An investigation into team-based bonus

and team performance

 CONTENTS

INtroduction....................................................................................................................................3
LITERATURE REVIEW...............................................................................................................3
1. Key contributions....................................................................................................................3
2. Aims.......................................................................................................................................6
3. Research Questions.................................................................................................................6
4. Key Factors.............................................................................................................................6
methodology...................................................................................................................................7
1.Sampling technique..................................................................................................................7
2.Sampling frame and size..........................................................................................................7
3.Methods of data collection ......................................................................................................7
4.Analysis and presentation........................................................................................................9
5.Access and ethical issues.........................................................................................................9
Time plan......................................................................................................................................10
budget...........................................................................................................................................10
References and bibliography.........................................................................................................11

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Title
An investigation into team-based bonus and team performance

INTRODUCTION
A reward is the return for performance of a desired behaviour. This practice is widely
spread in today’s organization to encourage a productive performance. The fundamental
aim of any reward is to attract, retain, and motivate people in ways which are in the
interest of the organization in exchange for their contributions (CIPD, 2000). The issue of
linking pay to performance is complex, there are many factors involved such as the extent
to which financial reward can encourage people and what is considered to be a suitable
level of reward to assess an acceptable level of performance.

This research will be looking into the issue of performance-related pay, focusing in
particular on a bonus scheme and how it can be linked to team performance. Money is
not everything, but it is important in influencing the workforce to work in a desired
direction and with a degree of effort and enthusiasm.

When reward systems are to put into practice, the organization should be aware that not
everyone has the same motives, expectations, and abilities. Different people will value
different aspects of the systems of reward that operate. Therefore, these variables must be
taking into account in order to understand the issue.

LITERATURE REVIEW
1. Key contributions
Financial reward can act as the catalyst for enhancement of performance in the
workplace. Improved performance can result from carefully implemented pay for
performance where employees are paid according to performance. Bonus scheme is easy
to institute and monitor for organizations whose are contingent on productivity where
outputs are tangible. This may take into account not only output alone but other
indicators of performance such as the ability to hit targets in order to achieve the bonus.
Therefore, performance can be measure when clearly defined targets or objectives have
reached and therefore the bonus is awarded in return of their effort and contribution
(Armstrong, 2000).

Team-based bonus is crucial for the improvement of relationships between team

members because it shows that organizations are recognised team achievements. All
members must work together in a spirit of co-operation. By achieving the requirements of
a task, it shows the team have sustained the standard of team performance (Armstrong
and Murlis, 1994).

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There are a number of reasons why performance-related pay schemes may or may not be
successful in organizations. It is feasible that some organizations have over-estimated the
concept of which money alone motivates people to perform well. Although team-based
reward is important for improved team performance by encouraging team working and
cooperative behaviour, it is still the individuals in the team who receive the financial
rewards. Therefore, in some ways, team reward is about the way individuals can be
accommodated within a team context. In such case, it does have some disadvantages.
which revolve around the contribution individuals make to the team, thus, it is necessary
to explore an internal state that directs individuals. Organizations cannot directly
influence this internal state, but they can create motives that push employees towards
certain behaviours. To help understand this, it is essential to look at literature in this
perspective which is discussed next.

Initial studies of motivation at work have addressed the implications of reward systems
and employee performance (Stajkovic and Luthans 1997, Van Eerde and Thierry 1996,
McClelland 1967). These studies have explained how rewards may affect the behaviour,
or in this case performance, of an individual. The law of effect developed by Thorndike
(1913) states that the probability of a particular behavior increases if it is followed by a
reward or positive reinforcement and vice versa. Based on the principle of reinforcement,
it states that people learn to recognize that some actions will help them to achieve their
goals, whilst other actions are less successful and may even result in punishment.
Therefore, we can say that instrumentality is the association between first level outcomes
and the second level outcomes based on the belief that one thing will lead to another. For
example, if a person believes working hard to reach an objective (first level outcome)
will lead to a defined level of payment (second level outcome) the strength of
instrumentality will be high. If the bonus plan is seen to be unfair and unrealistic, the
strength of instrumentality will be low (CIPD ibid). In order for bonus scheme to work
successfully, employees must appreciate the importance of instrumentality or money to
certain extent for otherwise rewarding bonus will not drive people to response to such
scheme.

