Title: Integrating customer orientation, employee compensation and performance management: a conceptual framework

Authors: Sven Tuzovic, Manfred Bruhn

Addresses: Wieselhuber and Partner Consultants, Koeniginstr. 33, D-80539 Munich, Germany. ' University of Basel/WWZ, Department of Marketing and Management, Petersgraben 51, CH-4051 Basel, Switzerland

Abstract: Compensation systems are an essential tool to link corporate goals such as customer orientation with individual and organisational performance. While some authors demonstrate the positive effects of incorporating nonfinancial measures into the compensation system empirically, companies have encountered problems after linking pay to customer satisfaction. We argue that reasons for this can be attributed to the measurement of customer satisfaction as well as to the missing link between customer satisfaction and customer retention and profitability in theses cases. Hence, there is a strong need for the development of an holistic reward and performance measurement model enabling an organisation to identify cause-and-effect relationships when linking rewards to nonfinancial performance measures. We present a conceptual framework of a success chain driven reward system that enables organisations to systematically derive a customer-oriented reward strategy. In the context of performance evaluation, we propose to rely on integrated and multidimensional measurement methods.

Keywords: customer orientation; rewards; success chain; performance measurement; employee compensation; employee pay; performance management; compensation systems; customer satisfaction; customer retention; reward model; reward systems; performance evaluation.

DOI: 10.1504/IJBPM.2005.006719

International Journal of Business Performance Management, 2005 Vol.7 No.3, pp.255 - 274

Published online: 04 Apr 2005 *

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