Performance measurement, motivation, and incentives: A case study of the Danish Business Authority

Christian M. Prip

Student thesis: Master thesis

Abstract

This master‟s thesis is a case study research of the Danish Business Authority with a normative objective of achieving a higher efficiency in the department, Business Support, where a performance measurement system has been installed prior to the investigation. The study is deductively based on a hypothesis that the board of directors are temporarily reallocating employees from Business Support to other parts of the organization for ill-considered cultural reasons, while, simultaneously, demanding a higher efficiency by increasingly monitoring the employee performances. The organizational culture is analyzed in a functionalist perspective with emphasis on the board of directors‟ values and basic assumptions in regard to motivation and performance. The purpose and design of the performance measurement system is analyzed from an organizational economics perspective. Both analyses are primarily based on interviews of the managerial group and documents obtained from the organization. A theoretical discussion of the findings in the analyses concludes with a few separate proposals for achieving a higher efficiency. It has been confirmed that caseworkers are being reallocated for inexpedient reasons. The explanation for this costly prioritization is found in cultural values, which albeit have become gradually counterbalanced by acceding, contrasting values, however, not at all completely replaced due to resistant, associated basic assumptions concerning motivation of employees. These inadequate basic assumptions are reflected in a narrow understanding of motivation as being homogenous and unidirectional, rather than configurable towards specific tasks, which has resulted in an overinvestment in intrinsic motivation yielding very limited benefits to the organization. These particular basic assumptions, in addition to a not fully thought through design of the performance measurement system, and the very limited utilization of the system as an incentive system inhibit a potential higher efficiency for the Business Support. The purpose of the performance measurement system is found to be both divergent in itself, with the proposals in the thesis, and with the identified basic assumptions, by exhibiting a disregard for the importance of motivation and a lacking understanding of contract theory. This inhibits the utilization of the system‟s potential and contributes negatively to skepticism towards the system amongst the employees. It is found that Business Support can benefit greatly from optimizing the performance measurement system by configuring the system‟s design, and additionally, extend the scope of the monitoring to include more dimensions on the casework. It is recommended to shift the focus away from intrinsic motivation of caseworkers to more extrinsic, monetary rewards, for which greater incentive effects and lower costs are expected. This will require changes in, how the salary budget is managed. Furthermore, it will possibly trigger a minor conflict with the respective union, HK, and most likely change the organizational culture substantially for the caseworkers with a significant element of competition. Alternatively, it is suggested that parts of the phone service are outsourced, if the board of directors, for some reason, find these proposals too radical.

EducationsMSc in Business Administration and Information Systems, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2015
Number of pages83