For bonuses to be effective, they have to be significant as noted above and must be
structured to attain a proper balance of motivating people to purpose and at achievable
effort. In other words, the bonuses must be modified to suit the specific conditions within
individual organizations. Hence, the reward as a means to an end in itself is more
important than how much people are paid. In practice, however, it is difficult to apply
reinforcement principle as it merely describes relations between reinforcement and
performance. It says nothing about whether or not a person will work harder for rewards
that they want. This issue is addressed by expectancy theory, which is discussed below.

Cognitive theories of motivation, such as expectancy theory, place more emphasis upon
the internal forces which lead to behavior. Expectancy theory is useful in clarifying how
rewards relate to performance as it attempts to explain the variables that affect people
behaviors. According to Vroom, the extent a person is motivated to behave in a certain
way is a combination of three variables: valence (strength of preference for a particular
outcome), instrumentality and expectancy (probability of success) which form the

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motivational force. Based on his finding, if the force score is high, the person will be
motivated. Only when all three variables are high will force be high, but this is unlikely
in all conditions. Many researchers feel his work is rather idealistic because they had
trouble in replicating his work.

Porter and Lawler have extended Vroom’s work where their model provides an overview
of performance in an organizational context by put forward the view that the strength of
motivation is dependent upon the person’s perceived probability that the their effort will
lead to a desired outcome. They also make the point that a simplistic view – that pay
alone motivates – can be problematic and emphasize that employees must expect the
rewards offered by the organisation if it is to produce the desired performance (1968).
This revealed that the values people place on reward that they expect affect the amount of
effort people put into their work. In other words, they must believe that their effort will
lead to the achievement of desired rewards and that the reward is directly related to and
reflected the effort they put into the assignment. If employees do not perceived that
rewards is worth for the required level of performance then the link between performance
and bonus will be broken. People will perform well if they believe their efforts will lead
to performance and the probability that their performance will lead to rewards and if they
want the rewards. Hence, the effectiveness a particular reward will have on performance
is related to the expectation that their performance will produce that reward.

By understand the forces which affect people actions as discussed above, it is important
to investigate the differences in individual needs that influence such characteristics.
Research conducted by McClelland on human motives place emphasis on the relative
value people place on rewards. He has identified three needs, achievement, power, and
affiliation. Specifically, McClelland argued that individual has different levels of these
needs where one need may be dominant. These needs may vary over time and
consequently affect their behaviour and working style. From a reward perspective,
McClelland’s work indicates that money is not high incentive, but it serves as a means in
return of successful effort to complete the task. McClelland firmly believed that
achievement-motivated people are generally the ones who make things happen and get
results, and that this extends to getting results through the organisation of other people
and resources, although as stated earlier, but they prioritise their personal goals and needs
above rather the group.

For any team to be successful, the members of the team are not only individually
committed and flexible but they must develop a range of skills which complement and
support one another (CIPD ibid). Thus, the concept of team roles are the key finding that
will form the basis of this research. Buchanan and Huczynski’s (1985) work on the
concept of team roles consider that the structure of a group can be differentiated in the
following ways: liking, status, power, leadership and role. They also pointed out aht
most people have in fact two roles within a group; the role they perceive that they should
have and the role that they actually function. Hastings (1986) commented that distinction
needs to be made between functional and team roles if the group or team is to function
effectively. The functional role the individual was to play, qualifications, experience,
attitude, appearance should be all considered. Belbin (1981) discovered that it can be

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helpful to the team’s efforts to have a number of personality types within a group to play
of and balance each other.
2. Aims
The aims of this research are to examine the relationship between ability to achieve
team-bonus and the variety of team roles play. According to Pret A Manger, this is
measured by the standard service of the team. The research also intends to explore
whether that various roles that portray are balanced to meet achieve team-based bonus

3. Research Questions
Additionally, the study is attempted to answer the following questions:
 What are the major factors influence employees to perform well within the team
context.
 To explore different team roles of employees within each branch
 To compare whether employees in each shop have different traits of team roles,
if this is likely, how these differences impact team performance

4. Key Factors
The literature reviews discussed above have helped to understand the key factors
that are essential in shaping up the characteristics of team performance. In order for team
pay to be effective, the following variables need to be considered:

Individual
 Individual expectations
 Individual motives
 Individual ability
 Individual perceptions on the probability of success
 Importance of instrumentality
 Individual personality type
 Desired outcome

Team
 Team pay will probably be effective where the unit has to stand alone, has clear
targets and clear agreed standards
 The members of the team are interdependent and recognize the success will only
come about through co-operation and shared responsibility
 The team members of the team are team players where necessary willing to
develop a range of skills which support team performance.

