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[Music] lets take a look at how to design team incentives firms increasingly rely on teams to manage their work they therefore need incentive plans that focus teams on performance and encourage teamwork team or group incentive plans pay incentives to the team based on team performance companies usually incentivize teams in one of three ways pay the same incentives to each team member pay different rates to each member based on performance and paying different rates to each group in some proportion to base pay usual approach is probably still to tie rewards to some overall standard of group performance such as 10 labor hours per car one company established such an overall standards for work teams if the firm docHubed a hundred percent of this goal the employees would share in about five percent of the labor costs saved if the firm achieved less than a hundred percent of its goal the bonus pool was less well most employers just use their experience to estimate what the team goal or stand
