Browsing by Subject "supervisor"

Supervisors’ role in implementing pay systems has become important part of pay systems that aim at supporting the strategy of the organization. This thesis studied supervisor’s role in implementing individual performance-based pay. The study focused on the processes by which supervisors can affect the functionality of a pay system. A pay system is well functioning when the employees and supervisors are satisfied with it and the effects are in line with the objectives for the system. Strategic pay is implemented through performance management processes where goals of the work are aligned with the strategy of the organization. The objective of the research was to create a structural model of the processes by which supervisors could improve the functionality of a pay system. The model is based on theories of knowledge of pay, meaning of pay and procedural justice. To test the model, six hypotheses were generated to study whether knowledge of pay, meaning of pay and procedural justice mediate the relations between supervisor’s role and activity and functionality of the pay system. The data for the study was collected with a survey (N=109) in one Finnish organization from the public sector. The data was analysed by structural equation modelling (LISREL 8.53). The results show that supervisors can improve the functionality of the pay system by performance management process, which is based on mutual trust and open communication. The role of the supervisor is to give feedback and tell how performance is connected to the pay raises. When this is done the pay system is experienced as meaningful, the employees are satisfied with it and it induces effects aspired. In addition, fair procedures in performance appraisal are important for employees to be satisfied with their pay. It is discussed whether power to make decisions and the responsibilities of the supervisors are in balance in this organization.