Tying Employee Performance to a Reward System

The aim of this thesis was to develop a performance-contingent reward system for the commissioner company. The thesis examined factors influencing employee performance and motivation. The theoretical framework of the thesis consists of performance and reward management. The thesis was based on the assignment by the commissioner company to create a reward system in the company. The purpose for investigating employees’ opinions on both the performance appraisal process and employee rewards was to help reduce resistance and increase commitment to the performance-based reward system. Moreover, a successful reward management system can help attract and retain the best talent and motivate staff towards optimal performance. Case study was used as a research strategy of this thesis and the research approach was mixed as the questionnaire contained both closed questions which were analyzed through quantitative methods and open questions which were analyzed through qualitative methods. The data for this study was collected using an electronic survey to enquire on opinions from employees on the performance appraisal, motivation at work and different rewards. The results provide an insight into the respondents’ views on factors that influence work motivation and thus can help the company to incentivize good performance. According to the results of the research, the company employees agree on the performance assessment and believe it is fair to reward those who perform well according to the assessment. They find financial rewards motivating. The reward system was developed through a workshop based on the research results. The system focuses on transparency in the eligibility and rules to the rewards. When creating a reward system, it is important that the personnel understand the reasoning behind it and that they feel they are being fairly treated. Development of the system should be highlighting transparency, consistency, as well as taking and responding to feedback