Think you're getting the most out of your employees by rewarding their performance?
Peter Kuhn, economics professor at the University of California, Santa Barbara, says that when workers are ranked solely on individual performance, it may create a culture of back-stabbing and colleagues hoarding information from one another.
According to Kuhn's recently published study, a competitive work environment may work well for men, who typically prefer to work solo. But for women, who tend to prefer teams, it can have serious implications on salary and promotion rates.
In the study, Kuhn and his co-author M arie-Claire Villeval, a n economics professor at the National Center for Scientific Research, conducted a series of experiments where participants chose between individual compensation or team-based pay for assigned work. Women were more likely to choose team-based pay and often avoided tournaments. This choice had the opposite effect on men.
Why? Men simply don't trust their colleagues' abilities as much as women do.
The researchers say that men tend to be overconfident in their skills and are "more pessimistic than women about the abilities of their potential teammates."
"Once you’re on a team with someone, your fates are tied together," Kuhn tells Business Insider. "It’s risky to tie your fate to someone else’s."
This preference, unfortunately, plays a role in the gender wage gap, according to the study. Since women prefer to work with others, their individual contributions are less visible, and they may shy away from aggressive competition that would damage relationships.
"To get access to top ranks, you have to compete with others," Kuhn says. "If you're going to be in a top government position, you have to win elections, and you have to get other people out of the way."
A bias toward individual performance may also divide workplaces where individuals see others in the company as competitors instead of colleagues.
"The nature of work has changed. It has to be more cooperative," says Kuhn. "With the demands of the workplace, you have to bring together expertise to share information in order to be successful."
So how can employers create a work environment that's more collaborative and will benefit both men and women?
Kuhn suggests using team-based incentives rather than ranking employees individually. Making team-building more financially attractive or taking group performance into consideration when paying bonuses will help promote collaboration and narrow the gender wage gap, he says.
In the study, when Kuhn and Villeval offered participants a 10% increase in pay to join a team instead of working solo, more men joined teams. Interestingly, women tended to choose teams even if it paid less than working individually.
If you’re worried that men won’t thrive in teams because there’s not enough competition, Kuhn says not to. The team will naturally encourage competition among members.
For example, if you allow people to choose their team members, they will most likely choose people they think are talented. Similar to picking sports teams in school, employees will work harder so that they will be picked by their colleagues. "You never want to be the last person picked," Kuhn says.
"If you give employees i ncentives to cooperate, they will share information and take time to train their colleagues instead of thinking [only about] themselves," Kuhn concludes.
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