Chapter 11 - Managing Team Performance

Learning Objectives

11.1 Know the definition of a team and the pervasiveness of teams in today’s organizations worldwide.

11.2 Understand the importance of managing team performance in addition to individual performance.

11.3 Understand the various types of teams and how different types of teams may require different types of performance measurement.

11.4 Be aware of challenges associated with the design and implementation of performance management systems that include a team component.

11.5 Extend guidelines on how to design performance management systems that consider individual performance to systems that include both individual and team performance components.

11.6 Design and implement a performance management system that focuses on (a) individual performance, (b) individual performance that contributes to team performance, and (c) team performance.

11.7 Extend principles regarding how to reward individual performance to how to reward team performance.

Chapter Outline

Managing Team Performance

Overview
1. Definition and Importance of Teams
2. Types of Teams and Implications for PM
3. Purposes and Challenges of Team PM
4. Including Team Performance in the PM System
5. Rewarding Team Performance

1. Definition and Importance of Teams

Definition of Teams
 Two or more people
o Interact
- Dynamically
- Independently
o Share common and valued
- Goal, objective, or mission

Importance of Teams
 Global pressures
 Flexibility in flatter organizations
 Complexity of products and services
 Rapidly changing environments

Performance Management and Teams
 PM systems should target:
o Individual performance
o Individual’s contribution to team performance
o Performance of entire team

General Principles of PM Relating to Teams
 Design and implement best possible system
o Strategic congruence, thorough, practical, meaningful, reliable, acceptable, ethical, etc.
 Consider dangers of poorly implemented system
o Use of false or misleading information, wasting time and money, damaging relationships, etc.

(Review principles in Module 1 - Increased complexity with teams)

Managing for Improved Team Performance
 Don’t limit team processes with other task or organizational requirements
 Provide good team design and organizational support
 Give feedback only on processes that the team members can control

2. Types of Teams and Implications for PM

Types of Teams
 Classified by
o Complexity of task
o Membership configuration

 Complexity of task ranges from routine to non-routine
o Routine
- Well defined
- Few deviations in how work is done
- Outcomes easily assessed
o Non-routine
 - Not defined well
 - No clear specifications on how to do the work
 - Outcomes are long term and difficult to assess

 Membership configuration includes
o Length of time team is expected to work together
o Stability of team membership--ranging from static to dynamic                
     

(See figure on slide for types of teams based on complexity and membership)

Types of Teams: Work or Service Teams, Project Teams, Network Teams

 Work or Service Teams
o Intact--people who have worked together for a while and know each other well
o Routine tasks
o Share similar skill sets

 Where would you find such teams at Saab or Saturn?

 Project Teams
o Assembled for specific purpose
o Tasks outside core product or service of organization (less routine)
o Include members from different functional areas
- Who don’t know each others’ specialties
- Who depend on each others’ knowledge and skill sets

 Why did IBM need such a project team to build the first PC?

 Network Teams
o Membership not constrained by
- Time or space
- Organizational boundaries
o Teams may include
- Temporary or full-time workers
- Customers
- Vendors
- Consultants
o Work is extremely non-routine

 How were network teams used to facilitate work in the Mir space station?
 

Examples of Different PM approaches for Different Types of Teams

Type of Team 

 Work and Service Teams

Type of Performance Management

 Peer ratings
 Project Teams
 Network Teams 
 Ongoing measurements
 Development of competencies

3. Purposes and Challenges of Team PM

Purposes of Team PM
 Traditional goals of any PM System
o Strategic
o Administrative
o Informational
o Developmental
o Organizational maintenance
o Documentation
 Specific to team performance
o Make all team members accountable
o Motivate all team members to have a stake in team performance

Challenges of Team PM
 How do we assess relative individual contribution?
 How do we balance individual and team performance?
 How do we identify individual and team measures of performance?

4. Including Team Performance in the PM System
Including Team Performance in the PM System:  Overview/Review (see figure in slide)
 Prerequisites
 Performance Planning
 Performance Execution
 Performance Assessment
 Performance Review
 Performance Renewal and Recontracting

 Prerequisites
 Knowledge of organization’s and team’s mission
 Knowledge of job to be performed by the team, including KSAs
o Task
o Contextual
- Communication
- Decision-making
- Collaboration
 How does the University of California at San Diego (UCSD) implement the prerequisites component?

