As I am writing this it is that time of the year again that my current employer delivers the yearly bonuses. And to my joy, they compensate me well.

However, the more experience I have on organizing teams the more I think about how these things should be done. While I’ve not done extensive research (I know, I should), I find the dilemma interesting. On one hand, you want to reward people for doing well, and on the other, you want to encourage them to work together as teams even if it means a personal sacrifice.

One of the better ideas I’ve ran into is to split the bonus factors to smaller personal impact portion and a larger team portion. Say, 25% of the bonus is personal, 75% based on team goals. What this ought to encourage is to make sure your team reaches its goal even if it would mean that individuals would need to forfeit their personal bonuses – since overall, they would benefit more. Further, if this is reinforced by peer feedback to make sure that if you are a team player, despite forfeiting bonuses it can be beneficial to individuals.

As with everything, this is not all rosy either – everything comes with trade offs. But given that these relate more closely on evaluating performance, I’ll save that discussion till another post.