Career concerns and team talent

•We study career concerns in teams.•We classify talent into two types: individual talent which is associated with an individual in the team and team talent that is common to each member in the team.•The presence of team talent reduces free riding.•When team talent is important group incentive pay can dominate monitoring even when monitoring is costless.

We develop a model of career concerns in teams. We draw a distinction between individual talent which is associated with a member in the team and team talent which is common to all members of the team. With team talent, members have less of an incentive to free ride and effort is more efficient. With team talent, we also show that group incentive pay can yield higher profits than monitoring even when monitoring is costless.