A leader calls with a team that is struggling, and they already have a plan. They are going to take everyone offsite. Two days at a hotel with a facilitator, some exercises, a nice dinner, a whiteboard covered in commitments. They want to know if we run sessions like that.
I ask one question before I answer. How are these people paid?
There is usually a pause, because it is not the question they expected. Then the answer comes, and the answer is almost always the same. Each person earns on their own individual production. Their bonus, their ranking, their sense of whether they had a good year: all of it rides on numbers they post alone.
And I have to tell them the truth, which is that no offsite will fix this team, because the offsite aims at the wrong 10 percent. Something settled their team's performance long before anyone booked a hotel. The design settled it. You cannot retreat your way out of a comp plan.
What team design actually is
Team design is the set of structural decisions you make about a team before its members ever work together: who is on it, what it exists to produce, how the work divides, and what the organization measures and rewards.
Most leaders never treat these as decisions at all. They treat them as background: the fixed furniture of the organization, whatever was already there when they inherited the team. Membership came from headcount, the comp plan from finance, the goals from the strategy deck. None of it feels like a choice, so none of it gets examined when the team underperforms. That is the trap, because the things that feel most fixed usually do the most damage. A leader will run four workshops on communication before asking whether the pay structure rewards the exact behavior they are trying to kill.
The reversal
Here is the finding that should change where you spend your effort.
J. Richard Hackman spent his career at Harvard studying what makes teams work, and his research produced a heuristic that he and Ruth Wageman refined into what people now call the 60-30-10 rule. It divides the variance in a team's performance into three buckets. About 60 percent of the variance traces to the team's design: the structure and conditions put in place before the team begins its work. About 30 percent traces to the launch, how the team gets kicked off. And only about 10 percent traces to what the leader does day to day, once the team is up and running.
Sixty, thirty, ten. Read that split again and let it land, because it inverts how almost every organization spends its energy. Be precise about what the 10 percent actually is: it is the day-to-day coaching a leader does with the team once it is running, the mid-flight nudges and course corrections in the one-on-one and the Tuesday meeting. That real-time coaching is real work, and a good leader should do it well, and it moves roughly a tenth of the outcome. The design set the other 90 percent before any of that started.
So picture the leader with the struggling team and the two-day offsite. The workshop, the facilitator, the fresh commitments to communicate better and trust more: all of that is an intervention on the 10 percent. Even run perfectly, it reaches the smallest lever in the system. Meanwhile the 60 percent, the design that is actually producing the results, goes home untouched and waits to reassert itself by the following Monday. This is why the enthusiasm fades. The research is clear that design is where the leverage concentrates, and the offsite never went there.
Hold onto one distinction, because the rest of this turns on it. Coaching a team through its Tuesday meeting is the 10 percent. Coaching a leader through the redesign of a broken comp plan is the 60 percent. Same word, different job, and confusing the two is how organizations spend on the small lever and starve the large one.
To be precise, because &FOX does not inflate its evidence: the split is a heuristic, not a law, and Hackman framed it that way. More recent work, including Google's study of its own teams, has argued the exact proportions. The number to hold is not the decimal. It is the direction. Design and launch swamp day-to-day coaching, and nearly every organization has the ratio backwards.
The five conditions that make up the 60 percent
If design is the majority of the game, the obvious question is what design is made of. Hackman answered that too. In Leading Teams, he laid out the conditions that raise the odds a team performs: a real team rather than a team in name only, a compelling direction, an enabling structure, a supportive organizational context, and access to expert coaching. He later added a sixth, having the right people. The first four are pure design, and each is a place teams quietly break.
A real team has clear boundaries and stable membership, yet Hackman found that most of the time members could not even agree on who was on the team. A compelling direction is a goal concrete enough that two members, asked separately what the team is for, give the same answer; getting that agreement is the leader's job, and most leaders skip it. An enabling structure covers roles, norms, and size, and size matters more than leaders think: Hackman found that as a team grows, the effort to manage the links between people rises almost exponentially. A supportive context covers resources and information and, above all, rewards. That last one quietly kills the most teams, and it brings us back to the phone call: if the organization pays individuals for solo results while asking the team to succeed collectively, the dysfunction is already built into the design.
