EVA-based Bonus Systems and the Influence on Motivation of Employees in Companies with Branch- or Profit-Centre Structure
Tobias Bandt
Since the beginning of the Industrial Revolution in the early the 20th century, companies have tried to find ways to motivate their staff and, through that, increase performance and productivity. Despite several theories that consider monetary incentives as not being a motivator it is still very common practice for companies to motivate their employees using profit participation schemes. Companies and organisational structures have significantly changed in the last 50 years. Is it still possible to measure and influence the performance of the individual? And what is the assessment based on? Is the approach of profit participation sustainable and contemporary?
Even in times of globalisation, companies try to delegate responsibility to their business units and branches in order to measure performance and make them comparable. Therefore, they organise them as profit-centres, small organisational units which act like a company within a company. Economic Value Added (EVA) promises to measure more than the profit of a unit; it considers the added value of a branch to the company, shareholders and customers.
This Master thesis aims to provide an overview of EVA, how it works and how it influences the motivation of people who work in branches that are organised as a profit-centre. It also analyses the influence of EVA-based incentive systems on the cooperation between branches and regions and, further, assesses the influence of fairness and transparency on the motivation. The research project is supported by a survey, conducted among branches of DIS AG, a company that has been using EVA for eight years as a basis for the calculation of monetary incentives. The survey covers three areas of EVA’s impact on employees: the influence on motivation in general, on cooperation between branches and the influence of transparency and fairness.
The results of this survey are used to develop recommendations for adapting the system in order to maximise the impact on employee motivation.
Inhaltsverzeichnis (Table of Contents)
- INTRODUCTION
- ABOUT DIS AG
- RESEARCH AIMS AND OBJECTIVES
- WHY IS THIS AN ISSUE FOR DIS AG?
- LITERATURE REVIEW
- MOTIVE, INCENTIVES AND MOTIVATION
- MOTIVES
- INCENTIVES
- MOTIVATION
- CONTENT AND PROCESS THEORY
- INTRINSIC VERSUS EXTRINSIC MOTIVATION
- MONEY AND MOTIVATION
- WORKING MOTIVES
- EMPLOYEE MOTIVATION, MODEL OF NITIN NOHRIA
- PROFIT-CENTRES
- FORMS OF CENTRE ORGANISATIONS
- ACCOUNTING, CONTROLLING AND Key Figures in Profit-CENTRES
- INCENTIVE SYSTEMS
- INCENTIVE SYSTEMS IN PROFIT-CENTRES
- PROBLEMS WITH Incentive SysTEMS
- ECONOMIC VALUE ADDED (EVA)
- POTENTIAL USES AND PROBLEMS WITHIN COMPANIES WITH PROFIT-CENTRE STRUCTURE
- ADVANTAGES & DISADVANTAGES OF EVA
- LITERATURE REVIEW - SUMMERY
- AN PRACTICAL EXAMPLE - THE EVA SYSTEM AT DIS AG
- WHY DID THE COMPANY CHOOSE EVA?
- CALCULATION OF EVA AND PAYOUTS OF BONUSES
- RESEARCH DESIGN AND METHODOLOGY
- RESEARCH PHILOSOPHY
- RESOURCES, ACCESS TO INFORMATION AND DATA COLLECTION
- RESEARCH APPROACH AND TECHNIQUE
- RESEARCH STRATEGY AND TIME HORIZONS
- ANALYSIS OF DATA: QUANTITATIVE AND QUALITATIVE METHODS
- ETHICS
- THE EVALUATION OF THE EVA-BASED INCENTIVE SYSTEM OF DIS AG
- QUESTIONNAIRE ANALYSIS
- METHODS
- FINDINGS
- MOTIVATION
- COOPERATION
- TRANSPARENCY OF THE INCENTIVE SYSTEM
- GENERAL STATISTICS
- ANALYSIS OF SUGGESTIONS FOR IMPROVEMENTS AND COMMENTS
- DATA INTERPRETATION AND DISCUSSION
- MOTIVATION
- COOPERATION
- TRANSPARENCY
- GENERAL COMMENTS
- CONCLUSIONS
- RECOMMENDATIONS
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This Master thesis aims to analyze the implementation of EVA-based bonus systems in a company with a branch or profit-centre structure. The research focuses on the impact of these systems on employee motivation, cooperation between branches, and the influence of transparency and fairness.- The influence of EVA-based incentive systems on employee motivation, both in the short and long term.
- The impact of EVA on cooperation and competition between different branches within the company.
- The role of transparency and fairness in the design and implementation of EVA-based incentive systems.
- The potential benefits and drawbacks of using EVA as a performance measurement tool in a branch or profit-centre structure.
- Developing recommendations for adapting the EVA system to maximize its impact on employee motivation.
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the research context, providing an overview of DIS AG and the company's use of EVA-based incentive systems. It outlines the research aims and objectives, highlighting the specific areas of inquiry.
- Literature Review: This chapter provides a comprehensive review of existing literature on motivation, incentives, profit-centres, and Economic Value Added (EVA). It examines various theories related to employee motivation, explores the concept of profit-centres and their implications for organizational structures, and delves into the definition, applications, and potential challenges associated with EVA.
- An Practical Example - The EVA System at DIS AG: This chapter presents a detailed case study of the EVA system at DIS AG, explaining the reasons behind its implementation and outlining the specific mechanisms for calculating EVA and distributing bonuses based on performance.
- Research Design and Methodology: This chapter outlines the research design and methodology employed in the study. It discusses the research philosophy, data collection methods, analysis techniques, and ethical considerations guiding the investigation.
- The Evaluation of the EVA-Based Incentive System of DIS AG: This chapter presents the findings from the questionnaire analysis, focusing on the impact of EVA on employee motivation, cooperation between branches, and the perceived levels of transparency and fairness within the system.
- Data Interpretation and Discussion: This chapter offers an in-depth analysis and interpretation of the findings, discussing the implications of the results in relation to the key research questions and objectives.
Schlüsselwörter (Keywords)
This research explores the impact of EVA-based bonus systems on employee motivation in companies with a branch or profit-centre structure. The key concepts and themes include: Economic Value Added (EVA), employee motivation, profit-centre structure, incentive systems, transparency, fairness, cooperation, and performance measurement.- Quote paper
- Dipl. Kaufmann, MBA Tobias Bandt (Author), 2010, EVA-based Bonus Systems and the Influence on Motivation of Employees in Companies with Branch- or Profit-Centre Structure, Munich, GRIN Verlag, https://www.grin.com/document/183808
