The Correct Answer and Explanation is:
Based on the provided image, the correct answer is:
rewarding all team members equally is not fair.
Explanation
This statement identifies a fundamental and widely recognized challenge in designing compensation systems for teams. The core of the problem lies in balancing group incentives with individual contributions, a concept central to organizational behavior and equity theory.
In virtually any team, individual performance and effort levels are not uniform. Some members may be highly productive, possess critical skills, or invest significantly more time and energy than others. Conversely, some members might contribute the bare minimum or engage in “social loafing,” also known as the free-rider problem, where they rely on the hard work of their colleagues.
When a compensation plan rewards every team member equally, regardless of their individual input, it can create a strong perception of unfairness. High-performing individuals may feel that their exceptional efforts are undervalued and unrecognized. This can lead to a drop in their motivation, as they see no additional benefit for their superior performance. Over time, these star performers might reduce their effort to match the group average, which ultimately lowers the entire team’s productivity and morale. This sense of inequity directly undermines the goal of using compensation to motivate peak performance.
The other options presented are incorrect. Rewarding individuals typically fosters competition rather than building cohesiveness, as it can discourage cooperation and information sharing. Furthermore, rewarding individual performance is one of the oldest and most established compensation practices; it is not a new or untried concept. Therefore, the difficulty in creating a system that feels fair to all contributors, given their different levels of effort, remains the most significant hurdle in team-based pay structures.
