The effect of reward structures on the performance of cross-functional product development teams

This study examines the effect of reward structures on the performance of c ross-functional product development teams. Results suggest that when it is easy to evaluate individual performances, position-based differential rewar ds lead to greater satisfaction. For long and complex projects, process-bas ed rewards have a negative effect and outcome-based rewards have a positive effect on performance. For risky projects and highly competitive or relati vely stable industries, a nonlinear and monotonically decreasing relationsh ip exists between outcome-based rewards and product quality.