Index

Abstract

The traditional reward system (RS) based on the job description and salary scales is often unable to cope with changes in the business environment: market globalization, technological development, and organizational changes. In this context, the project-based organization (PBO) must adopt new RSs that encourage employees to have responsibility and autonomy in their jobs and define their professional lifestyle. The present work aimed to identify the challenges of a competency-based reward system (CBRS) in PBO. To this end, we carried out a qualitative study based on 31 semi-structured interviews with Tunisian project managers. The results showed that RS must fund the development of the project actor, emphasizing their current and potential competencies rather than rewarding past performance. In addition, RS may be a substantial risk in PBO when there is a significant gap between employees’ salaries. Improper distribution of rewards can negatively affect the motivation of project team members and encourage unproductive functioning within the organization.

Keywords: Competence, Competency-based reward system, Project-based organization, Qualitative study, Project manager, Tunisia.

JEL Classification: J24; J33; M12; M52.

Received: 26 August 2021 / Revised: 30 September 2021 / Accepted:15 October 2021/ Published: 2 November 2021

Contribution/ Originality

This study contributes to existing literature by identifying the challenges of a competency-based reward system (CBRS) in PBO.


1. INTRODUCTION

Traditionally, reward systems (RSs) have been designed according to the job description and salary scales (Shahzad, Bajwa, Ansted, & Mamoon, 2016) and are often unable to cope with changes in the business environment: market globalization, technological development, and organizational changes. Kerrin and Oliver (2002) reveal that traditional RSs cannot be effective in project-based organizations (PBOs). The flexibility of project team members makes it difficult to establish a fixed salary level given the frequent changes in functions and responsibilities.   According to Miterev, Mancini, and Turner (2017), RS within the organization should reflect the nature of project-based work. Clark and Colling (2005) argue that attention needs to be paid to the important role of RS in PBO, as it is expected to vary from a project to another. Each time a project starts, the organization redefines its RS. In this context, PBO must adopt new RSs that encourage employees to be responsible and autonomous in their jobs and define their professional lifestyle (Singh, 2010). A competency-based reward system (CBRS) has thus become increasingly prevalent within many organizations in recent years (Hsiao & Kralj, 2012). Indeed, researchers and practitioners frequently emphasize the use of CBRS to foster problem-solving and employees’ creativity (Hon, 2012). Therefore, CBRS seems essential for PBO.  The present work aimed to elucidate the relationship between CBRS and PBO. In other words, we tried to answer the following question: What are the challenges of CBRS in PBO? To answer this question, we carried out a qualitative study based on 31 semi-structured interviews with project managers exercising their functions in Sfax and Tunis. 

The remainder of the paper is organized as follows: The first part outlines the literature review. The methodological elements of the research are described in the second part. The third part presents and discusses the results obtained. 

2.  LITERATURE REVIEW 

2.1. Definitions of Project

A switch in the mode of management, from traditional business management to one that is more flexible and responsive to the organizational environment, has been taking place since the 1980s. In 2000, a project was defined by The French Speaking Project Management Association as “a specific approach that allows a future reality to be structured methodically and progressively. A project is defined and implemented to respond to a client's need, and it involves an objective and actions to be undertaken with given resources”. According to ISO 10006, project is“unique process consisting of a set of coordinated and controlled activities with start and finish dates, undertaken to achieve an objective conforming to specific requirements, including constraints of time, cost and resources”. The project was defined by Turner (1993) as “an endeavor in which human, material, and financial resources are organized in a novel way, to undertake a unique scope of work, of given specification, within constraints of cost and time, so as to achieve beneficial change defined by quantitative and qualitative objectives”.

After the examination of the definitions provided above, we can distinguish three major categories of project constraints (Garel, 2003): The first is the technical specifications that fit a particular description of a product or a service to be fulfilled. They consist of the technical necessities of the product. The project demands quality standards that match the customer's exigency. The second is the deadline which may be a major constraint for the project, as implementation contracts usually embody penalty clauses for late deliveries. Failing to meet deadlines may affect the cost-effectiveness of the project. Finally, the cost control related to budgetary and financial constraints, such as the accessibility to skills, equipment, and technical requirements, is vital for the execution of the project. 