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METHODOLOGY
1. Sampling technique
Probability sampling technique is used in this research to identify an appropriate
sampling frame since the chance of each case being selected from the population is equal
for all cases. As there is a limited resources with which to pay for travel and other
associated data collection costs. Three cases (shops) will be selected using simple random
sampling where a computer program will be used to generate random numbers to prevent
bias. The advantage of probability sampling is that sampling error can be calculated. When
inferring to the population, results are reported plus or minus the sampling error.

2. Sampling frame and size

Based on the sampling technique discussed earlier, this has informed to justify a suitable
sampling frame for this study. The research population of this research is all Pret A
Manger branches, approximately 144 shops, throughout the UK. Each shop consisted of
around 30 employees; this is a reasonable amount to conduct the research. As there is an
assumption based on the research objectives that the employees in each shop may or may
not portray similar characteristics, three shops are selected in order to compare the data
obtained for each shop.

3. Methods of data collection

The study will use the multi-methods approach by combining the survey and
exploratory study and explanatory study which consisted of three main stages:

The primary stage, a self-perception inventory questionnaire will be posted to each of the
three shops. The questionnaire examines will be developed from the concept of team
roles by Belbin (1981). The sort of data that is expected to get at this stage will be
assessed by age, gender, started date (date that began to work), opinion, and most
importantly team role(s) of the employee. The data on the roles are the halfway to
underpin whether there are any relationships between the success of achieving team-
based bonus and the variety of roles that employees in each shop possessed.

The second stage will carry out an exploratory research through reviewing the existing
literature from the company’s records and reports (documentary secondary data) such as the
successful ratio of team-based bonus of each shop or branch (from the selected sample), these can
be use to compare with primary data. Other materials such as previous researches of similar topic
areas will also taking into account.

The third stage of the research will be an explanatory study via semi-structured group
interview to clarify the content of some of the questionnaire results. This is essential in
order to understand the relationships between variables as well as to get the meaning
behind some of the primary data. The research is intended to explain the relationship
between success of team-based bonus system and the factors that seem to lead to such
success.

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Some advantages and disadvantages of each of the approach are shown in the tables
below.
Table 1: Questionnaire

Advantages
Contents flexible, can be tailored to
address issues of current interest
The responses can be gathered in a
standardised way, good for
comparisons
Rather rapid and inexpensive
Can be administered simultaneously
to large group of respondents
Respondents are not disrupted by
researcher
Disadvantages
Inability to check validity
Questions may be misinterpreted by
respondents
A poorly designed questionnaire may
decrease response rate
Take time to design and analyze

As questionnaire is mainly dependent upon the researcher’s ability to construct the

questions, the errors of the questionnaire can be minimized by (Saunders et al., 2003):

 Carefully design of individual questions;

 Clear layout of the questionnaire form;
 Clearly explain the purpose of the questionnaire
 Pilot testing;
 Carefully planned and executed administration.

Table 2 Secondary data

Advantages
Disadvantages
Inexpensive way of gathering
May not be up to date
information
Access may be difficult or costly
Enormous saving of resources (time
The required report(s) may not
and money)
available in the university library
Immediately available
Locating suitable documents may
Useful to compare findings and
pose challenges
supplement with primary data

Table 3 Semi-structured group interview

Advantages
Disadvantages
Respondents’ views
Time consuming (set up and structure)
In-dept, rich, exploration of topic
Costly if samples are geographically
Clarification of complex behaviours
distribute (travel)
and possible uncertainties
Data more difficult to analyze
Useful to build on themes that have
Less control than in individual
emerged form questionnaire
interviews
Wider range of uses
Require trained interviewers
Use tape recorders

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The multi-methods are appropriate in this study to help answer the questions and meet the
aims of the issue that have been addressed earlier. There are two major advantages:
firstly, different methods can be used for different purposes in the study. Secondly, it
enables triangulation to take place, for example, semi-structured group interview is a
valuable way of triangulating data obtained from other sources such as secondary data
and questionnaire.

Questionnaires are ideal for collecting data from a number of respondents and the
questions can be design to tailor the aims of the research. Semi-structured group
interview is chosen because the research strategy required information concerning
interviewees’ beliefs, considered opinions and insights. These are difficult to obtain
through structured interviews as standardized questioning prevents opportunities to
explore the context in-depth. Secondary research is useful for additional information that
supplements other methods in this research.

