Incentive systems -an evaluation of the "Motivational Model for Rewards"

Abstract

Background and problem statement: Incentive systems have become widely spread during the last decades and now often include front line workers to larger extent than before. The aim of an incentive system is to motivate the staff to work in line with the organization’s goals but to be effective they need to be designed to fit the different preferences of the staff. Research has shown that evaluation of incentive systems are seldom executed, which can lead to resources being spent on ineffective management control. We have discovered an interesting model for evaluating incentive systems and we intend to test its suitability for that purpose. From that, we have formed our research question: Is the “Motivational model for rewards” suitable for evaluating an incentive system? Aim: To, with help from normative theories and research, develop knowledge about how incentive systems should be designed in order to be functional. To answer our research question we are going to evaluate the suitability of the “Motivational model for rewards” with help from normative theories, previous research and the data collected through interviews. Research method: We have compiled normative theories and research on incentive systems and motivation and also conducted a study of employees’ opinions about their incentive system and what factors they found motivating. The suitability of the “Motivational Model for Rewards” was analyzed based on the gathered results. Conclusion: We have found evidence that the model is a proper tool for evaluating the incentive system of the investigated organization. The reason for our judgement is the several advantages of the model, such as the simplicity of its form and that it is easy for individuals to understand. Further it covers the most essential variables in an incentive system and connects those to theories about motivation and rewards. Suggestions for further research:  Testing the “Motivational Model for Rewards” to evaluate incentive systems in other line of business with a greater number of respondents.  Studying to what extent are evaluations of incentive systems conducted in Sweden? It would be interesting to compare the result with the result from the study made by Armstrong, Brown and Reilly (2011).  Investigate what motivates store managers in other retail companies, where monetary incentives are not offered.