Teamwork, silos, moral hazard, and compensation

Here is a great post describing why even the best compensation scheme is imperfect. 
Some money quotes follow.

"A defensive player [on a soccer team] normally helps his team to win by defending, 
but not always. For example, when losing 1 to 0 with five minutes to go, it may be better 
to attack—even at the risk of a counter-attack.

"But if the coach assesses the defender’s performance based on goals scored by the 
opposition, a perverse situation arises: Doing his job, that is, attacking when it is beneficial 
for the team, may damage the defender’s measured performance, and his career
...
"Every organization I have helped over 25 years of teaching and consulting has complained 
of 'silos,' 'lack of teamwork,' and 'failure to cooperate.' This is not surprising, given that their 
incentives make collaboration and global optimization hazardous to peoples’ careers.
...
"Consider a sales organization that wants to break down silos and encourage cooperation. 
It institutes a global incentive system that compensates each sales representative with an 
equal share of a commission pool of 15% of total sales revenue.

"The good news is that there are no incentives for individualistic behavior. Every sales rep is 
as happy to make the sale herself as to pass it on to a colleague.

"The bad news is that in this system there are no incentives for productive behavior. Given 
the effort required to make a sale, every sales rep would prefer to pass the prospect to a 
colleague than follow up herself.

"Furthermore, above average salespeople will exit while below average ones will enter, 
bringing the average further and further down. The company will end up full of low productivity 
salespeople who expend minimal effort.

"Organizations find themselves between the proverbial rock and the hard place. On the one 
hand silos, on the other hand low productivity."