Pay knowledge, pay satisfaction and employee commitment: evidence from Finnish profit‐sharing schemes

Abstract

Knowledge of the pay system has been identified as one of the key elements affecting the success of the reward system. In this paper, the aim is to study how communication, performance feedback and membership length are related to profit‐sharing knowledge, and how profit‐sharing knowledge is related to profit‐sharing satisfaction and organisational commitment. The data is collected from Finnish personnel funds, which are deferred profit‐sharing schemes. Survey data from over 753 employees in 30 companies in different sectors were used. In studying the antecedents of profit‐sharing knowledge, we found strong evidence that better profit‐sharing communication and higher membership length increase profit‐sharing knowledge. Furthermore, we find strong evidence that the relationship from profit‐sharing knowledge to commitment is mediated by profit‐sharing satisfaction. We discuss the implications for management.

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