During 2007-2010 significant dislocation occurred in the financial services sector with governments having to come to the aid of a large number of financial institutions. Throughout this crisis much political, media and practitioner interest was given to reward structures within the industry and, in particular, the proportion, or mix, of different rewards provided in overall compensation.
This thesis examines influences on the determination of reward mix in the UK financial services sector. Three theoretical perspectives are examined – agency, institutional and resource dependency – as potential explanations. Semi-structured interviews were conducted with reward executives from 30 financial services firms, alongside perspectives garnered from ten reward consultants.
These interviews identify the strength of institutional pressures on firms to conform to an agreed reward mix norm, largely driven by historical reward patterns and reinforced by strong employee expectations that they will receive this norm. However, firms are still seen to exercise strategic choice, influenced by the extent to which they have the desire and capability to resist institutional pressures. The research also identifies which firms are likely to differentiate their reward mix from that established in the sector. The findings provide a contribution to an under-researched area in a key sector of the economy. They present both an important account of the pressures facing reward mix determination in the financial services sector at this time, and a theoretically informed approach to understanding those pressures through the presentation of a unified theory of reward mix determination