Abstract:

Performance measurement and evaluation plays an important role in motivating employees´ future effort and assessing their past performance. The appropriate choice of performance measures and the question whether to link performance measurement system (PMS) and reward system creates a lot of debate among scholars as well as practitioners. Effective PMS and reward system should positively affect employee outcomes: work performance, job satisfaction and retention. Financial rewards that are linked to performance have been shown to improve employee motivation and performance (Cerasoli, Nicklin and Ford, 2014; Garbers and Konradt, 2014; Gerhart and Fang, 2014; Jenkins, Mitra, Gupta a Shaw, 1998; Shaw and Gupta, 2015). On the other hand, financial rewards were criticized for their unintended and dysfunctional consequences such as short term orientation, neglecting aspects of work that are not rewarded, unethical behavior and undermining of intrinsic motivation also called the crowding-out effect (Frey and Jegen, 2001; Kerr, 1975; Ryan and Deci, 2000; Weibel, Rost and Osterloh, 2009). Most of this research is grounded in cognitive evaluation theory and self-determination theory. Futhermore, recently discussed aspects affecting the motivational effectiveness of financial incentives are justice and fairness perceptions of employees, namely distributive and procedural justice (Groen, 2018; Cravens, Oliver, Oishi and Steward, 2015; Landry, Gagné, Forest, Guerrero, Séguin, and Papachristopoulos, 2017). The contribution of this paper is the identification of aspects influencing the effectiveness and perception of rewards. The research pursued as a case study in food retail company and the findings are based on in-depth interviews with subordinates and managers at different levels of firm´s hierarchy.