Managing corporate culture through reward systems

Abstract

This article discusses a study on the link between a firm's reward system and its culture. Seventy-five human resources managers from 14 companies in the U.S. were interviewed regarding their respective firm's managerial reward system. The research found that two forms of reward systems were most common, the hierarchy based-system and the performance-based system. Each of these reward systems was examined in terms of how they help reinforce a firm's cultural values and norms. The relationship between growth strategy and reward systems was also studied. It was found that most firms with a steady-state growth strategy employed a hierarchy-based reward system, while firms with evolutionary growth strategies use performance-based reward systems.