eThesis - Kauppakorkeakoulun sähköiset gradut

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Objectives of the study:

Research problem of this study is to find answers to the question of how performance appraisal and payment determination processes can be combined as a process and as an IT-tool in SAP. This study also introduces how case company Kela have performed this combination. In addition, this study gives further information regarding whether the benchmarked companies are combining appraisal and payment determination processes, and what are their experiences regarding the combination / non-combination, as well as how their IT-tools support these processes.

Academic background and methodology:

Earlier literature introduced in this study provides background information to the topic, including support and criticism regarding should payment be linked to performance. Methodology of this research is a case study. In addition, this research has also elements of Action Design Research (Sein et al.,2011). Qualitative empirical study includes benchmarking of four companies. Scope of the benchmark study is companies who are utilizing SAP in performance appraisal or who have experience in combining the performance appraisal and payment determination processes.

Findings and conclusions:

There exists both support and criticism regarding should payment be linked to performance. Psychological and economic theories supporting the linkage of performance and payment imply that combining payment and performance would enhance the individual employees' performance. According to critics, payment is not the main motivator for employees, but job satisfaction can be derived from eg. responsibility, recognition or optimal amount of challenges. It seems that no single truth is available to the questions whether pay should be linked to performance. In addition, it seems that linking pay to performance in public sector is more challenging than in private sector. Within the benchmarked companies, there exists more support for keeping payment and performance as separate process, including separate discussions.