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Project Team Rewards
performance could be measured against
. A benchmark could only be based on estimates
and these estimates were less reliable the higher the uniqueness. Furthermore, a high
uncertainty means many risks (Andersen 2004). This means, under high uncertainty and
with many risks, it is difficult to agree in the beginning of a project what performance or
results can be expected from the members and what results or performance are above
average and should be rewarded. If it was tried, it seems likely that some stakeholders
would feel treated unfairly because the actual team’s
performance and results would
strongly differ from the agreed ones. Hence, motivation would decrease according to
equity theories. Therefore, performance or result-based rewards seem
not appropriate if a
project’s uniqueness is high. Competence or skill-based rewards seem more appropriate in
that case. If the uniqueness is low, performance rewards seem appropriate. Since result
based rewards solely focus on quantity, this type of reward is not suitable for projects. In
addition, a high uncertainty means, there is no clear line of sight between the rewards and
the team member’s actual contribution. According to expectancy theory, the team
members’ expectancy and instrumentality is low in that case. Therefore, rewards agreed in
advance (incentives) make little sense and focusing on recognition is more appropriate.
5.3.2.  Impact of Risks
In incentive contracting the risks’ amount, probability, and impact are major factors
influencing the design of the contract since the main purpose of incentive contracting is
transferring the risks (see 3.5.2. Incentive Contracting, p. 30). In rewarding employees,
transferring the risks is not the aim. The aim is to increase employees’ performance as far
as possible. It has to be kept in mind that usually employees are employed and not self-
employed because they tend to wanting decrease risks (Wilson 2003). Therefore, it seems
plausible that the impact of a risk should not be considered. The amount and probability of
risks are indirectly considered by considering the outcome and process clarity (see
previously section).
In line work, it may be easy to relate rewards to past performance or performance of peers (“you will get a
10% bonus if you sell 10% more cars than last year or your colleague this year”). In projects, this kind of
benchmark does not exist.
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