Incentive Pay Policies in Finnish Professional Hockey

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School of Business | Bachelor's thesis
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Research objective The purpose of this paper is to provide an explicit theoretical framework for the design and implementation of incentive pay based on the extensive earlier literature regarding the topic. Furthermore, the discussed frame of reference will be utilized to evaluate current incentive pay policies in the Finnish major hockey league, Liiga. Since no earlier research covering this specific topic exists, the aim for this study is as well to initiate further discussion concerning opportunities to enhance athletic performance through financial incentives which may eventually be indirectly reflected positively in financial performance as well. Data and methodology This paper can be described as a case study, which evaluates current incentive policies in Finnish professional hockey in relation to theoretical framework. Since no relevant previous data covering this specific topic exists, the latter part of this paper presents the results of a survey directed to 69 players in Liiga. To support these results, three executives working in Liiga organizations were interviewed to compose an extensive overview on the status quo regarding monetary incentives. Results The most effective incentives appear to derive from career development, while in contrast, the endogenous contract-based incentives form only a minor part of incentives. The absence of monetary incentives occurs mostly due tovery competitive labour markets, which forces organizations to increase base salaries while competing for desired recruitments. As a result, the guaranteed compensation comes closer, or in some cases may even exceed the estimated value of player contribution which results to declined willingness for organizations to offer monetary incentives on top of base salaries.
Thesis advisor
Mustonen, Mikko
Murto, Pauli
incentives, pay for performance, incentive pay, incentive pay design, sports economics, Finland
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