Article Review - ‘managing Corporate Culture Through Reward Systems’

Maxime HAMON – Master 1, EM Normandie, Oxford Campus

 Jeffrey Ken and John W. Slocum, Jr.  - ‘Managing corporate culture through reward systems’

Academy of Management Executive. 2005, Vol. 19, No. 4

Jeffrey Kerr and John W. Slocum (2005), in their article ‘Managing corporate culture through reward systems’ discuss the potential link between a firm’s reward system and its corporate culture. The article tends to describe and study the actual reward system of 14 different companies implemented in the United States. The organisations represented in the sample ranged from single product industrial firms to multidivisional conglomerates. Over 75 managers were interviewed during this field research. The interviews were focused on each firm’s reward system, questioning the definition and evaluation of performance within the organisation, the different feedback processes as well as the administration of rewards. Eventually, additional interviews were focused on company’s traditions, values, and norms. The research spots out two distinct forms of reward systems, the hierarchy based-system and the performance-based system. These two different reward systems were studied in terms of how they help reinforce a firm's cultural values and norms. The following article tends to describe and study the relationship between growth strategy and reward systems. Results showed 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.

After a detailed background of the close relationship existing between corporate culture and reward system, the authors turn their attention to the main focus of the study represented by two distinct reward systems previously defined as the hierarchy based reward system and the performance based reward system. On the one hand, the authors define the hierarchy based reward system as a reward system focusing on a subjective performance criteria issued by the superiors as regard to the subordinates. On the other hand, they define the performance based reward system as a reward system focusing on an objective performance criteria, taking into account almost only quantitative evaluation aspects. Both of the reward systems are presented as such as they shape the culture of the organisation through the behaviours and attitudes that they incurred. The authors consider that the type of culture that emerges from the hierarchy based reward system would be what they call the Clan culture. In other words, the hierarchy based reward system would generate some kind of corporate culture where the relationship between the individual and the organisation as well as the relationship among organisation members and the process of acculturation would be supported, inter alia, by a mutual long-term commitment, a sense of interdependence and collectivity as well as a long, thorough socialization. In contrast, the authors demonstrate that the type of culture that would emerge from the performance based reward system would be what they call the market culture. In this type of culture, generated by the performance based reward system, the relationship between the individual and the organisation is this time qualified as contractual and implies a mutual short-term commitment. The relationship among other members of the organisation would be shaped around limited interaction, independence and centralised on the individual itself. Additionally, the process of acculturation of such type of culture includes little socialisation as well as a distance from the superiors, who seem to be represented as negotiators as well as resource allocators.