You cannot retreat your way out of a comp plan
Let me make the comp problem concrete, because it is the sharpest version of a design failure I know, and I did not learn it from a case study. Across three decades in wealth management, I inherited compensation plans I never would have built, redesigned plans that were quietly breaking the teams they governed, and built new ones from scratch. Then I lived with every one of them long enough to watch what held and what backfired. That is the part most consultants never see, because they leave after the rollout. I stayed for the Monday mornings. So when I tell you a comp plan is the most powerful design decision on your team, I am not theorizing. I have been the person who got it right, and the person who had to go back and fix what I got wrong.
Here is the pattern I watched most often. A firm takes a group of advisors, each one earning entirely on solo production, each one ranked against the others, each one's year defined by numbers they post alone. Then the firm decides these advisors should operate as a team. They should share clients, hand off relationships, refer business to the specialist who serves the client best rather than the one who books the credit. So the firm sends them to a retreat. Trust falls, shared vision, a facilitator who has everyone write their commitments on an index card.
Monday morning, the advisors go back to a compensation plan that pays each of them to hoard. The comp plan is the design. The retreat was the 10 percent. And the comp plan wins every single time, because the comp plan is what people actually read when they decide how to behave. It talks to them every day. The index card talked to them once.
This is not a story about bad advisors. Every one of them is behaving rationally, doing exactly what the structure pays them to do. That is the whole point. When behavior and structure disagree, structure wins, and it is not close. You do not motivate people out of an incentive. You redesign the incentive.
Why almost nobody redesigns the incentive
Here is what I have learned from doing this work: leaders see the comp problem far more often than they fix it. They can name it, and then they leave it, because correcting the 60 percent is one of the hardest things a leader ever does.
Sit with what a comp redesign actually demands. You have to look honestly at who wins and who loses under the new plan, and there are always losers, because a plan that pays differently pays some people less. You have to decide whether your best producer, the one whose income drops when you stop rewarding hoarding, will accept it or walk, and you have to decide that before you can know. You have to sequence the rollout so no one panics in the gap between the announcement and the first new paycheck. And then you have to stand in front of the team and tell them you are changing how they get paid, which is the single most threatening sentence a leader can say to a room, and say it so that a talented, nervous, half-suspicious group can actually hear it.
That last moment is where leaders freeze. I have watched capable executives diagnose the comp problem perfectly and then leave it in place for two years, not from laziness, but because the communication felt too dangerous to attempt alone. The redesign is a spreadsheet problem for about a week. After that it is a nerve problem, a sequencing problem, and a communication problem, and those are the ones that sink it.
Here is the honest boundary. &FOX does not build your comp spreadsheet; we are not employee compensation consultants, and you have people for the modeling. What a leader needs at this moment is different. It is someone who has stood in that exact spot, run the redesign, made the who-wins-who-loses calls, delivered the message to the room, and lived through the Monday after. Someone who knows where the pitfalls sit because they have fallen into a few. That is coaching aimed at the 60 percent, and it is the whole difference between a leader who names the comp problem and a leader who corrects it.
The uncomfortable implication for anyone buying team development: an intervention that leaves the design untouched is theater. Good theater, sometimes. People enjoy the offsite. But the team you had on Friday is the team you will have on Tuesday, because you spent your effort on the 10 percent and left the 60 percent exactly as it was. The leaders who break that cycle are the ones who go after the design, and who get help with the part of the design that is too costly to get wrong.
Named practice: the design audit before the intervention
Before you spend a dollar developing a struggling team, audit its design. Four questions, in order. Do them honestly and you will usually find the problem before you have finished.
One. Is this a real team, or a group you are calling a team? Write down what the team produces that no member could produce alone. If you cannot name a genuinely shared output, you have a group of individual contributors who share a manager. That is a fine thing to be, but it does not respond to team development, so stop buying it.
Two. Would every member give the same answer for what the team is for? Ask them separately, not in a meeting where they can copy each other. The spread in their answers is your direction problem, measured. If the answers scatter, no trust-building matters yet, because the team is rowing in different directions with great enthusiasm.
