Bonuses are headline news but if you think that bonuses motivate individuals, you should read on. Extra payments rarely motivate people to work harder or better. Motivation has mainly to do with the goals you set people and how you interact with them as a leader or employer while they strive to achieve those goals. Teams are no exception but they require extra care and attention if you are to get the most out of them.

Let’s look first at how best to motivate individuals before moving on to the more difficult topic of teams. Assume people on staff are paid adequately when external benchmarks are used and most importantly, that they are paid the right amounts relative to each other. Now you have the basis for heightening their interest in their work and persuading them to learn and grow.
The first thing they need to be clear about is where they fit in – what their role is and how they can make a difference. Talk to them about this every six months and never take it for granted that they already know.
Next, contrast the role they are in now with how it could be in six or twelve month’s time. Be careful not to suggest you are doing this in order to tell them that their current performance is inadequate. Make sure they understand that you are happy with the way they are doing things now, but you are doing this in order to challenge them moving forward. 
Challenge and goal setting are two of the major components of motivation. However, laying down the gauntlet is not usually enough by itself. You have to start to believe in yourself. You have to be convinced that the results are worth achieving and you will want to be sure that somebody will recognise you for the achievement or for the progress you have made.
Motivating teams means applying a set of principles – setting challenges that are measurable, breaking them down into steps, supervising closely, giving personal encouragement and demonstrating progress.
However, teams present a particular challenge because they comprise individuals who while they may believe in themselves, have to believe in each other. They also have to be taught how to reward and recognise each others contribution and how to communicate. These challenges are quite difficult because individuals have, of course, different personalities and this determines the way they prefer to communicate and what they appreciate in others.
A great advantage is that once a team has been set up and trained properly, the encouragement given by one team member to another propels everything along and there is extra energy and reward to be derived from simply combining with others to get things done.
Four foundations are needed to create this cohesive team working environment. These are: trust, a collective interest in achieving a common goal, communication skills and conflict management skills.
So what can businesses do to motivate their teams? The key steps are:
·         Reminding individual employees how their roles fit (and the importance of their roles) within the wider organisational strategy
·         Setting clear, challenging and measurable goals
·         Recognising current achievement
·         Pointing out to each employee their potential
·         Following up regularly throughout the year
·         Holding team development events – based on improving the four foundations of an effective team
·        Using psychometric tests, such as the Myers Briggs Type Indicator to help team members understand each other better and improve their working relationships. This will build overall team effectiveness
And what about those bonuses? Wouldn’t it be quicker and more effective for businesses to promise a big bonus and just leave teams to work out things for themselves?
Most emphatically, that will not work. Small short term bonuses paid to individuals in order to recognise their progress can be part of the mix and annual bonuses paid to everyone can strengthen the bonds between businesses and employees. Anything else usually does more harm than good – but the link between money and motivation is for another time.