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School of Business | Department of Accounting | Accounting | 2016
Thesis number: 14599
Effectiveness of reward system in case company
Author: Lehto, Lauri
Title: Effectiveness of reward system in case company
Year: 2016  Language: eng
Department: Department of Accounting
Academic subject: Accounting
Index terms: laskentatoimi; accounting; johtaminen; management; ohjausjärjestelmät; control systems; kannustaminen; incentives; palkkiot; remuneration; strategia; strategy
Pages: 41
Key terms: management control; reward systems; strategy; johtamisjärjestelmä; palkitseminen; strategia
RESEARCH OBJECTIVES This study contributes to the literature of reward systems as a part of management control systems. It examines a newly established bonus system at a Finnish technical trade company from the perspective of how well its design and use reflect the recommendations provided by the existing literature. The study aims at explaining the implications of the design and use on the effectiveness of the system.

DATA SOURCES AND RESEARCH METHOD The theoretical references of this case study include journal articles and books discussing reward systems' role in management control systems and the factors affecting reward systems' effectiveness. The collection of empirical data was conducted over a period of two years between October 2013 and November 2015, during which the researcher worked at the case company. The data includes a large number of interviews of personnel and review of written materials of the case company.

RESULTS The study shows that the general design of the system was in accordance with the recommendations whereas the way it was used from the perspective of top management participation as well as lack of formalized performance evaluation had significant moderating implications on effectiveness. In addition, ambiguity of the strategy itself was identified as a significant moderating factor.
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