Team based pay for performance reinforce team planning and problem solving, and help ensure collaboration. But it is also quite clear that group-based plans also have their own potential drawbacks. These are the some reason that has unhealthy effect on the spirit of team work and cooperation.
• One is that most employees prefer that their pay of performance be based on individual rather than group performance. A worker’s pay may not be proportionate to his or her personal effort. This may demotivate top workers.
• individuals may feel their personal self-worth is diminished
• Free riding effect’ One individual puts in less effort than others but shares equally in team rewards, or , there is a concern that co-workers will not contribute equally to group performance, but nevertheless will receive the same level of rewards. This will also create a negative effect on the spirit of team.
• Intergroup social problems-pressure to limit performance for example, team members are afraid one individual may make the others look bad.