2.2. Definitions of Project-Based Organization

Several research works have been conducted to conceptualize PBO (Gareis & Huemann, 2000; Hobday, 2000; Koskinen, 2010; Lindkvist, 2004). PBO has been labeled with different terms, namely project-based organization, project-oriented organization, project-based firm, project-based company, etc. A project-based organization is defined as an organization where the project is the main mechanism for managing and integrating all the business functions of the firm without any formal functional coordination between the project lines (Hobday, 2000). A project-based organization can handle characteristics evolving in the production more properly and reply flexibly to clients' diverse needs. It can implement diversified knowledge and skills effectively and maneuver dangers and doubts linked to projects. Project-oriented organization was defined by Gareis and Huemann (2000) as “an organization, which defines ‘Management by Projects’ as an organizational strategy, applies temporary organizations for the performance of complex processes, manages a project portfolio of different project types, has specific permanent organizations to provide integrative functions, etc.”. A Project-oriented organization is presumed to improve the organizational distinction and assignment of managers’ duties, quality control using group work, full project characterizations, objective orientation, staff development, and learning from projects. For Lindkvist (2004), the project-based firm functions in project mode by constructing multi-faceted facilities and original work to content its clients that may require interfirm collaborations or the support and synchronization with other functional units. Otherwise, a project-based company is described as an organization whose most products are made against designs indicated by customers (Koskinen, 2010).

2.3. Definitions of Competence

Since the 1980s, the concept of competence has gained acceptance in organizations. To understand this concept, Delobbe, Gilbert, and Le Boulaire (2014) present two approaches: psychological and professional.

According to the psychological approach, Boyatzis (1982) defines competence as “an underlying characteristic of a person in that it may be a motive, trait, skill, aspect of one’s self-image or social role, or a body of knowledge which he/she uses”. The author presents two types of competencies. Standard competencies include expertise, experience, and knowledge that each employee must have to perform his/her tasks. Distinctive competencies differentiate the best individuals from the least effective ones. Furthermore, Spencer and Spencer (1993) present competence as an underlying characteristic of an individual that is causally related to criterion referenced effective and/or superior performance in a job or situation”. These authors claim that, through competence, it is possible to predict an individual’s performance in different work contexts over a certain period. For Spencer and Spencer (1993), the analysis of competence can be compared to the iceberg model. The visible part of competence corresponds to physical or mental knowledge and skills. The hidden part of competence constitutes the individual’s personality, which includes the innate individual characteristics that are difficult to value, such as motivations ​​and attitudes. 

According to the professional approach, the concept of competence is not only an ability to act or a stock of knowledge and skills associated with superior performance, but its application is to provide real value to the organization (Takey & de Carvalho, 2015). For Durand (2015), competence is defined as a set of knowledge, skills, and attitudes manifested in the exercise of a job. In addition, Le Boterf (2010) states that competence is not limited to an accumulation of knowledge but is presented as a process of actions that allows the mobilization and coordination of different skills to achieve a predefined goal. 

2.4. Levels of Competence

Beyond the multiple definitions of competence (Besson & Olaba, 2017; Hedhili & Boudabbous, 2020; Loufrani-Fedida. & Aldebert, 2020) apprehend this concept at different levels: individual, collective, and organizational. According to these authors, competence not only focuses on the individual and their work team but could be deployed by the whole organization.

Gilbert and Thionville (1990) define individual competence as a set of mastered skills and knowledge that an employee has acquired through training and experience. For Loufrani-Fedida (2012), an individual competence is defined as a set of managerial actions undertaken by the organization to manage and develop them. According to the author, the employee must have a portfolio of competencies that can be updated and mastered in real work situations. The emergence of new organizational structures encourages employees to collaborate and master several individual competencies to increase the organization’s competitiveness (Adla, Gallego-Roquelaure, & Calamel, 2020). This collective dimension of competence is manifested and developed in work teams representing a source of value for the organization (Retour & Krohmer, 2006). Indeed, collective competence is defined as the set of individual competencies of the members of a group. It refers to the knowledge and skills that contribute to the ability of a group to coordinate and produce a joint result.

According to Meschi (1997), organizational competence “only makes sense in relation to the organization that will use and develop it”. It must be progressively built up and enriched during a long process of collective learning realized through repetition, experience, the interaction between employees (Naffakhi, 2011), and the integration of various technologies (Hamel & Prahalad, 1990), which ensures the organization's growth and sustainability. Thus, organizational competence is one of the constitutive elements of organizational strategy development (Dietrich, Riberot, & Weppe, 2018).    