Performance Planning
 Results expected of the team
o Key team accountabilities
o Specific objectives for each key accountability
o Performance standards
- Acceptable levels
- Unacceptable levels
 Behaviors expected of team members
o Include competencies
- Clusters of knowledge, skills, abilities (KSAs)
 Developmental objectives to be achieved by team and its members
o Areas that need improving
o Goals to be achieved
- Team performance
- Individual performance that will benefit team performance

 How does Duke University use Performance Planning?

Performance Execution
 Team responsibilities
o Commit to goal achievement
o Seek feedback from
- Each other
- Supervisor (if there is one)
o Communicate openly and regularly
o Conduct regular and realistic peer-appraisals
 Supervisor responsibilities (if there is one)
o Observe and document
- Team performance
- Relative contribution of team members
o Update team on any changes in goals of the organization
o Provide resources and reinforcement

Performance Assessment
 Types of Assessments
o Self-appraisals
o Peer evaluations
o Supervisor evaluation
- Individual performance
- Team performance
o Outsider appraisals (if appropriate)

 Kinds of Performance to be Assessed
o Individual task performance
o Individual contextual performance
o Team performance

 Dimensions of Team Performance to Assess
o Effectiveness
- Quality
- Quantity
- Cost
- Time
o Efficiency
- Communication
- Coordination
- Collaboration
- Decision making
o Learning and growth
- Innovation
- Documented learning
- Best practices, process improvements
o Team member satisfaction
- Team member perceptions of how teamwork contributes to their growth and personal well-being
Performance Review
 Two meetings with supervisor or review board
o Team meeting
- Discuss overall team performance and results
- Information comes from:
 Team members
 Other teams/outsiders
 Supervisor’s evaluation
o Individual meeting
- Discuss how individual behavior contributed to team performance
- Information comes from:
 Self-appraisal
 Peer ratings
 Supervisor’s evaluation
 Emphasis on past, present, and future
o Past:  performance during review period
o Present: any changes in compensation, depending on results obtained
o Future: goals and development plans for team and individual members

Performance Renewal and Recontracting
 Make adjustments to performance plan
o Using information gathered during review period
o May include new key accountabilities and competencies
o May adjust goals upward or downward
- Include plan for individual performance as it affects team functioning

Including Team Performance in the PM System: Summary
 Prerequisites
 Performance Planning
 Performance Execution
 Performance Assessment
 Performance Review
 Performance Renewal and Recontracting

5. Rewarding Team Performance
80% of Fortune 1000 companies reward team performance in some way (1999)

 How does Motorola’s approach help with quality control in China?
 How is Phelps Dodge Mining Company using team rewards to change employee mindset?

Making Team-based Rewards Effective
 All employees should be eligible
 Rewards should be
o Visible
o Contingent
o Reversible
 Avoid factors which cause reward systems to fail
 Consider variable pay systems (in addition to individual bonuses)
o Bonus based on team performance from company-wide pool
o Teams self-fund bonus based on cost and efficiency savings
 
Managing Team Performance: Summary
1. Definition and Importance of Teams
2. Types of Teams and Implications for PM
3. Purposes and Challenges of Team PM
4. Including Team Performance in the PM System
5. Rewarding Team Performance

Worked Solutions for End-of-Chapter Cases

Answers for Case Study 11.1 Not All Teams are Considered Equal

1. Public Service Works currently incorporates the following measures in their team performance management system:
a. Prerequisites – the company currently links the system to business goals and strategies.  This is identified in the organizational performance section of phase one of their process: Business Plan Goals and Strategies.  It is also reinforced through the employee performance section during the orientation process.
b. Performance Planning – during this phase the company links employee performance to that of the organization and identifies specific measures and desired outcomes.
c. Performance Execution – the company does not have a specific phase labeled performance execution; however, it does conduct performance coaching which provides on-going feedback and assistance to the employee.  This process provides input from the supervisor, other managers, customers, and team members.
d. Performance Assessment, Review, and Rewards – this is lumped into the Performance Assessment phase.  The employee receives formal feedback on yearly performance and discusses performance rewards.
e. Performance Renewal and Recontracting – the Public Service Works organization has an employee Learning and Development Plans phase.  This is similar to the renewal and recontracting phase, as it looks at the employee’s on-going development.
(Suggested points: 5, [11.5])

