Individual Rewards Can Decrease Teamwork: 4 Areas to Watch

Individual Rewards Can Decrease Teamwork: 4 Areas to Pay Attention To
While the majority of companies continue to tout teamwork and collaboration as a core values on their websites, corporate culture assessment findings reveal that, operationally, most organizations continue to undermine teamwork by stressing individual bonuses, promotions, and recognition programs.  Over rewarding individual accomplishments can decrease teamwork and undermine performance.

This disconnect is not just philosophical. Change management consulting research and real-world leadership action learning outcomes consistently show that overemphasizing individual rewards:

• Weakens teamwork.
• Slows learning.
• Reduces overall performance.

None of this suggests that individual recognition is inherently wrong. The problem is imbalance and misalignment. When strategies require interdependence, incentives and ways of working must reinforce that interdependence.

Leaders who need real teamwork to succeed must align rewards and “how work gets done” with reality. If success requires collaboration, incentives must reward collaboration. Otherwise, organizations will continue to get exactly what they pay for — individual effort at the expense of team performance.

4 Ways that Individual Rewards Can Decrease Teamwork and Undermine Performance

At the core, incentives shape behavior. When people are rewarded individually, they optimize individually. That may sound obvious, but the downstream effects are more damaging to teams than most leaders expect.

1. Individual Rewards Promote Self-Interest
   For teamwork to matter, teams must agree and commit to shared goals, mutual accountability, and coordinated effort. When individual incentives are overweighted, the definition of winning becomes “I stood out” not “we achieved the outcome.” Even collaborative employees begin prioritizing visible contributions over collective results. Over time, team alignment and commitment erode, and teams become collections of high-performing individuals pulling in slightly different — and often conflicting — strategic directions.
2. Rewarding Individuals Discourages Knowledge Sharing
   Our organizational alignment research found that the free flow of information (e.g., insights, lessons learned, and emerging risks) ranked as the fourth strongest predictor of higher team performance. Project postmortem feedback finds that individual reward systems often introduce an unwanted scarcity mindset around expertise. If recognition or advancement depends on standing out, helping others catch up becomes counterproductive.

   Additionally, research by Siemsen, Roth, and Balasubramanian found that performance-based incentives can reduce knowledge sharing when employees perceive internal competition, directly harming team effectiveness.

3. Individual Rewards Encourage Internal Competition
   Sometimes, a competitive workplace culture can sharpen focus and drive increased performance, but inside a team that must rely on each other to achieve shared goals, it can damage trust, increase workplace politics, and reduce team collaboration when colleagues are competing for a limited pool of rewards. In complex, interdependent work (i.e., matrixed organizations, cross-functional initiatives, and innovation efforts) this internal competition can increase friction at precisely the moments when coordination matters most for successful strategy execution.
4. Individual Incentives Weaken Psychological Safety
   Teams need openness — admitting mistakes, asking for help, and challenging assumptions. When individual outcomes dominate, errors feel more threatening and feedback feels riskier. Amy Edmondson’s research on psychological team safety shows that learning and performance suffer when people feel personally exposed. Individual reward structures amplify that exposure, pushing teams toward silence rather than constructive debate.

The Bottom Line
If a team produces little beyond the sum of individual contributions, you are a working group not a team; emphasizing individual rewards is appropriate. But when success depends on integrated skills, shared judgment, and real interdependence, rewards must meaningfully reinforce collective outcomes — otherwise collaboration will remain optional.  Organizations that need strong teams to execute their strategy must design reward systems that reinforce shared goals and mutual success — not undermine them.

To learn more about how about how to to build high performing teams, download 5 Steps to Align Project Teams to Pull in the Same Direction

by Tristam Brown: CEO

Tristam Brown is an executive business consultant and organizational development expert with more than three decades of experience helping organizations accelerate performance, build high-impact teams, and turn strategy into execution. As CEO of LSA Global, he works with leaders to get and stay aligned™ through research-backed strategy, culture, and talent solutions that produce measurable, business-critical results. See full bio.