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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.

Using data collected from over 1,000 individuals in 30 Finnish personnel funds, we study the links between pay knowledge, pay satisfaction and pay effectiveness. We find consistent evidence that higher levels of pay knowledge are associated with improved pay satisfaction and perceived pay effectiveness at the organizational level. We find that pay knowledge has an independent impact on organizational outcomes, rather than being mediated through pay satisfaction. Finally, comparing measures of actual pay knowledge and perceived pay knowledge, we find that the measures of actual knowledge were better connected to the outcomes. This last result suggests that to reliably estimate the relationship between pay knowledge and pay effectiveness researchers should prefer measures of actual knowledge.

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We explain the special features of the Finnish profit‐sharing system and explore what outcomes this deferred plan has for the company under longitudinal conditions. We measure changes in employee attitudes, effects of the system, and, in particular, the changes in the employee's pay knowledge before and after the combination of a deferred profit‐sharing system with a cash‐based one. Statistical analyses are preceded by qualitative analyses of interview data to provide the reader with an understanding of the context. Even though the employees' pay knowledge has increased and they perceive that they get more feedback on company key ratios, there still is a need for human resource management and managers to provide training and enhance discussions on the pay system for both supervisors and subordinates. © 2010 Wiley Periodicals, Inc.