To Örebro University

This study examines the effects of the retailer Clas Ohlson’s financial reward system. The purpose is to correlate the management’s intentions with their reward system to the actual effects it has on the employees. Are the management’s intentions with the reward system consistent with the effects that the reward system gives? The approach of this study to answers the questions is that the writers will need to interpret, understand and explain the results obtained during the study. To obtain empirical data a number of personal interviews have been conducted, one with the corporate management, one with the store management, and six with store employees.

Clas Ohlson use a form of Management Control System, specifically Result Control. The purpose of Result Controls is to be able to measure performance and to make employees aware of the company’s goals and strategies. To control the actions of the employees the system rewards good actions and punish bad actions. Another purpose is to make all employees strive towards the same goals by making the goals measurable, precise and controllable. The corporate management’s intentions with the reward system are to make employees motivated, more efficient, increase productivity and to raise financial incomes. Clas Ohlson uses a reward system that rewards an entire group for its performances. This makes individual performance hard to measure and to be motivated by.

The findings of the study are that employees often take the rewards for granted and that both positive and negative effects have evolved because of the reward system. The major positive effects are that employees earn more money, groupthink increases, employees strive towards the same goals, and competence is increased plus that it is a good measurement of how well they are performing. The major negative effects are that focus is only on the group’s performance, and that the goals are not specific for the individual. The reward system also tends to choke innovation and creativity because the company brings hardly any new employees into the company. This means that the management’s intentions with the reward system are not completely fulfilled.