2.5. Competency-Based Reward System in Project-Based Organization

RS is one of the most outstanding activities in human resources management within the organization (Medina & Medina, 2015). Indeed, CBRS differs fundamentally from the traditional RS based on the job description and salary scales (Huang & Zhu, 2013). According to this approach, employees are rewarded based on the level of competencies they have acquired (Balkin, Roussel, & Werner, 2015). These competencies must be demonstrable in fulfilling the employee's job roles. Ledford Jr (1991) defines CBRS as an RS in which employees are rewarded for the competencies they have developed. In this regard, two project actors doing the same work may have two different levels of reward, as one individual has more competencies than the other does For Dietrich, Gilbert, Pigeyre, and Aubret (2010), CBRS refers “not to a job description but rather to the repertoire of competencies possessed by employees”. In other words, it no longer depends only on employee criteria related to job situations, such as age, qualifications, and seniority but also on the valorization of competencies held by the project actor.   

CBRS encourages employees who meet the expectations of PBO and demonstrate the required competencies to perform their tasks properly (Spencer & Spencer, 1993). Therefore, competitive employees who demonstrate new or improved competencies get a salary raise (Nalini, Alamelu, Amudha, Gowri, & Sujana, 2016). Thus, employees must be duly rewarded through variable reward plans. This encourages the project actor to take measures to fill the gaps in their competencies portfolio and develop their knowledge regularly (Kiznyte, Ciutiene, & Dechange, 2015). According to Alaei and Shahrezaei (2015), CBRS promotes the involvement of employees in the overall PBO operations, which leads to problem-solving ability and improved productivity. Thus, CBRS is perceived as a form of organizational support that contributes positively to meeting the employees’ needs (Nalini et al., 2016).

3. RESEARCH METHODOLOGY

3.1. Data Collection

This work aimed to identify the different challenges of CBRS in PBO. Therefore, we adopted a qualitative study based on semi-structured interviews for data collection. In this interview mode, the interviewer leads the interviewee to communicate detailed information about the research topic. The semi-structured interview allows the establishment of a “framed freedom”: The interviewees can respond as they wish but on well-defined themes. In addition, we have favored observations during each interview. Comments and informal discussions with the different interviewees regarding the purpose of the interview were recorded in a corpus.   

3.2. Sample Description

The choice of the sample is a crucial step in the qualitative study; it contributes to the wealth of collected information. The number of interviews was not fixed a priori. We continued the interviews until we reached semantic saturation (Glaser & Strauss, 2017). Data obtained from the last interviews did not provide any further additional information. Therefore, the final sample consisted of 31 project managers. Those who agreed to be interviewed were Tunisian. Furthermore, we made sure to vary the sample in terms of gender (26 men and 5 women), age (28 to 53 years), and years of experience (2 to 15 years).

3.3. Conduct of the Interviews

The semi-structured interviews were conducted in the cities of Sfax and Tunis. Data collection took place during the second half of 2016. Moreover, an appointment was set in advance for each intended interviewee to ensure their availability for the interview. The interviews took place in the interviewee's workplace, with an average duration of 45 minutes. To collect as much information as possible, we reassured the interviewees at the beginning of each interview about the confidentiality and anonymity of responses while explaining that this research was carried out for scientific purposes.  Most of the interviews were conducted in French. However, some interviewees were more comfortable speaking in Tunisian Arabic to express themselves comfortably and deepen their responses. Therefore, we translated the responses into English with the help of expert translators.

After the agreement of most interviewees, their responses were memorized using a Dictaphone. We insisted on recording, as it offers the possibility of bringing out elements that might not be considered pertinent during the interview. In addition, all the interviews were exhaustively transcribed for a better interpretation of the collected data.

4. RESULTS AND DISCUSSION

Most interviewees state that traditional RS needs to be revisited to enhance employees’ competencies in PBO. RS must reinforce the acquisition and implementation of appropriate competencies of project actors and support their engagement within an organization. The organization must create an effective RS that encourages employees to master competencies in their jobs, take responsibility, and resolve problems. For Abuazoom, Hanafi, and Ahmad (2017), project actors become more motivated to develop their competencies when the organization provides a good RS.

“The organization must reward and recognize the efforts of project actors to acquire new competencies” (Interviewee 11).

“The project actor brings to the organization a set of competencies for which they expect to be rewarded” (Interviewee 17).

“Employees should be rewarded for their demonstrated competencies at work” (Interviewee).

“An effective RS enables employees to improve their competencies, thereby increasing their organizational commitment” (Interviewee 22).

“PBO must reward what employees are able to do and how they demonstrate these competencies” (Interviewee 26).

