The twelve guiding principles for instituting variable team-based pay structures within organization are: First principle, goals should cover areas that team members can directly affect, meaning compensation will not motivate employees unless there is a direct line of sight between performance and results. Second principle, balance the mix of individual and team-based pay a thoughtful balance of individual and group incentives may be most appropriate. Third principle, consult the team members, who will be affected, the programs with the greatest likelihood of success are those that have input from all levels of the organization, including members of the team, teams that support or interface with the team, those who will administer the plan, management, and customers. Fourth principle avoids organizational myopia; many programs fail not because they are inherently flawed, but rather because they create problems with other teams, groups, and units within the organization.

Fifth, principle, determine eligibility who is qualifies for the plan, every member of the team should be eligible for the plan, and the plan should indicate when someone becomes eligible or loses eligibility. Six principles, determine equity method, there are two basic variations: same dollar amount and same percentage amount. Seventh, principle, quantify the criteria used to determine payout, there are two main ways to measure team results: financial and operational. Financial measures tend to be ''bigger,'' encompassing profit and loss or revenues. Operational measures are typically productivity based Eight. Principle, determine how target levels of performance are established and updated goals can be based on either past performance or projected performance.

Nine, principle develop a budget for the plan, all plans should pay for themselves, with the exception of safety plans. This means