4. Analysis and presentation

The data obtained from the above methods of data collection will analyse by using
statistical analysis where data are roughly summarised using tallies and transferred into
spreadsheet. When working with a large frequency distribution, it is possible to use
measure of locations such as mean, median and mode. Frequency can be grouped by
questions and or by headings. For example, respondents are asked to rate the factors that
influence their performance: their answers could be collected and analysed as follows.
Which factor scored the highest? Which factor scored the lowest? It is also useful by
looking for patterns and comparing variables and examining relationships between
variables. When the data have been entered into spreadsheet, the exploratory data
approach is used to display data. This emphasises the used of diagrams to illustrate the
information. In addition, it is possible to explore other relationships in data.

5. Access and ethical issues

There is unlikely to be any problem in getting access to conduct surveys at Pret A
Manger as one of my colleague working at Pret A Manger shop in Luton. The
organization seemed to be very flexible where formal access can be negotiated. But it
may not be possible to get permissions for internal company’s reports about data on the
sample, subject to confirmation. If the data is impossible to access, there is an alternative
source that can be reviewed from as there are similar researches in the field.

The approaches that this research implemented have been designed to minimize ethical
issues. For example, when conducting group interview, tape recorder is used where the
group will be notified before the interview process.

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TIME PLAN
Activity
Week 1-7 review of literature
Week 8 finalise research topic, objectives
Week 9 develop a one to two page draft of potential questions, topic,
objectives and theoretical review.
Week 10 present short version of the proposal to adviser
Week 10-11 review research methods literature
Week 11-12 identify and contact relevant sources related to the field
Week 12-14 use feedback for improvement and devise research approach
Week 15 draft research approach
Week 15-16 develop questionnaire, continue to speak to people about feasibility of
various approaches
Week 17 agree formal access to the sample for collection of primary data
Week 17-19 review secondary data
Week 18-20 compile, pilot test and revise questionnaire
Week 21 post questionnaire
Week 22 call the shops to remind them to complete the questionnaire
Week 23-24 collect questionnaire and start to analyse data
Week 25-26 conduct semi-structured group interview
Week 27 finalise data analysis
Week 28-29 complete first draft of project report
Week 29-30 submit to tutor and await feedback
Week 31-32 revise draft
Week 33 print, bind, and submit the final project report

BUDGET
Hotel (3 nights @ £50) £150
Food (4 days @ £12) £ 48
Underground train (3 trips @ £100) £300
Other transportation expenses £ 50
Survey expenses (3 shops)
Questionnaires (i.e. materials, postages, telephone costs) £ 60
Interviews (i.e. recorders, set up costs) £100
Miscellaneous expenses £ 50

Total £758

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REFERENCES AND BIBLIOGRAPHY

Armstrong, M (1996). Employee Reward. London: IPD House

Armstrong, M. & Murlis, H (1994). Reward Management. London: Kogan Page

Armstrong, M. (2000). “Financial Rewards and Performance Management.” Introduction

to Human Resource Management: 145-180.

Beardwell, I. and Holden L. (2001). Human Resource Management. London: Pearson

Education Limited.

Belbin, M. (1981) Management Teams: Why they succeed or fail cited in Ong, V. (2006)
The concept of team roles. PPAD-2 notes

Chartered Institute of Personnel and Development (2000) “Employee reward, matching reward to
circumstances.” Rewarding performance & competence. Manchester: Martello Press Ltd.

Chartered Institute of Personnel and Development (2000) “Employee reward, Strategy and
approach” Reward Psychology and theory. Manchester: Martello Press Ltd

Hastings, 1986, Tracking Those Incredible Creationists: The Trail Continues,

Creation/Evolution, Issue XVII, pp. 19-27.

Hastings, R. J. (1986). "Tracking Those Incredible Creationists: The Trail Continues.”

Creation/Evolution cited in Ong, V. (2006) The concept of team roles. PPAD-2 notes

McClelland, David C (1967). “Money as a Motivator: Some Research Insights.”

McKinsey Quarterly 4.2: 10-21.

Ong, V. (2006) The concept of team roles. PPAD-2 notes

Porter, W. and Lawler, E. (1968). Managerial attitudes and performance. Homewood,

IL: Dorsey Press.

Spector, P. (2003). Industrial Organizational Psychology. Hoboken, NJ: John Wiley and
Sons, Inc.

Thorndike, E. (1913). Educational Psychology: The Psychology of Learning cited in

Spector, P. (2003). Industrial Organizational Psychology. Hoboken, NJ: John Wiley and
Sons, Inc.

Vroom, H. (1964). Work and Motivation, cited in Spector, P. (2003). Industrial

Organizational Psychology. Hoboken, NJ: John Wiley and Sons, Inc.

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