Shifting your company's compensation structure from an individual-based system to one that includes team-based pay can yield powerful results; such as increased efficiency, productivity and profitability. But making the switch is not for the faint of heart and does not work for all companies.

The notion of team-oriented corporate structure came into vogue in the United States during the 1980s and 1990s, prompted by the example of successful Japanese companies. Over The past 10 years, the use of team-based pay has ticked upward, says Edward Lawler, director of the Center for Effective Organizations and a distinguished professor of business at the University of Southern California's Marshall School of Business. The center's periodic surveys of Fortune 1,000 corporations indicate that in 1990 about 59 percent of companies surveyed were employing a team-based compensation system. The figure had risen to 80 percent by 1999, the most recent year for which data are available.

But Lawler cautions that this figure does not mean that team-based pay is widespread throughout the halls of corporate America; it "just means they used it somewhere." He adds, "In virtually no organization is it a companywide practice."

Finding the Right Fit

Teams can be structured a variety of ways. They can be groups of multifunctional employees brought together temporarily to accomplish a specific task, such as developing a new product or penetrating a new market. But the more common and more successful structure is a manufacturing cell or other type of small group where employees are brought together along functional or business unit lines on a permanent basis to produce a product, perform an ongoing task or provide a service. Team pay also is occasionally used in the sales