2. Overall, the current steps are appropriate for team performance management.  They link employee performance to that of the organization and the employee’s primary team, which is his or her work unit.  Some steps that are not appropriate include the fact that the system looks individually at the employee’s performance and the department.  There does not appear to be a link to how well the employee contributes to the success of the team–just how well  the team has performed as a whole.  Also, when looking at the performance pay reward system, it only links individual performance to pay and is tied to market conditions such as cost-of-living increases.  There is no team component even though part of the employee’s evaluation is contingent upon team performance.
(Suggested points: 5, [11.7])

3. Additional steps to improve the current team performance management system include:
a. In the prerequisite phase add information as it relates to the specific teams and what they are to do and how.  This will enable the company to establish criteria for team success.
b. The Development Plan should include a section that addresses, at the team level, results expected of the team, behaviors expected of the team members, and development objectives to be achieved by the team and its members—not just individual criteria.
c. In the Performance Assessment phase, three types of performance need to be assessed:   a) individual performance, b) individual performance or contextual performance which refers to specific activities that contribute to team performance, and c) team performance as a whole.
The reward system should be expanded to take into consideration the different types of teams, as well as the individual component.
(Suggested points: 10, [11.5])

Answers for Case Study 11.2 Team Performance Management at Duke University Health Systems
Process Component Present at Duke University? (with comments if appropriate)
Prerequisites No
Performance Planning Yes
Performance Execution Yes – described as the Feedback and Coaching Phase
Performance Assessment Not as an individual entity.  This phase is combined with the Evaluation Phase.
Performance Review Yes – this is described as the Evaluation phase.
Performance Renewal and Recontracting No
Rewarding Team Performance Yes – there is a reward phase that takes into consideration individual and team performance.

(Suggested points: 2, [11.5])

Answers for Case Study 11.3 Team-Based Rewards at the State of Georgia

1. The positive aspects of the State of Georgia’s reward system include:
a. Define and measure performance first, then allocate rewards.
b. Use only rewards that are available.
c. Make rewards contingent.
d. Those individuals rated “Exceeds Expectations” receive an additional lump sum bonus.
(Suggested points: 5, [11.7])

2. The negative aspects of the State of Georgia’s reward system include:
a. Not all employees are eligible for rewards; i.e., if they are at the top of the pay scale for their grade level, they do not receive a reward regardless of performance rating.
b. Everyone who “met expectations” receives a standard increase based on available funds.
(Suggested points: 5, [11.7])

3. Recommendations for improving current reward system:
a. Revise the system so that top performers are not punished because they have reached the top of their pay scale.  This can be done by changing the criteria to be performance based versus grade.
b. Implement a CP type plan to motivate employees to do a better job and to advance.
c. Make rewards meaningful and visible.  Small cost-of-living increases can be a demotivator to high-performing employees.
(Suggested points: 10, [11.7])

Additional Cases and Worked-Solutions

Case Study: Brokerage Firm International (BFI)

The management at Brokerage Firm International, BFI, is becoming concerned about the way the firm is operating.  Brokers are paid a base salary with bonuses contingent on the number of orders processed and the amount of money processed.  Individual brokers work with individual investors and each broker competes with the rest for clients.  Due to the competitive climate, brokers do not communicate with each other and mentorship is non-existent.  Management is wondering whether the culture is leading to the temptation to engage in unethical behavior, such as moving money around that doesn’t need to be moved (since it would lead to higher bonuses for the broker involved).  Management decides to create a team based performance management system with the following goals:
1. Promote individual performance
2. Promote team performance so that:
a. There is more on-the-job training
b. There are more mentorships
c. Values and ethics of the company are more easily shared
In the context of Chapter 11, provide a recommendation for a team-based performance plan that will measure all the types of performance involved.
(Suggested points: 10, .2[11.3], .2[11.5], .4[11.6], .2[11.7])

Answer:

This is a good example of a situation where individual rewards have created so much competition between employees as to motivate each individual not to contribute to team work.  The first order of business is to change the reward system to include rewards for team successes as well as individual successes.

In order to accomplish this, there must be a performance management system that assesses individual performance as well as team performance.  Part of evaluating individual performance, in this context, will include individual contributions to the team.  Supervisors must provide information as to exactly what is expected of each employee and the whole team.  Supervisors must also be trained in providing feedback as effectively as possible. 

The first step will be to make sure that all employees have a good understanding of the goals and mission of the firm.  There is a need to change the attitudes of the employees to be more team oriented.  The team members must orient themselves toward competition with other brokerages rather than competition within the brokerage.  It’s clear from the context of this case study that the strategic plan is to promote not only individual performance, but also team performance so that there will be more on-the-job training, and more mentorships.  In doing this, it should be easier to achieve the goal of sharing the values and ethics of the company. 

