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Using rewards in implementing strategy

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  • Paul J. Stonich

Abstract

Corporations often find it difficult to carry out their strategies because they have executive compensation systems that measure and reward performance in a way that ignores or even frustrates strategic thinking, planning, and action. In particular, reward systems rarely emphasize the long run adequately, nor are they well coordinated with the methods and objectives of other management systems. This article describes three methods that can be used to match rewards with accomplishment of strategic goals: the weighted‐factor method which weights various performance measurements according to strategic objectives, the long‐term evaluation method, which ties compensation to goals achieved over a multiyear period, and the strategic funds deferral method which varies from the conventional financial accounting model for the measurement of performance. The article recommends that all three methods be combined into a single system in which the rewards for senior managers throughout the company are determined by the three methods in different proportions according to those factors that constitute successful performance in their positions.

Suggested Citation

  • Paul J. Stonich, 1981. "Using rewards in implementing strategy," Strategic Management Journal, Wiley Blackwell, vol. 2(4), pages 345-352, October.
  • Handle: RePEc:bla:stratm:v:2:y:1981:i:4:p:345-352
    DOI: 10.1002/smj.4250020403
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    Cited by:

    1. Mehmet Ali Köseoglu & John A. Parnell & Melissa Yan Yee Yick, 2021. "Identifying influential studies and maturity level in intellectual structure of fields: evidence from strategic management," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(2), pages 1271-1309, February.
    2. Richard J. Arend & Y. Lisa Zhao & Michael Song & Subin Im, 2017. "Strategic planning as a complex and enabling managerial tool," Strategic Management Journal, Wiley Blackwell, vol. 38(8), pages 1741-1752, August.
    3. Edward Stead & Michael M. McKinney & Jean Garner Stead, 1998. "Institutionalizing environmental performance in US industry: Is it happening and what if it does not?," Business Strategy and the Environment, Wiley Blackwell, vol. 7(5), pages 261-270, November.
    4. Steinmann, Horst & Schreyögg, Georg & Thiem, Jürgen, 1989. "Strategische Personalführung : inhaltliche Ansatzpunkte und Überlegungen zu einem konzeptionellen Bezugsrahmen," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 22(3), pages 397-407.
    5. Steinmann, Horst & Schreyögg, Georg & Thiem, Jürgen, 1989. "Strategische Personalführung : inhaltliche Ansatzpunkte und Überlegungen zu einem konzeptionellen Bezugsrahmen," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 22(3), pages 397-407.
    6. Kamoche, Ken, 1997. "Managing human resources in Africa: Strategic, organizational and epistemological issues," International Business Review, Elsevier, vol. 6(5), pages 537-558, October.

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