Group Incentive Plan Results in Teamwork and Organizational Development

Posted by Dr Rajasulochana A.L On 21/10/2023 06:53:57

Group incentive means money or a reward given to a group of employees who achieve something together. Benefit of group incentives is the good feeling that naturally develops between teammates.

This technique is extremely beneficial in situations when individual worker output cannot be quantified, but group worker output can be commonly measured. The importance of group incentive plans is mostly on teamwork towards the common goal.


Group incentive plans are best suited for and appropriate in the following scenarios: When individual performance cannot be properly quantified.

  1. A group of employees all have the same sort of talent or ability.
  2. The accomplishment of the goal is tied to the group’s collaborative efforts.
  3. The goal is to incentivize indirect employees rather than direct workers.
  4. A group is made up of a small number of people.

Types of Group Incentive Plans

1. Profit-Sharing

One of the types of group incentive plans is– Profit sharing. It is a collaborative incentive program in which you pay a share of your company’s overall earnings to your employees. Profit-sharing fosters a sense of responsibility amongst employees and supports higher levels of team performance.

2. Priest Man’s Plan

Another type of group incentive plan includes Priest Man’s plan. This plan establishes a standard performance for the whole organization. If performance surpasses the benchmark, an incentive is given in proportion to the increase.. Inefficient workers contribute to the efforts of efficient workers since higher output helps everyone in the firm.

3. Scalon Plan

Joseph Scanlon inspired the name of this approach. Under this plan, a one percent participation incentive is paid for every one percent gain in production. Except for senior management, all employees are eligible for the incentive. The appropriate sum or bonus is not paid on a monthly basis. A reserve fund of one-half of the first fifteen percent is established to compensate for any changes in labor costs. If this reserve is still unclaimed at the end of the year, it is dispersed among workers in the final month of the year, and a new reserve is formed.

4. Employee Stock Ownership Plans (ESOPs)

Employee stock ownership plans (ESOPs) provide workers with business shares, either as an outright grant or at a beneficial price that may be less than market value. These plans are more popular in large insurance providers, banking institutions, gas and electric providers, and businesses with more than $500 million in revenue. The primary goal of ESOPs is to encourage mutuality of interests and to make employees feel that they are part of a company and understand the management’s point of view. As co-partners, they will act responsibly and strive to make the company more successful.

Examples of Group Incentive Plans

  • Spot Bonuses

Spot bonus is a significant incentive given to employees on the spot in exchange for performing a specified assignment. This bonus encourages a group of employees to take the initiative and work beyond. If you spot a group that is performing extremely well in their area, you can award the prize to that group on the spot. Offering spot incentives has the advantage of providing a quick response to excellent employee conduct.

  • Bonuses for Completion of Project

Employers can acknowledge project completion by scheduling project incentives. Project incentives often stipulate a certain deadline that the team must reach in order to receive a monetary award. When adopting a project-based compensation incentive, make it clear what criteria employees must achieve in order to get the bonus, such as financial constraints and milestones. Because everyone on the project team has a role in whether or not everyone earns a project bonus, project incentives promote collaboration and friendship. Each member would be driven to work as a team and assist one another in accomplishing the objectives.

  • Non-Monetary Incentives

Aside from the standard paid time off, try giving your staff additional vacation days in exchange for performance gains. This assists them in achieving a better work-life balance. Some employees choose to dress casually, such as in jeans and a T-shirt. Consider having a casual dress day once a week for the top-performing team. Company picnics allow employees to get away from the office. They’re also a terrific technique to boost teamwork. An excursion to an amusement park or similar recreational facility, for example, is an alternative to the typical picnic in the park.

Conclusion: Takeaway for Business owners

It is critical for a business owner or someone in a leadership capacity to foster a solid work ethic, enthusiasm, and creativity in the workplace. Offering group incentives in addition to basic pay is a wonderful approach to motivating your staff and enhancing retention rates by providing a happy and competitive workplace. Creating successful group incentive plans can be critical to accomplishing business objectives.

See Also:


IIBS Bangalore Welcome you to experience the superior professionalism and CSS - Cultural Connection as you pass through IIBS and let the change begin within you through IIBS.