Published: 11/08/2005, Volume II5, No. 5967 Page 30

A trial proved that team pay can work as long as managers are trusted and targets specifiable, as Peter Reilly, Jane Phillipson and Peter Smith explain

It is a year since we completed consultancy support to the team pay experiment in the NHS. A cross-section of 15 trusts representing different types of service provision tested whether the concept of linking the variable pay of employees to the level of performance they have achieved in their team can improve team working.

The preoccupation with Agenda for Change may have left little room for thinking about other reward options, yet the requirement for continual improvement in efficiency and effectiveness suggests the lessons from the trial should not be ignored - and, with the new GP contract, this applies as much to primary as to secondary care.

First, team pay can work in all areas of the health economy. Good results were delivered by ambulance trusts, primary care trusts, a learning and disability trust, pharmacy, outpatient, surgical and medical wards and others.

Second, a wide variety of occupational groups can participate. Although the scheme worked particularly well with ancillary workers, there were more mixed results with doctors. This is partly because the ancillary workers welcomed the chance to earn extra money. This was less important to doctors, who were more interested in improving services.

Third, team pay can work to a degree with any size of team. Existing research suggested that no more than 15 employees should form part of a team for team pay purposes. We had a variety of sizes, ranging from around 20 people to over 4,000 (a whole trust). The key to success was close attention to the design of targets and to communication. So long as team members trust the competency and integrity of their managers, they are prepared to support team pay. A consultative process that engages staff in the project is ideal, but not essential if this feeling of trust is already apparent.

Finally, it is important to get the right reward for the team. Straight financial incentives may work best with the lower paid; using an 'improvement fund' (where the 'winnings' can be placed for staff to spend on staff facilities/development) may suit diverse teams or those where team boundaries are blurred.

So if money can work in lifting performance, what are the conditions for success? Besides those implicit in the list above, it is essential to have upfront leadership by the management team to demonstrate the importance and benefits of the scheme and their commitment to it.

Management has to have a clear sense of purpose about team pay and must spell this out. Continual communication that addresses staff's interests and concerns is vital, as is reliable information that allows precise monitoring of progress.

And then there are the targets: clear and simple targets that are easy to communicate and evaluate work best.

There should be an obvious line of sight between effort and reward, and staff need to see the targets as achievable and relevant.

Unfortunately, targets were the biggest problem in the trial. Managers too often proposed input or process targets, not outcome-based ones that would deliver real value.

The suggested targets were also often insufficiently stretching, poorly specified or hard to assess. Targets seemed to be hardest to specify where the team structure was least defined.

During implementation, some staff were frustrated where they saw targets as outside their control or imposed by external agencies. These feelings were intensified where staff had doubts about the legitimacy of offering incentives to improve performance.

It would be wrong to suggest that all the trial sites were wholly successful or that all participants expressed positive opinions. Nevertheless, there is a prize in getting team pay right. Patients benefited through improved efficiency (for example, shorter waiting times and quicker feedback on laboratory results), effectiveness (better care), awareness (patient feedback) and communication.

Trusts benefited through financial savings, improved data management and better connections with other health service providers. Team pay produced advantages for staff in terms of higher motivation, greater awareness of their work, clearer job roles, better teamworking, and faster delivery of initiatives.

These successes seemed to have been achieved through concentrated attention to key priorities, communicating them clearly by way of targets and recognising staff effort through a reward. Team pay is less of a simple incentive model and more of a process improvement model, but an important one in bringing diverse staff groups together to meet a common goal.

Peter Reilly is director of consultancy at the Institute for Employment Studies, Jane Phillipson is associate director and Peter Smith a director at the Hay Group.


Dental patients in the Morecambe Bay area have team pay to thank for the fact that they no longer have to wait for referral letters to wend their way through a paper system when their dentists want to make a hospital appointment for them.

The introduction of electronic bookings was just one of the benefits of the team pay pilot at Morecambe Bay trust's maxillo-facial surgery team in 2002. The team, which worked across three Lancashire hospitals, improved the way they worked together and created service improvement.

For their reward, they opted for a collective improvement fund for equipping staff development facilities.