Executive Summary: In this Master’s Thesis, I aim to examine the correlation between the theory of reward prediction error and the elements in the compensation and benefit solution, that contributes to the motivation and retention of the employees. Motivation and retention are two major issues in Human Resource Management. It exists in all companies and there are many different aspects to examine, in the solution that offers the best results in order to motivate and retain your employees. Many researchers around the world have furthermore discussed it widely. I therefore thought it would be interesting to have this concept examined with some alternative and different theory, than just the regular motivation and retention theories. Therefore, I decided to discover whether there is a correlation between the theory of reward prediction error and the motivation and retention of employees. This thesis contains analysis of the motivational factors that influence the decision making of the individual. Furthermore, I have investigated which elements that makes up the most important part of the compensation and benefit solution for the employees. The theory of reward prediction error, is grounded in the classical conditioned reflexes theory by Ivan Pavlov. However, there is a distinction that defines the reward prediction errors. The essence of the theory is that motivation only occurs when the individual receives more than expected. This is relevant for everything, including compensation and benefits. Therefore, it is interesting to investigate whether this claim is valid in motivational theory, and how it can affect the motivation and retention strategies in the companies. The conclusion of this Thesis is that the companies must take the reward prediction errors in to consideration if they wish to be successful in their compensation and benefit solution. It is important to do the unexpected and to keep the employees motivated by constantly making benefit and compensation unexpected and keeping their interest and expectations towards the compensation and benefit at a high. If the companies manage to keep these conditions met, they are more likely to succeed with their compensation and benefit solution, in correlation with the reward prediction error.
|Educations||MSc in Human Resource Management, (Graduate Programme) Final Thesis|
|Number of pages||75|