Interdependence and fit in team performance management

Purpose – To evaluate a proposed prescriptive model for the design of effective combinations of performance goals and pay‐for‐performance plans for the performance management of teams. Design/methodology/approach – The idea underlying the model – in which task, goal, and reward interdependence and their fit play a dominant role – is that a pay‐for‐performance plan should support the team goals and the goals of individual team members as well as support the way in which team members need to cooperate. To obtain a first notion on the model's validity, it was applied to evaluate a pay‐for‐performance plan for management teams at a large IT company. This evaluation consisted of an in‐depth study of three management teams, using a case study methodology. Findings – Combinations of fit among type of team, performance goals, and pay‐for‐performance plan (established by a fit between the interdependence constructs and/or by an overlap in the content of the goal and pay indicators) are more effective than combinations of misfit. Research limitations/implications – The case study was limited to intra‐team interdependence relationships and did allow for a analysis of the separate effects of a fit between the interdependence constructs versus content fit. Practical implications – This study shows that pay‐for‐performance plans should not be designed in isolation, but rather in alignment with performance goals and existing task interdependencies. Originality/value – This is the first study to investigate the three inter‐dependence constructs in conjunction in a field setting.