THE EFFECT OF REWARD SYSTEMS ON THE IMPLEMENTATION OF COST SAVINGS STRATEGIES IN LOCAL AUTHORITIES

Abstract

This paper investigates the effect of reward systems on the relationship between cost
saving strategies and cost saving performance. Three cost saving strategies under the practice of quality management were investigated, namely customer focus, continuous improvement, and teamwork. Cost saving performance was selected as a criterion variable to justify the successful implementation of these strategies. This approach is in line with the strategic objective of implementing these strategies, which is saving on the cost of operation. Data of this study were collected from 205 middle level managers of local authorities using a questionnaire as the research instrument. The findings of this study revealed that the reward systems have failed to provide significant support to the successful implementation of cost savings strategies. Therefore, this finding signifies the unsuitability of the criteria used to reward employees in local authorities with the requirements needed for these strategies to be successful. The implications of this finding are narrated in this paper.