do it^[44]. Notwithstanding, as a team progresses with a project or a task, new information usually comes to light. For instance, unexpected changes in your context may turn a type of project your team aces into a difficult challenge with multiple unforeseen obstacles. Unless you revise the criteria you use to assess team effectiveness, your team may end up with a poor evaluation when in reality it thrived. Just make sure your revision is a reflection of the changes detected in the task and not an excuse to postpone the output.

Also, since teams mature over time^[44], a key effectiveness indicator at one moment in time may be a liability at another time. For example, you may learn that accentuating viable teamwork was beneficial in the early stages of your team, but a source of distraction later on, once viable teamwork is already in place and the team is trying to focus on its performance indicators.

Another example on the importance of revising dimensions and measures of team effectiveness is when fostering one dimension hinders another. For instance, an excessive focus on team performance may lead your team members to ignore unrewarded tasks that may be critical to sustain performance (helping each other out, for instance)^[30]. Likewise, if your measures of team effectiveness only encourage cooperation between team members and create competition between teams, your company may lose viable resources that come from cooperation between teams^[45].

Challenges associated with revisiting dimensions and measures of team effectiveness

Most teams face three main challenges when revising dimensions and measures of team effectiveness. First, changes in performance measures may raise concerns on whether team members’ previous effectiveness is going to be recognized and rewarded^[30]. To avoid this, it is important to be clear about the time-frame of a measure, to be consistent in how you apply the measures, and to reward previous effectiveness even if new measures are now in place.

Second, teams do not always have access to the necessary resources to redesign and change effectiveness measures. Time, budget, advanced training, and support from top management are examples of resources that may not be available to properly manage team effectiveness. With limited resources, changing team effectiveness measures can become an additional source of pressure and stress to team members and supervisors. The demands of teamwork can even be intensified if the new measure of effectiveness is about efficiency; that is, a measure aimed at improving the productivity of your team. Research has found that when teamwork becomes a source of pressure and a demand to work more hours, the well-being of team members suffers^[14].

Finally, ensuring that everyone is on board with the changes in the criteria used to evaluate team effectiveness is not always straightforward. Changes in how team effectiveness is assessed tend to go hand in hand with changes in the formal and informal roles of team members. For instance, a member who gains an informal leadership position due to unique expertise may become redundant if that expertise is no longer important for the new team effectiveness criteria. Established ways to deal with this resistance to change in effectiveness criteria include: involving team members in the development of new effectiveness measures^[24], providing a reasonable explanation for the change^[46], emphasizing team rewards (particularly if the change reflects increased teamwork)^[47], and having clear goals for the change that are aligned with the values of the team and organization^[48].

Step 5: Use team effectiveness criteria strategically

This last step is mainly about politics and strategy. Hard work and meeting team effectiveness thresholds are important, but they are only one piece of the long-term success puzzle. Other important pieces, like your political skill and how strategic you are, can be equally important^[49]. For instance, those who master political skills (like knowing how to position themselves socially, mastering networks, and understanding and managing other people well), tend to advance faster in their careers^[50]. Likewise, high-level strategic thinking is one of the competencies that more clearly distinguish executives from non-executives^[51].

How can you be strategic and political about your team effectiveness? In the previous steps, you most likely identified the effectiveness priorities of each team constituency (such as team members, clients, and top management). Now, you can strategically highlight each dimension of effectiveness to the people who care the most about it. For instance, there is no substantial benefit in highlighting how satisfied your team members are to top management, if their focus is on productivity, efficiency, and quality.

Highlighting the information of most relevance to each constituency of your team is not only political and strategic, but it also saves time and may even create resources. For example, companies with highly reputable top management teams tend to attract more (and better) job applicants^[52], and to have employees who are more identified with the company^[53]. By highlighting reputation aspects (an effectiveness dimension) to relevant team constituencies (potential job applicants and current employees), top management teams are able to work with and retain the most talented professionals. Likewise, politically skilled and well connected leaders tend to have access to additional resources, upon which their teams can capitalize on^[54]. Indeed, large scale studies show that most people throughout the world do not appreciate lone and poorly connected leaders^[55].

Challenges associated with using team effectiveness criteria strategically

Being strategic and skillful politically is neither positive nor negative. These are neutral competencies that can have positive or negative consequences, depending on their underlying intentions, applications, and consequences^[56]. For instance, when overdone, politics tends to have performance costs – team members may spend more time networking, promoting the team, and competing for resources rather than working^[57]. So, the main challenge with this step is to find the right level of politic behavior that will most likely help the team achieve its effectiveness goals.

A related challenge is whether you can draw a clear line between strategic political behavior and shady political behavior. Honest and transparent strategic political behavior communicates trustworthiness and creates an environment where trust and collaborative work can be fostered in your team and company^[58]. Shady political behavior not only undermines trust and cooperative work, but also communicates to other team members that shady and selfish behaviors are acceptable^[59]. For instance, while highlighting relevant information to specific team constituencies is strategic, political, and likely welcomed; taking credit for other teams’ work is a shady political strategy that undermines teamwork and should be avoided.

Conclusion

Teamwork is here to stay and we should use the best available knowledge to make it more effective and pleasant to all people involved in or impacted by it. Rather than being daunted by all the dimensions and measures of team effectiveness available out there, we have structured that information so you can become knowledgeable on team effectiveness. We defined team effectiveness; outlined the rhombus model of team effectiveness and identified its key dimensions and corresponding measures; and shared a step-by-step guide on how to delineate, measure, and reward team effectiveness.

Team effectiveness is complex, as well as subject to luck and random events outside of your team’s control. However, there are still things we can do to enhance our probabilities of success. We hope the recommendations we shared in this article contribute to your team’s enhanced effectiveness. As always, we thank you for trusting your time with ManagingLifeatWork.com. Until next time, keep improving the probability of enhancing the effectiveness of your team, and good luck!

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