5 Effective Team-Based Rewards

team based rewards

Incentive Programs for Teams

  • Goal-Based Rewards
  • Merit-Based Rewards
  • Gain Sharing
  • Profit Sharing
  • Discretionary Rewards

More businesses than ever are moving toward team-based work structures. Team-based reward programs have become essential. These types of incentive plans are often performance-focused and can be either monetary or non-monetary. The overall goal is to encourage team participation and productivity. While there are many different types of team-based incentive programs, the following plans are among the best.

1. Goal-Based Rewards

Some of the most popular team-based reward programs involve goal-based rewards. These types of incentive programs reward teams only when they reach a preset goal. These can be either short-term or long-term goals and can include such things as:

  • reaching an established amount of sales
  • securing a particular number of contracts within a certain time frame
  • reducing waste by a set percentage within a predetermined amount of time

Goal-based reward programs are highly effective in encouraging:

  • teamwork
  • motivation
  • effort

2. Merit-Based Rewards

Goal-based incentive programs reward teams when they reach a certain goal. Merit-based programs reward teams for putting forth exceptional effort. These types of team-based reward programs are a bit subjective in the sense that managers or supervisors determine whether or not teams deserve a reward. As stated in an article posted by Forbes, ambiguity is never a good thing when it comes to team-based incentive programs. There should be clear guidelines as to what constitutes exceptional behavior and engagement.

3. Gain Sharing

Gain-sharing is a type of team-based reward program that rewards teams for measurable accomplishments in non-financial areas. One example: a bonus given to a team for increasing levels of customer satisfaction by a certain percentage from one year to the next. Another example of this type of program is a bonus given to a team for improving an essential shipping or receiving procedure. The goal of gainsharing programs is motivating teams to improve various areas of business operations.

4. Profit Sharing

Profit sharing reward programs are similar to gainsharing programs in that they provide team-based rewards to teams for exhibiting exceptional behavior. The difference between these two programs:

  • gain sharing programs offer bonuses to team members
  • profit sharing programs pay them a certain percentage of the company’s overall profits

Profit sharing plans encourage high levels of team performance, which can ultimately increase a company’s success.

5. Discretionary Rewards

Team-based discretionary rewards are given to team members based on team performance and outcomes. They’re sometimes referred to as spot rewards. While these reward programs may sound very similar to some of the programs discussed above, rewards given in discretionary programs are not dependent on predetermined goals. Much like merit-based reward programs, managers or supervisors decide whether or not a team is deserving of a discretionary reward.


As more companies see the value in team-based work structures, it has become highly important for them to implement reward systems based on team performance and engagement. There are many great ways to provide team-based rewards. The five programs described above are among the most effective.

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