Background and discussion of problem Incentive reward systems are commonly used in many companies around the world. There is no such thing as a perfect reward system and that is why a company needs to adjust the reward system after their own needs, to more effectively reach their future goals. It is very important that the employees accept and feel motivated by the reward system. An improperly designed reward system, e.g. with too high goals, could lead to that the employees feel stressed and exhausted instead of motivated. Out of this comes our research question. “How does the sales staff in a company react to the chosen incentive reward system; in terms of motivation and stress?” Aim of the study The purpose of this paper is to describe how an incentive reward system can work in practice and how it may influence the employees in terms of motivation and stress. We were interested to know more about how the sales staff in an insurance company reacts to performance based payment. Method In order to answer the research question of this thesis, we studied the relevant literature on the subject and also performed qualitative interviews. Three salesmen were interviewed at an insurance company, all with different background and position. In addition we also interviewed the sales manager to get a good picture of the incentive reward system. All collected information was analyzed and the conclusion is based out of the analysis. Analysis and conclusion According to the results of this study, it is very important that the company has good communication and clear goals. It is also crucial that the salesmen can be involved in the goal-setting process to get more motivated. For the salesmen we interviewed the possibility to earn a lot of money and the freedom to plan their own workdays were the most essential factors for motivation. The primary sources of stress had to work with administrative tasks and also situations when the technology was not working properly. These results are, most of the time, in line with what the studied theories are saying.
Contents
1. INTRODUCTION
1.1 BACKGROUND
1.2 DISCUSSION OF PROBLEM
1.3 RESEARCH QUESTION
1.4 AIM AND SCOPE
1.5 DELIMITATION
1.6 OUT L INE
2. METHOD
2.1 CHOICE OF SUBJECT
2.2 RESEARCH METHOD
2.3 CHOICE OF OBJECT
2.3.1 HOW THE INTERVIEWS WERE REALIZED
2.4 COLLECTING INFORMATION
2.4.1 Library search engines
2.4.2 Internet
2.5 DISCUSSION OF CREDIBILITY
2.5.1 Validity
2.5.2 Criticism of sources
3. FRAME OF REFERENCES
3.1 INCENTIVE REWARD SYSTEMS
3.1.1 How to implement an incentive reward system
3.2 MOTIVATION
3.2.1 McClelland’s motivation Theory
3.2.2 Expectancy Theory
3.2.3 Herzberg’s two factor Theory
3.3 STRESS
3.3.1 Positive Stress
3.3.2 Negative stress
3.4 PARTS OF INCENTIVE REWARDS CONNECTED TO MOTIVATION AND STRESS
3.4.1 Group rewards
3.4.2 Individual rewards
3.4.3 Non-monetary rewards
3.4.4 Monetary rewards
3.4.5 Connection between performance and payout
3.4.6 Communication and feedback
3.4.7 Possibilities of advancing in the company and personal development
4. EMPIRICAL STUDIES
4.1 A DESCRIPTION OF THE EXAMINED COMPANY
4.2 A NORMAL DAY AT WORK
4.3 THE INCENTIVE REWARD SYSTEM
4.3.1 Group rewards
4.3.2 Non-monetary rewards
4.3.3 Salary and Commission
4.3.4 Connection between performance and payout
4.3.5 Communication and feedback
4.3.6 Possibilities of advancing in the company and personal development
4.4 MOTIVATION
4.5 POSITIVE STRESS
4.6 NEGATIVE STRESS
5. ANALYSIS
5.1 THE INCENTIVE REWARD SYSTEM
5.2 GOAL SETTING
5.3 GROUP REWARDS
5.4 NON-MONETARY REWARDS
5.5 SALARY AND COMMISSION
5.6 CONNECTION BETWEEN PERFORMANCE AND PAYOUT
5.7 COMMUNICATION AND FEEDBACK
5.8 POSSIBILITIES OF ADVANCING IN THE COMPANY AND PERSONAL DEVELOPMENT
6 CONCLUSIONS
6.1 CONCLUSION
6.2 SUGGESTIONS FOR FURTHER STUDIES
APPENDIX
Author: Adolfsson, Oskar,Björnänger, Sandra
Source: Goteborg University
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