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School of Business | Department of Management and International Business | International Business | 2013
Thesis number: 13419
Pay knowledge as a motivator of performance - Case: Neste Oil Corporation
Author: Mikkonen, Juho
Title: Pay knowledge as a motivator of performance - Case: Neste Oil Corporation
Year: 2013  Language: eng
Department: Department of Management and International Business
Academic subject: International Business
Index terms: kansainväliset yhtiöt; international companies; työ; work; palkka; pay; tieto; knowledge; motivaatio; motivation; palkkiot; remuneration; tehokkuus; effectiveness; energiatalous; energy economy; öljy; oil; henkilöstöhallinto; personnel management
Pages: 143
Key terms: pay; palkka; pay knowledge; palkkatietämys; pay satisfaction; palkkatyytyväisyys; motivation; motivaatio; performance management; suoritusjohtaminen; effectiveness of pay; palkitsemisen tehokkuus
Understanding how much and what employees know about pay determination and pay-related processes can help organizations to improve pay satisfaction and its effectiveness as a motivator. Elevated pay knowledge has been found more effective than pay raises in motivating performance and promoting organizational commitment. Unlike previous survey-based pay knowledge studies covering multiple organizations with low contextualization, this single case study researches pay knowledge in the organizational context of Neste Oil Corporation. In addition to identifying the current state of pay knowledge and pay satisfaction in the case company, variance by background variables is studied and comparisons are made to the findings of previous studies.

This study builds on the "Pay knowledge in Finland" study (Moisio et al., 2012) as an intensive single case study focusing on one of the participating organizations. The results of a wide internet-mediated personnel survey conducted by Moisio et al. are complemented with data from Neste Oil annual personnel surveys and internal pay documents, as well as interactions with human resource professionals from the case company. The study aims at developing the understanding of the managerial implications pay knowledge has in a specific context.

Pay knowledge is found to vary significantly based on background variables. Base pay issues are generally rather poorly known at Neste Oil; however, employees understand performance-related issues well and performance-based incentives (bonus) excellently. Upper white-collars know performance and bonus issues significantly better than white-collars. Managers are found to know pay issues greatly better than non-managers. Neste Oil employees are slightly more satisfied with pay and its administration, bonus particularly, than Finns in other studied organizations.

To raise pay knowledge, organizations must ensure open and effective pay communication and increase employee engagement in pay processes. The use of appropriate pay information sources should be encouraged, and managers as important mediators of pay information should be trained. Perceptions of fairness and individual differences in motivators should be considered when pay decisions are made to make pay an effective motivator. Even if the study focuses on pay, it is suggested that a balanced set of intrinsic motivators and rewards should be provided to secure performance and motivation in the long term.
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