Tangible Rewards for More Than Just Productivity: Examining Canadian Public Accounting Firms' Rewards Programs*

Abstract

Companies spend significant amounts of money on tangible rewards programs, even during the economic turmoil of the COVID‐19 pandemic. The prevalence, growth, and significance of these expenditures highlight the importance of understanding the purpose and use of these programs by organizations. Research on public accounting (PA) firms' compensation plans has focused on the balance between professional and commercial incentives in partner profit‐sharing schemes but has failed to examine the incentives for nonpartner audit professionals. However, it is exactly these professionals who do a substantial amount of work on audit engagements. This paper has three main purposes. First, we investigate the nature and composition of PA firms' tangible rewards programs and provide a detailed description. Second, we examine the use of firms' tangible rewards programs to provide evidence of what actions are being rewarded. We use Almer et al.'s (2005, Behavioral Research in Accounting 17: 1–22) framework, which presents dimensions of the auditors' professional contribution, and explores whether firms recognize these dimensions using tangible rewards. Third, we develop future research questions to help explore the use of tangible rewards in firms without structured output. We collect archival data on the use of tangible rewards from each of the Big 4 PA firms and three of the next four largest international accounting firms in Canada. We find that firms use their tangible rewards programs for “building a culture of recognition,” for performance incentives, and for employee and firm development, thus rewarding a broad set of measures beyond the incentive measures for hours worked.

Personality characteristics, preferences for rewards and the propensity to choose an auditing job

“…The multiplicity of rewards is also increasingly evident in the auditing industry. A recent study by Fiolleau et al (2023) shows that beyond monetary rewards for non-partners, audit firms leverage non-monetary rewards such as gift card-based and points-based schemes that are redeemable for merchandise, etc. These are implemented for various purposes, from performance incentives to employee recognition and business development.…”

“…Our study contributes to recruitment and compensation research in auditing. Prior research highlights that the rewards used to direct and motivate audit staff (non-partners) are largely unexplored (Burrows and Black, 1998; Coram and Robinson, 2016; Fiolleau et al. , 2023).…”

“…Our study contributes to recruitment and compensation research in auditing. Prior research highlights that the rewards used to direct and motivate audit staff (non-partners) are largely unexplored (Burrows and Black, 1998;Coram and Robinson, 2016;Fiolleau et al, 2023). The few studies in this regard show that the importance placed on various rewards is a function of auditors' career stage (Lynn et al, 1996;Miao et al, 2009).…”