In this case, the reward system needs to be changed to provide motivation for brokers with more experience to mentor less experienced brokers and for on-the-job training to take place between employees.  This could be accomplished, for example, by creating a team reward if all brokers meet certain quotas.  If even one broker comes in under the quota, the reward is not achieved.  This way, brokers will not only worry about their own clients, but will be concerned about clients of other brokers as well.  This should promote teamwork within the group. 

In order to combat the temptation for brokers to make unnecessary sales and purchases (moving money that doesn’t need to be moved), the rewards should not be based on the amount of money processed, but should instead be based on customer satisfaction and profits for the company, which are undoubtedly the real issues. 

A mentoring program should be developed. Prior to the implementation of the mentoring program, the possible mentors must be trained in their new capacity before being given the extra responsibility. Individual brokers should be given the opportunity to choose who is involved in the mentoring relationships.  Mentors and their subordinates could be given extra time for training purposes and the company could provide mentors with extra money for training classes. 

This case provides an example of a work or service team; the brokers have worked together for a long time.  Each team member has similar skills and would benefit from peer ratings.  When the new performance management and reward system has been implemented and there has been improvement in teamwork, mentorships, and on-the-job training, another change should be made, which would be to implement peer reviews and possibly 360-degree feedback systems.  Feedback from team members, supervisors, and clients can be a very useful tool if the feedback is provided in a positive and constructive way.  Before this step can be implemented, it is important to make sure that employees are trained in providing feedback.  Supervisors should have been trained in providing feedback at the beginning of the team-based reward program. 

Case Study: Fred’s Airfoil Company

Fred's Airfoil Company is a small manufacturer of private airplanes.  The company does all the work involved in designing, testing, and manufacturing the planes, as well as selling the planes to individual buyers.  Fred Hoffman, the owner of the company, has decided that it is time for a brand new design.  He has established a team of engineers and mechanics to work on this project. 

Fred remembers past projects where the design of the new aircraft was inefficient because, as the design progressed, previously finished items had to be redesigned to fit in with newer ideas.  Fred feels that the process could run more smoothly if the team worked together better and has hired you to design a team-based performance management system.  He is hoping that your system will address the project team we just discussed, as well as other teams involved in his business. 

Please provide a detailed description of the key features of the system you would recommend. 
(Suggested points: 10, .2[11.2], .2[11.3], .3[11.5], .3[11.6])

Answer:
 
The first step in this process is to determine the goals and mission of the company.  For this particular case, a good sample mission statement would be:

“Fred’s Airfoil Company offers uniquely designed personal aircraft for private pilots all over the world by designing innovative airfoils at affordable prices.  Airfoils are created, from the original design and engineering, all the way to the sales floor, exclusively by Fred’s Airfoil Company.”

Once the mission is agreed upon, the next step is to decide upon goals.  For the purposes of this exercise, let’s focus on the efficient design of new projects.  From the information in the case, it appears that different people are creating designs for different components of the aircraft and that they are not communicating very well.  This is a problem for team work and may be resolved through a team-based performance management system. 

With specific goals for performance in mind, a system must be developed for individual performance, which will include the development of specific job requirements.  For this task we will use O*net to find generic job descriptions for each of the members of our team.  We will then revise the descriptions to meet our specific goals for this company.  Once the performance goals for each employee have been determined, it will be necessary to include information on how each member of the team should be expected to contribute to the team.  Given the goal of efficient design and manufacture of the new aircraft, at least part of the performance goals in this case should include the team communicating effectively at each step of the project, and with the development of each individual aircraft part.  Rather than a team that includes engineers only during the initial design and then morphs into manufacturers only, all team members should be included in the project from beginning to end to ensure that each team member “owns” the project and that there is feedback from different aspects of the design and manufacture of the craft. 

This team will probably benefit little from peer assessments, as different team members have different skills.  Assessment of peer performance should be limited to the types of behaviors that ensure good team performance; for example, communication and task completion.  Once the specific behaviors for each team member are agreed upon, they should be added to the performance management program for each employee.

Finally, goals for the entire team must be developed and specific criteria must be developed. The entire team must be evaluated on these criteria as well. 

Performance evaluations should be completed somewhat frequently, perhaps once a month or so, since this project is not likely to take more than about a year, and problems can quickly take the project off track. 

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