How to incentivize your workforce: a theoretical and empirical analysis

The question of how to incentivize employees is a highly debated topic in the economic literature. While multiple theories have been evolved in the past 40 years about how to incentivize employees, empirical research remains scarce and is often based on case studies or narrow segments in the workforce. In this thesis, foundations are formed of how to incentivize workforces in general, taking into account that objective performance measures are often not available. Proxies are chosen in order to identify if there is an empirical relationship between these foundations and the financial performance of firms in the whole of Europe. Although the conclusion of this thesis is that there is no significant relationship between the foundations to incentivize workforces and the financial performance of firms in Europe, this thesis forms a basis of how empirical research can be done in order to exploit how to incentivize workforces in general.