Rewarding one person for designing one coffee machine is a simple example. Somewhere between simple one-person rewards and wasteful free-rider rewards given to everyone lies a valuable and critical sweet spot: rewarding teams for collective outcomes. Designing a team reward is tricky. It requires carefully thinking through both the benefits and possible perverse incentives of many different choices. The analysis goes beyond the normal experience of a rubber-stamper payroll person. In other words, it requires a strategic chief incentives officer.
