Rewarding Store Managers within Swedish Retail. How are reward systems important?

Abstract

Background: There is a general demand for research within Swedish Retail, not only because there is a lack of recent research but also since the sector is growing significantly. Reward systems are a heavily discussed issue but also a commonly used tool to motivate employees and to inform them about what is important for the company. The ICA Maxi store format is interesting to investigate, since it is a large store format and the situation between the store manager and the retailer is specific. The store manager is responsible for all daily operations. Hence, he is responsible for the retailer’s personal investment since the later has little contact with everyday operations. Consequently, the reward system becomes crucial to i nv estigate in th is given situation. Research problem: How is the reward system meaningful for store managers working within Swedish retail? Purpose: The purpose is to understand how the framing of the system is meaningful for the store manager and how it motivates him. Methodology & A qualitative case study has been realized. For empirical data Empirical evidence: interviews with the store managers and the retailers of three ICA Maxi stores have been done. An interview has been done with an expert within Swedish retail in order to gain understanding for the industry. Theoretical framework: Scientific literature has been the base for the theoretical framework. Theories discussed are the agency problem, motivational theories, the framework for reward systems and the role of a store manager. Results and conclusions:It is shown that reward systems are not important for store managers from an informative aspect. Neither is the motivational aspect significant. Still, they are meaningful in order to accommodate the manager’s hygienic factors. The managers’ owner-like position demands a share of the profit and a compensation for the work they put in. Furthermore, the importance of the reward system increases over time. Further research: The most interesting area of further research we believe is to look deeper into if and how the daily operative work is influenced by the reward system, especially focusing on myopia and suboptimization.