4.1. Motivation of Project Actors

The results reveal that RS increases the motivation of employees, which in turn promotes successful project execution. RS must motivate employees to perform their tasks efficiently, which creates a solid and ideal employer-employee relationship. Hölzle (2010) states that RS is about meeting the needs of employees and ensuring their commitment throughout the project execution. A PBO must provide a correct and balanced RS to keep its employees in their functions. 

“RSs must be designed to improve the motivation and performance of project actors in carrying out their tasks” (Interviewee 5).

“Project actors tend to receive the rewards they deserve” (Interviewee 14).

“Creating a good RS is a challenge for the project manager, as it can positively influence the behavior of employees towards their jobs and increase their organizational commitment and, consequently, their performance” (Interviewee 17).

“Project actors are motivated if they feel valued in their organization, and this value is demonstrated by the rewards given to them” (Interviewee 19).

“A good RS promotes positive emotions and motivation among project team members and encourages them to be aware of completing their tasks on time” (Interviewee 25).

4.2. Cooperative Rewards

According to most interviewees, rewards are an essential means that fosters collaboration and trust among project team members. The project environment is crucial to encourage mutual support and cooperation between employees. The project actors build positive relationships with each other when they work cooperatively. Tabassi and Bakar (2009) state that team-based RS can create an atmosphere of recognition among project actors and encourage them to accomplish their tasks effectively.    

“Team-based RS is a way to ensure the cooperation of the project team members” (Interviewee 10).

“Rewarding the project team as a whole is much better than rewarding only individual contributions” (Interviewee 13).

“Collective achievements rewards reinforce the relationships of trust among project team members and facilitate better communication and collaboration between them” (Interviewee 19).

“Since project success is primarily the result of collective work, it is difficult to individualize the contribution of all those involved” (Interviewee 24).

“Recognizing only the best members of the project team may demotivate and frustrate others”
“RS can build more lasting mutual trust between project actors” (Interviewee 27).

4.3. Financial Rewards

Based on the results of this study, the financial reward has a strongly influence on whether the employee will join the project. The interviewees reveal that salary concerns need to be covered by an effective reward mechanism that ensures the satisfaction of project actors and their willingness to contribute their greatest expertise to their jobs. 

“Financial rewards (promotions and salary increases, etc.) encourage project actors to improve their job performance” (Interviewee 9).

“As a project manager, I try to motivate my employees and reinforce their organizational commitment with relatively high financial rewards” (Interviewee 16).

“My organization often offers salary increases to keep qualified project actors in their jobs” (Interviewee 25).

4.4. Social Rewards

Although financial rewards are valuable in motivating employees, some interviewees reveal that project actors can achieve significant success in their jobs through social rewards. They state that not only financial rewards (salaries, bonuses, retirement benefits, overtime, etc.) but also social rewards (empowerment, job security, job satisfaction, etc.) lead to higher employee productivity. Interviewees also claim that various forms of social rewards, such as luncheons, celebrations, career opportunities, peer-to-peer recognition, and access to information, are considered valuable tools to enhance the desired project team behaviors, hence increasing their performance at work.      

“Financial rewards are not always the best route for project actors. Like all other employees, they want recognition and appreciation for their work” (Interviewee 2).

“After a very busy time in this project, my supervisor offered me a weekend trip with my family” (Interviewee 6).

“For me, giving a project actor more responsibility can be seen as a social reward. It could have a positive effect on their motivation at work” (Interviewee 13).

“I often use social rewards to engage my employees in their jobs instill the core values of the organization (Interviewee 18).

“Recognition, apart from financial rewards, is considered a favorable way to generate enthusiasm among project actors” (Interviewee 22).

“The lack of appropriate social rewards could negatively impact employee performance, which in turn reduces the chances of achieving the project goals on time” (Interviewee 25).

“Holding an end-of-project party provides a psychological adjustment to recognizing the accomplishment of my employees” (Interviewee 30).

4.5. Budget Constraints

Most of the interviewees state that PBO is often associated with budget constraints. Small and medium-sized organizations cannot afford to pay competitive salaries to project actors, as they often have limited budgets. The project actor often demands higher salaries because of short-term contracts. Interviewees claim that project managers do not always have a sufficient budget available to reward their employees. According to Al Otaibi and Ali (2011), most project actors are not satisfied with their jobs because their salaries and bonuses do not match expectations. Low salary is the main reason why project actors are likely to seek career opportunities outside the organization.

