Compensating in a Collaborative Reality

moneyColumbia sociology professor Shamus Khan poses this question in The New Yorker: If study after study shows that the success of a team depends less on the aggregate talent of the team members and  more on how they work together, should we rethink how we compensate?

Study 1: A  2005 paper in the American Journal of Sociology shows that “individual superstars didn’t do much to explain a musical’s success; the relationships among all the people working on a production mattered much more. Specifically, the researchers found that successful teams combined people who had previously worked together with newcomers.”

Study 2: A 2010 paper in Science described research in which “they put people in groups and directed them to solve tasks. They found that a group’s performance was related to the intelligence of group members, but not much. What mattered far more was whether group members were sensitive to one another, whether people participated equally in conversations, and whether the group included a high proportion of women.”

If the success of a team has more to do with group dynamics than with the achievements of individual employees, how do we  align compensation metrics accordingly?

 HOW analysis:

Khan proposes a few alternatives, namely, gainsharing (employees share in the success of firm) and lockstep compensation (employees’ gain in salaries depend on seniority, not merit, promoting a collective attitude—lockstep firms interestingly report higher satisfaction, partly because salary gaps are much more narrow). This question is similar to the NYT article that questioned why the Nobel Prize was awarded to individuals instead of teams when scientific inventions are the products of collaboration instead of individual genius.

Part of the rethinking in metrics must certainly be from “what” or “how much” to “how,” in particular how we collaborate and work together. But perhaps another part of rethinking metrics is moving from “I” to “we,” from rewarding individuals to rewarding teams.

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