|SpareBank 1 SMN, a regional bank consisting of 50 branches, recently decided to change
their compensation policy. That meant for the bank to discontinue its performance pay
scheme, and replace it with a new fixed pay scheme, namely a career model. The change
happened due to a general dissatisfaction amongst the management with the consequences of
using performance pay as a part of the compensation system, and it was in 2013 decided to
discontinue further use of it and instead implement a career model based on fixed pay.
This research was done using a qualitative method. In total, 17 interviews with employees
working at 3 different branches (Stjørdal, Malvik, and Meråker) were conducted. The aims
of the research was to find the employees’ perceptions and opinions concerning being
deprived performance pay, in addition to reveal possible multitask problems that could have
occurred due to the bank’s performance pay schemes.
The findings revealed that the perceptions of the most recent performance pay schemes
varied to a great extent. Performance pay seems to have motivated the majority of the
interviewees, but the thesis also proposes that employee loyalty, and the level of effort put
in, did not change significantly because of its discontinuation. However, the discontinuation