Managerial intentions for and employee perceptions of group-based incentives: Social exchange theory-based interpretations

Research output: Contribution to journalArticleScientificpeer-review

Researchers

Research units

  • University of Oulu

Abstract

Purpose: This paper aims to interpret and compare managerial intentions for and employee perceptions of group-based incentive systems. Design/methodology/approach: The data comprise interviews with managers and employees in four Finnish firms with experience of company-wide incentive systems involving profit-sharing and team-based rewards. Benefitting from social exchange theory, managers’ intentions and employees’ perceptions are examined. Findings: Managers’ and employees’ views resemble each other concerning profit-sharing as reflecting reciprocity rooted in perceived distributive fairness, whereas examination of the team-based rewards revealed impediments in reciprocity. While managerial intentions for team-based rewards refer to social exchange with economic intensity via selection of controllable performance measurements aimed at making individual-level effort count, the employees’ perceptions deem such metrics non-controllable, reflecting perceived distributive and procedural unfairness. Practical implications: Profit-sharing seems to create fair social obligation and goal congruence between managers and employees, whereas team-based incentives easily suffer from unfairness, reducing their effectiveness. Originality/value: Distinguishing between managerial intentions and employee perceptions pertaining to incentive systems facilitated in-depth exploration of the social exchange inherent in them, conceptualized in terms of economic intensity, fairness and controllability. With this lens, qualitative analysis revealed differences in interpretations of controllability and fairness between the managerial intentions and employee perceptions. The central contribution to scholarship takes the form of interpretations reflecting upon these key findings.

Details

Original languageEnglish
Pages (from-to)605-625
Number of pages21
JournalJournal of Accounting and Organizational Change
Volume15
Issue number4
Publication statusPublished - 4 Nov 2019
MoE publication typeA1 Journal article-refereed

    Research areas

  • Employee perception, Managerial intention, Profit-sharing, Social exchange theory, Team-based reward

ID: 39141931