The Impact of Performance and Reward Management System on Employees' Motivation to Develop New Competencies - Case Herman IT

Abstract

This thesis is commissioned by Herman IT, the data centre services provider based in Kajaani, Finland. In the foreseeable future, the company is planning to establish the competency-based organizational model. This should be done in order to reinforce the culture of continuous learning in the corporation, where employees are responsible for taking the ownership of acquiring new competencies. However, employees of Herman IT may not be motivated to learn new competencies, and this results in the learning gap. The study aims to close the gap by creating a competency-based model linked to performance management. Thus, the research problem of the study is to explore whether a competency-linked performance and reward system will motivate the Herman IT's employees to develop new competencies.

The research is mainly based on the motivational theories, namely the MARS model, Goal-setting Theory, Need Theory and Expectancy Theory. Also, the study reveals the basic concepts of competency, performance management, reward system, the concept of motivation and learning organizational culture. The theoretical findings are systemized in a way relevant for the commissioning company.

The research is based on the quantitative method. The data collection method is the questionnaire, which was designed in the Digium Enterprise survey software. The answers were analysed in the SPSS software. According to the research findings, the competency-based organizational model is effective for reinforcing the learning culture in the organization.