Interdependent Work Teams, Incentives and Performance : A Longitudinal Study

Abstract

This research focussed on the performance of individuals in work teams. The purpose of this study was to investigate the nature of the team processes which could explain time-associated differences, in the performance outcomes of individuals within work teams, in teams whose members had moderately interdependent tasks and received hybrid pay incentives. The extant literature has a large body of work on teams in general; there also exists a large amount of work on currently understood relationships between task-interdependence, pay incentives, team processes, and performance. However, although task-interdependent work teams with hybrid pay incentives are common in many labour-intensive business environments, the current literature is thin on the identification of specific team processes which link long-term performance differences in comparable teams. Secondly, few studies on work-team performance, in the current literature, incorporate time as a predictor variable. This research investigated the effects of the introduction of performance-based hybrid pay incentives to members of work teams; the research also investigated the nature of explanatory, time-linked team processes which could be associated with performance variances between these work teams. A review of the literature on work team effectiveness, pay incentives and performance in work teams, resulted in hypothesised relationships between the interdependent tasks of work team members, hybrid pay incentives for supervisors, and overall team performance over time. The research focussed on variances between the team processes for good and poor teams to design a work team process and performance model, which could be used to predict performance variance between teams over time in the field. The study was conducted on bulk-cash deposit processing teller work teams. These work teams were located at geographically dispersed processing centres (18 cash centres), where each work team was composed of an average of 6 members, comprising a team supervisor, and a combination of permanently employed tellers (regular tellers) and tellers on renewable fixed term contracts (contract tellers), in a financial services firm. Using a longitudinal research design, the study used mixed methods, incorporating a control group time-series design. Quantitative performance data included the number and accuracy of deposits processed and attendance records; the data also included ratings on behavioural measures for professionalism. Individual and team-level performance related data was collected from over 480 individuals, in monthly buckets over a period of thirty four months (N=16,358 teller data months), during which a pay incentive for performance was introduced as the first intervention (IV1), followed - after eight months - by a second intervention (IV2), which was the allocation of tellers into teams, whose supervisors received hybrid pay incentives. Using a multiple case study approach, qualitative data was collected using semi-structured individual and group interviews incorporating rating scales, for individuals and focus groups, in two phases of data collection periods. The interviews were lagged to findings from analyses performed on the quantitative data collected. Using a combination of repeated measures analysis of variance (ANOVA) for the quantitative component of the study, emerging-themes analysis for the qualitative component, and structural modelling techniques, 1) as expected, the introduction of pay incentives for regular tellers was associated with statistically significant increases in the volumes of deposits processed per unit time, with a large effect size; 2) the introduction of individual pay incentives for regular tellers was associated with statistically significant increases in overall individual performance, with a medium effect size; 3) the combination of the introduction of individual and hybrid incentives, and the allocation of supervisors to teams, was associated with statistically significant additional increases in the volumes of deposits processed per unit time and accuracy of deposit processing for both regular and contract tellers, within high performing teams; 4) internal team processes (intra-team communication, target-setting and coaching, progress monitoring and feedback) explained the variance in inter-team performance over time; 5) team coordination and target-setting were the intervening variables in the relationship between pay incentives and team performance. A predictive performance model for performance in interdependent work teams with a combination of individual and hybrid pay incentives was developed, based on the quantitative and qualitative findings from this study.