Setting the stage for team-based performance management

Authored by Joan Goodwin, Lauren Kirby, and Dena Rezaei.

The current state of team-based performance

Organizations today thrive on team-based work. According to a recent Deloitte Global Human Capital Trends report, 65% of work is organized around cross-functional team-based lines,¹ and for good reason—53% of executives said that the shift toward team-based work has led to a significant improvement in performance. Furthermore, the study reports that ideas developed by teams have a 156% greater appeal to customers.² Even as organizations recognize the critical role of teams, most performance management processes still evaluate and reward performance at the individual level. So, what does the rise of team-based work mean for the future of performance management?

What makes for a high-performing team?

Team performance has long been measured, recognized, and rewarded outside the business world—when we watch sports teams outscore their opponents, we can effortlessly identify the winning and losing team. Organizational team performance takes on a new meaning across an organizational context and is less observable, making it more complex and difficult to recognize and define.

The primary differentiator of high-performing teams is effective teaming behaviors. Team composition, which describes team member attributes, such as skills, abilities, experiences, and personality characteristics,³ has disproportionately focused on individual skills and abilities as the primary determinants of team performance and success. However, it has increasingly become clear that effective teamwork requires more than a group of experts with the skills and capabilities needed to complete tasks; success also depends on members’ teamwork capabilities.⁴

Even the most effectively composed team must have psychological safety, trust, and respect. In a study on team dynamics and performance, Google found that psychological safety was the top indicator of team effectiveness.⁵ The presence of psychological safety, which breeds trust and respect, is critical for teams to innovate and effectively navigate conflict. This enables them to maximize their potential and drive better outcomes together than they would perform alone, particularly when team composition offers complementary points of view.⁶

Eight management strategies to activate team performance

Despite the abundance of research on what detracts from or contributes to team performance, a recent Deloitte Global Human Capital Trends study reported that only 28% of organizations said they “awarded performance rewards based on ‘achievement of measurable team metrics.’”⁷ So how should organizations address this discrepancy to enable, measure, and reward team performance? Try these performance management strategies.

1. Organizational culture: Organizations that have managed to incentivize individual performance will need to undergo a culture change to successfully shift to a team-based performance model. Cultures oriented toward only individual successes may unintentionally promote unhealthy competition between teammates or business units. It is critical that leaders and team managers are equipped to clearly communicate the “why” to drive adoption of a culture shift to promote both individual and team success.
2. Types of work: The nature of teams varies greatly across industries and even within organizations. For instance, a customer service team, which may have daily or weekly goals measured by customer satisfaction, has very different responsibilities and objectives than a product research and development team, which may have longer-term goals measured by a product’s success in the market. Team performance standards should be flexible and account for these types of differences.
3. Team diversity: Just as is true for individual performance assessments, it is critical to mitigate bias in the evaluation of team performance. Those responsible for managing and measuring team performance are accountable for gathering appropriate data on individual contributions while also considering team dynamics and diversity when assessing team performance. Stereotypes can negatively impact all employees and make team-based performance management less fair and equitable.
4. Goal setting: It is important to align the “who,” “what,” “when,” and “how” of a team’s work so that members have shared, complementary goals against which performance can be measured in addition to their individual goals.⁸
5. Check-ins and feedback: Team check-ins that foster honest conversations can help identify how a team is performing and generate ideas and alignment on what needs to improve. By having an open dialogue about what each member needs and what gaps they perceive, corrections can be made quickly for a better work experience and improved outcomes. Setting up team feedback norms and mechanisms drives performance outcomes and increases team member satisfaction and motivation.⁹
6. Development: While managers should support their team members’ personal development goals, it is also important to focus on building the capabilities of the team as a whole. Through check-ins and feedback sessions, teams can identify their development needs and opportunities, and provide one another coaching and mentorship. Team leaders should also focus on helping teams be flexible and adaptable to maintain effectiveness as environments shift.
7. Evaluations: Organizations should evaluate the impact of team achievements by linking individual and/or team goals to the organization’s purpose and overall metrics. Assessing both individual and team performance may motivate members to make contributions that drive favorable team outcomes. Team performance assessments can be more heavily weighted for individuals whose work more directly ties to team objectives (such as team leaders), than for others who played more of a support role (such as administrative coordinators).
8. Rewards and recognition: Organizations that base performance management around team successes may use individual performance to inform employees’ base salaries—but rely on team performance to inform bonuses. Team norms should support frequent recognition among teammates, and organization-wide communications can highlight “shared successes” and stories of how individuals worked together to make tangible impacts on the organization’s purpose and goals.

Measuring team performance

Teams within organizations can deliver value across four levels: 1) the organization, 2) stakeholders (both internal and external to the organization), 3) the team itself, and 4) individual team members.¹⁰ For this reason, team performance measurements across the “what” and “how” must include a composition of outcomes, from a mixture of vantage points, including the self, other, organization, and stakeholder.

Most organizations utilize surveys as inputs into formal performance reviews for individual employees, and the same should be true for team-level assessments. External or internal stakeholders, such as customers or other business units who depend on the team’s output to execute their own work, can use surveys to provide feedback on the team’s taskwork. Individual members can assess their own and others’ demonstration of teamwork components such as trust, respect, and psychological safety, and the quality of the team’s composition.

Shifting to team-based performance management

Strengthening and enabling team performance helps organizations adapt and thrive and better reflects the nature of how work is done. However, like all performance management processes, there is no one-size-fits-all strategy for enabling, measuring, and rewarding team performance. To close the gap between the rise of team-based work and the predominant approach to performance management that prioritizes individual contributions, organizations must start by defining the “what” and “how” of team performance in their unique context. Doing so will allow them to identify points of intervention for team effectiveness and define clear dimensions of what team performance measurements should assess (this should be based on feedback from multiple sources).

Authors:

• Joan Goodwin
• Lauren Kirby
• Dena Rezaei

Contributors:

• Sally Rappaport
• Vicki Walter

Endnotes:

¹ Erica Volini et al., 2019 Deloitte Global Human Capital Trends: Leading the social enterprise: Reinvent with a human focus, Deloitte, 2019.
² Erica Volini et al., 2019 Deloitte Global Human Capital Trends: Leading the social enterprise: Reinvent with a human focus, Deloitte, 2019.
³ Richard A. Guzzo and Marcus W. Dickson, “Teams in organizations: Recent research on performance and effectiveness,” Annual Review of Psychology 47, (1996): pp. 307-38.
⁴ Julie Vy Dinh and Eduardo Salas, “Factors that influence teamwork,” in The Wiley Blackwell Handbook of the Psychology of Team Working and Collaborative Processes (Hoboken: John Wiley & Sons Ltd., 2017), pp. 13-41.
⁵ Google, Guide: Understand team effectiveness, 2016.
⁶ Chidiebere Ogbonnaya, “When teamwork is good for employees—and when it isn’t,” Harvard Business Review, August 29, 2019.
⁷ Erica Volini et al., 2019 Deloitte Global Human Capital Trends: Leading the social enterprise: Reinvent with a human focus, Deloitte, 2019.
⁸ Erica Volini et al., 2019 Deloitte Global Human Capital Trends: Leading the social enterprise: Reinvent with a human focus, Deloitte, 2019.
⁹ Deborah Ancona, “How to combat team failure and drive innovation using the X team,” MIT Sloan School of Management, August 10, 2013.
¹⁰ Daniel Slyngstad, Gia DeMichele, and Maritza Salazar, “Team performance in knowledge work,” in The Wiley Blackwell Handbook of the Psychology of Team Working and Collaborative Processes (Hoboken: John Wiley & Sons Ltd., 2017), pp. 43-71.