Characteristics of and changes in managerial incentive systems: a case analysis of an Italian business unit

Anna Alexander Vincenzo, Francesco Ambrosini, Andrea Bafundi and Emilio Passetti

Chapter 9 in Research Handbook on Accounting and Organizational Change, 2025, pp 228-251 from Edward Elgar Publishing

Abstract: A managerial incentive system is a fundamental control mechanism used to motivate employees and align their behaviors with organizational goals. However, the current literature does not fully study how these systems change due to changes in the proprietary structure. This chapter investigates how managerial incentive systems change due to a merger and acquisition (M&A) operation. The analysis is based on a qualitative case study of a business unit in Italy. We adopt a multi-dimensional framework to analyze technical characteristics and aspects of performance measurement. Key changes include an increased emphasis on variable compensation, the use of qualitative measures for assessing employee performance, a greater focus on short-term financial results, and the introduction of a shorter reporting period for assessment. The findings show that managers of the acquired company were forced to accept the new system designed by the acquiring company without participating in its design and trial. The analysis enriches accounting literature with insights into changes in managerial incentive systems. It also provides suggestions on how to implement a new managerial incentive system without compromising its acceptance by managers and their motivation.

Keywords: Managerial incentive system; Management control; Management accounting change; Performance measurement; Merger and acquisition (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803928906
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