“I tried to recruit some experienced employees, but they were asking for too high salaries, I could not offer them what they were asking for” (Interviewee 5).

“My employees are not motivated in their jobs, as the rewards offered are lower than their expectations, which is due to the budgetary constraints of the organization” (Interviewee 9).

Low salary can demotivate the project actors from doing their job properly” (Interviewee 16).

“Project actors will leave the organization if their supervisors do not recognize their efforts” (Interviewee 21).

“Given the limited budget allocated to my project, I cannot offer additional bonuses to my employees” (Interviewee 28).

4.6. Comparison of Rewards

Interviewees indicated that RS could constitute a high risk in the organization when there is a significant gap between the salaries of project team members. Project actors often compare their efforts and rewards to the efforts and rewards of others. Improper distribution of rewards can negatively affect the motivation of project team members and encourage unproductive functioning within the organization. Shore and Cross (2005) argue that project actors may hinder collaboration among themselves in the event of excessively large salaries and bonus differences. Thus, building trust between these employees will be more difficult. Reynaud (2001) states that “no employer would consider rewarding employees in a totally fluctuating manner, not only for reasons of motivation but also to avoid falling into a total disorder within the organization”   

Equal and desirable rewards should be implemented in the organization” (Interviewee 1).

“Pay inequality can have negative implications on the efficiency of certain project actors and trust between them” (Interviewee 10).

“Individual rewards lead to constant comparisons between project team members” (Interviewee 13).

“Individual rewards may undermine teamwork because employees tend to compare themselves to others” (Interviewee 29).

4.7. Competence-Based Reward System 

Interviewees reveal that the implementation of CBRS is not easy in PBO, as it is characterized by increased direct and indirect labor costs. In fact, CBRS is not only difficult to design but also to introduce and manage. For this reason, Gilbert and Thionville (1990) argues that CBRS is rarely achieved by organizations. Klarsfeld and St-Onge (2000) state that “it seems difficult to claim whether CBRS is effective or not”.    

“Personally, I avoid this kind of rewards. We always use salary scales and job descriptions to reward project actors. It is a compromise”  (Interviewee 4).

“CBRS has many disadvantages: increasing salaries, constant re-evaluation of competencies, conflicts between project team members, etc. In short, it is not very profitable for our organization” (Interviewee 12).

“I do not think that my organization will ever adopt CBRS. It has failed in other organizations. It certainly causes bad faith competitions between project actors, such as aggressiveness, harmful behaviors, communication interference, information retention, and collapse of team spirit” (Interviewee 19).

“Given the limited budget allocated to the project, we do not dare increase employees’ salaries. We play on bonuses, but we do not touch basic salaries” (Interviewee 22).

“I am not convinced enough about CBRS. What competencies should be rewarded? Mobilized competencies? Proven competencies? Or competencies of tomorrow? It is a bit fuzzy, isn't it? Fortunately, CBRS is not applied in our organization” (Interviewee 31).

5. CONCLUSION

The present work aimed to identify the challenges of CBRS in PBO. To this end, we conducted a qualitative study based on 31 semi-structured interviews. The results show that RS should fund the development of the project actor, focusing on their current and potential competencies rather than rewarding their past performance. Furthermore, employees who are not satisfied with their rewards are less willing to make further efforts to comply with PBO goals. The present work has several contributions: On a theoretical level, it enriches the existing literature on the relationship between CBRS and PBO. On a managerial level, it provides project managers with a concrete and rigorous description of the specific challenges of CBRS in PBO. The three limitations of this work lie in: First, the small sample size, which consists only of project managers working in Sfax and Tunis, hinders the generalization of the results obtained. Thus, it would be interesting to extend the sample by including project team members working in other regions of Tunisia. Second, the nationality of the interviewees, as only Tunisian project managers were interviewed. It would be wise to interview foreign project managers in future works. Third, we did not highlight a quantitative study. It would be relevant to conduct a similar study using a questionnaire administered to a larger sample to strengthen the validity of the results.   This work proposes new avenues that seem interesting to pursue in the future. First, it would be appropriate to replicate this study in new areas of investigation, taking into account new cultural contexts. Second, a qualitative longitudinal study could be carried out to observe the changes in interviewees’ perceptions over time. Finally, it would be appropriate to investigate the impact of CBRS practices on project success through a quantitative study.

Funding: This study received no specific financial support.  
Competing Interests: The authors declare that they have no competing interests.
Acknowledgement: Both authors contributed equally to the conception and design of the study.

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