Teamwork or Turf Wars? The Secret to Balancing Individual and Team Incentives

Incentives can be a double-edged sword when it comes to teams. Uri Gneezy’s "Mixed Signals" highlights the delicate balance between motivating individual excellence and fostering collaboration.Individual bonuses can spark competition and conflict, undermining team harmony.

Imagine a soccer team where star players argue over who takes penalty kicks because of unequal bonuses. This tension reflects how individual incentives may clash with the collective good. Conversely, team-based rewards encourage cooperation but risk some members free riding on others’ efforts.

Experiments show that when team members keep their individual prices if the team succeeds, internal competition drives prices higher, potentially hurting competitiveness. Shared rewards promote cooperation and more competitive outcomes. Understanding these dynamics helps leaders design incentive systems that balance personal and group motivations.

Effective strategies include mixing individual and team rewards, setting clear expectations, and ensuring fairness to prevent disputes. Communication and transparency are key to aligning incentives with culture and goals.

To master incentive design for teams, Uri Gneezy’s insights provide a valuable roadmap for leaders and managers. 1 3