This just moves the competitive boundary between teams, rather than individuals. It's not unheard of teams that compete and sabotage each other to make their project the most important and impactful.
Then switch deparmental for organisation-wide, then that for nation-wide, then that for world-wide.
For example, you might have a legacy team whose future headcount growth is negatively impacted by a new team. Whether because this new team is automating tasks of the legacy team, or building a product that will cannibalize sales.
From the perspective of the company, the legacy team should embrace the future and allow themselves to be creatively destroyed.
But in reality, you have some leaders who do not want to give up power and will try to hold on, optimizing for personal incentives.
If somehow the people in the old team get into their heads the idea that organisation-wide success stands in conflict with their security, then you have a problem.
But the problem is with management, not the people on the teams.
Edit: in general, it's a common disease in companies to associate people with teams rather than the organisation. People don't become useless because their previous roles are obsoleted. Those are still valuable people and sure, there's a cost to retraining them, but the cost to letting them go (in terms of what it teaches the rest of your employees) is so much greater. (Though unfortunately harder to measure.)
Let the team measure themselves, bit give them a clear mandate and shared purpose.
When teams are incomparable, no such rivalry can make sense.
That leads to the prisoner's dilemma and tragedy of the commons. When team success is the goal, slackers thrive.
> That leads to the prisoner's dilemma and tragedy of the commons. When team success is the goal, slackers thrive.
Teams have lifecycles too, so there are dynamics of team selection and teammate selection that can help with those problems.
As if my additional efforts are not going to move the needle much and there is nothing individually for me to win, why not just enjoy the ride?
If the easy things fail (usually the financial or flexibility kind) there are other options. Find them the same position in a different team with different dynamics (a great individual can sink if everyone else on the team is much better, or much worse), find them a different position where they can shine (you can start as a mediocre midfielder and end up a successful goalkeeper), or even have them find a different job entirely.
After a worker has achieved a base level of income that makes their life comfortable, any extra treats they receive will decrease their interest in the core function of their work, moving their focus to the extrinsic motivator instead.
I've also heard interpretations of this effect that explain it as: being rewarded can demean the value of work, because it may feel as though the work itself is a chore that nobody would do unless they got rewarded.
In general, I believe that extrinsic motivators lead employees to follow their instincts less and focus on anything that will net them a reward. This means that even if someone has a great idea for improving some aspect of the work a company is doing, it might not get done. They are instead being rewarded for whatever arbitrary KPI that management has decided is important.
In fields where there is a single clear KPI, all processes are mature, management has a clear view of the entire value chain, and workers are focused on a single task that is highly tied to the KPI --- e.g. yields in manufacturing tied to a production line worker --- sure, rewarding high KPI is not a terrible idea (or at least as terrible as it would be otherwise). But whenever a workers focus can be co-opted by bonuses I believe bonuses tied to KPIs are a bad idea.
RE: your second point, I absolutely agree. How well a person "fits" in a team has a high impact on a person's motivation.
1. "The Effects of Contingent and Noncontingent Rewards and Controls on Intrinsic Motivation", 1972, Edward L.Deci, [Available online] http://selfdeterminationtheory.org/SDT/documents/1972_Deci_O...
2. Punished by Rewards, Alfie Kohn, 1999, https://www.alfiekohn.org/punished-rewards/
3. "Intrinsic and Extrinsic Motivation ", Roland Bénabou & Jean Tirole, 2003, https://academic.oup.com/restud/article-abstract/70/3/489/15...
4. Intrinsic and Extrinsic Motivation - The Search for Optimal Motivation and Performance, Carol Sansone & Judith Harackiewicz, 2000 https://www.amazon.com/Intrinsic-Extrinsic-Motivation-Perfor...
5. "Intrinsic and Extrinsic Motivation", Lisa Legault, 2016, [Available online] http://www.lcwu.edu.pk/ocd/cfiles/Professional%20Studies/FC/...
6. "Do intrinsic and extrinsic motivation relate differently to employee outcomes?", Kuvaas et al., 2017, [Available online] https://www.researchgate.net/profile/Bard_Kuvaas/publication...
EDIT: added more recent sources
Oh, this is a slightly different topic. Of course if your belly is growling money will motivate you a lot, and that motivation tends to go down the more you go past your comfort baseline.
But think of pay disparity for example. Maybe your belly is full but your slacker colleague is making more money than you. That has a good chance of demotivating you, making you ask "why should I try harder?". Reducing this disparity and (perceived) inequity, eliminating the demotivating factor, goes a long way and has a far longer lasting effect than just the same extra money would bring otherwise.
And pay disparity can be a problem, especially if salary data is hidden. I think most of the time the problem is a lack of openness about salaries and why they are as they are.
Why would a high performer stay there? The rest of the team drags him down and there is nothing he can do about it, he will just leave for a position where he doesn't have to pick up the slack of the entire team before he gets acknowledged.
Either way you can make that decision, perhaps your particular business is better off with high performing individuals. Like a door-to-door sales company probably doesn't benefit that much from team dynamics, and you'd definitely get slackers in that context. But a software team more often than not gets impacted negatively by a rockstar billowing out code rather than organizing with the team.
Remove individual metrics or performance indicators, make team success the important goal. Most of us work in a team of some kind, yet in places like retail sales they often pit employees against eachother with individual budgets instead of store budgets.
If you ever go into a clothing store and wonder why the changerooms look like they haven't been cleaned in weeks, that's probably why. If everyone is trying to meet an individual sales budget no one can afford the time to clean the store since it could cost them a sale. If it doesn't matter who gets the sale as there is only a store budget, they can work together to get all the extra tasks done. One person can clean the change rooms while the other takes sales etc.
When you start tracking a metric there can be all kinds of second order effects, so it's important to pick your metrics and goals wisely.