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Rather than focus solely on individual incentive plans, companies can also implement group or organizational incentive plans. Group incentive plans are intended to get employees to work as a collective unit. The group might consist of a couple individuals, an entire department, or an entire company.

When a company relies on teams, it is important to foster a collective sense of identity and cooperation among the team members. One method of doing so is to provide team-based incentives. In fact, piecework plans, standard hour plans, bonuses, awards, and merit pay can all be applied to entire teams as well as individuals.

Team incentives make most sense when employees perform tasks that are highly interdependent on one another and when cooperation and collaboration are required for the team to be successful. Free riders are individuals who do not work as hard as the others on their teams. In other words, they are getting a free ride from the work their teammates are doing.

One solution to this problem is to have team members evaluate the contributions of each other through a peer appraisal or a 360-degree performance evaluation.