Three. Does the structure fit the work? Look at size first, then at whether every member can name what they own and what they depend on others for. Vagueness here surfaces later as missed handoffs and duplicated effort, and it gets blamed on attitude when it was structure.
Four. Does the reward match the ask? This is the one that matters most and gets examined least. Line up what you ask the team to do collectively against what you pay each person for individually. Where those two disagree, you have found your leak, in the 60 percent where the leverage lives. No workshop reaches it. Only a redesign does.
Run those four questions and one of two things happens. Either all four conditions are genuinely sound and the team still struggles, in which case the problem really does live in the 10 percent and a team intervention is worth buying. Or, far more often, one of the four is broken, and you now know exactly which piece of the 60 percent needs to change.
That second outcome is the useful one, and it is also the harder one, because knowing which condition is broken is not the same as fixing it. Diagnosis is free. Correction is the work, and as the comp story showed, correction is where nerve and sequencing and communication decide whether anything actually changes. This audit gets you to the diagnosis. What you do with it is where the performance you have been missing comes back.
Common mistakes
Treating the offsite as the strategy instead of the punctuation. An offsite can launch a well-designed team beautifully. It cannot rescue a badly designed one. The retreat is the 30 percent at best, and only if the 60 percent underneath it is sound.
Blaming the people for a structure problem. When a team underperforms, the instinct is to look at who. The 60 percent says look at what: what structure are these people operating inside, and what is it paying them to do? Usually the people are behaving exactly as designed.
Redesigning everything at once. You do not need to rebuild the whole system. Find the one condition that is most broken and fix that. Usually it is the reward. Start where the gap between structure and ask is widest.
Frequently asked questions
What is the 60-30-10 rule for teams?
It is a heuristic from the team research of J. Richard Hackman and Ruth Wageman. It holds that roughly 60 percent of the variance in a team's performance traces to the team's design, about 30 percent to how the team is launched, and only about 10 percent to how the leader coaches the team in real time. The exact proportions are debated. The durable insight is that the conditions set before a team begins its work matter far more than day-to-day management.
If design matters most, is coaching a team pointless?
No, and this is where people misread the rule. Two different kinds of coaching exist, and they aim at two different levers. There is the day-to-day coaching a leader does with the team in real time, the mid-flight nudges, and that is the 10 percent. Then there is coaching a leader through the design work itself: diagnosing which condition is broken, making the redesign decisions, and getting through the communication without losing people. That second kind aims squarely at the 60 percent, because the design does not fix itself. Somebody has to do it, and doing it well is the highest-leverage help a leader can get. Fix the 60 percent first, with real support, and the day-to-day coaching starts paying off on top of a system that finally works.
We already did an offsite and nothing changed. Why?
Almost always because the offsite worked on the 10 percent while the design stayed the same. The most common culprit is a reward structure that pays for individual behavior while asking for collective behavior. If people went back to a system that pays them to do the opposite of what the offsite asked, the system won. It usually does.
Can we redesign a team that is already running?
Yes. The research on relaunching teams is encouraging: a leader can bring an existing team back to a design conversation and effectively restart it. It is harder than designing well the first time, because you are changing conditions people have already adapted to, and the reward structure is usually the piece that has calcified most. That is exactly the redesign that benefits from someone who has run it before, but it is very much possible, and it beats running another intervention on the 10 percent.
Back to the phone call
When the leader with the struggling team asks whether we run offsites, the honest answer is that we sometimes do, but never first and never as the fix. First we look at the design, because that is where 60 percent of their answer already sits, decided, waiting.
Most of the time we find the problem there, and most of the time it is unglamorous. A comp plan that rewards the opposite of what the leader wants. A direction that five people would describe five ways. A team that was never a team, just a group with a shared calendar invite. None of that is what people hope the problem is. All of it is more fixable than the problem they feared, which was that they had the wrong people. And the fix, when it is the comp plan, is not a spreadsheet you hand off. It is a redesign a leader has to lead, and the leaders who pull it off rarely do it alone.
You do not magically rise to the occasion as a team. You fall to the level of your design. Build the design, and the team you wanted turns out to have been available the whole time.
