An empirical study of the reward preferences of South African employees

Abstract

Orientation: Adapting traditional reward systems to focus on employee preferences has become a necessity as companies strive to attract, motivate and retain a skilled and high performing workforce. Research purpose: The aim of the study was to identify certain categories of rewards that employees consider to be most important, including base pay, contingency pay, benefits, performance and career management, quality work environment, and work–home integration. The impact of these reward categories on an organisation’s ability to attract, motivate and retain employees was explored, together with the influence of demographic variables on reward preferences. Motivation for the study: There is much debate over whether reward packages should be tailor-made to suit individual employees. It has been argued that a ‘one-size-fits-all’ approach with regard to rewards is no longer effective. Research design, approach and method: A structured questionnaire, based on the total rewards model, was used to achieve the objectives of the study. A sample of 250 employees from 11 medium-sized to large-sized organisations participated in the study. Main findings: The results showed that base pay is deemed to be the most preferred reward component amongst respondents; however, they are most dissatisfied with the level at which this reward is provided by their current employers. Base pay is also the most important reward when attracting and retaining employees. Differences between reward preferences and demographic variables, including age, gender and job level, were found. Practical/managerial implications: Organisations should design their reward systems according to the preferences of their employees by focusing on base pay and contingency or variable pay. These rewards will also serve to retain them; although, to motivate employees, non-cash awards and recognition should be emphasised. Contribution/value-add: This study contributes to literature on reward preferences, which is lacking in a South African context. It also provides support for segmentation of rewards based on certain demographic variables.