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UNlYfRSfT'r'--OF--JOHANNESBURG

THE RELATIONSHIP BETWEEN PERSONALITY TYPESAND REWARD PREFERENCES

By

Ronel Nienaber

Thesis

SUBMITTED IN FULFILMENT OF THE REQUIREMENTS

FOR THE DEGREE

Doctor of Commerce

IN

Leadership in Performance and Change

IN THE

Faculty of ManagementDepartment of Industrial Psychology and People Management

AT THE

University of Johannesburg

Promoter: Prof M H R BussinCo-promoter: Dr C Henn

July 2010

ACKNOWLEDGEMENTS

I would like to express my sincere gratitude to all those who contributed to

the completion of this thesis. I am particularly grateful to my promoter Prof

Mark Bussin and co-promoter Dr Carolina Henn for their continuous

support, guidance and feedback. Mark, thank you for being a wise and

supportive colleague and role model in the world of reward management.

My deepest gratitude goes to my family and friends for their continuous

encouragement, understanding and love despite my frequent mental and

physical absenteeism during the past three years. A special word of

thanks goes to my best friend, soul mate and husband: thank you for not

allowing me to give up and for always encouraging me to be more than

what I thought I was capable of. To our children, you are all incredibly

special - thank you for your ongoing interest and care during this study.

This study would have been particularly difficult if it was not for the kind

support of Prof Shirley Zinn, Prof Mark Bussin and the South African

Reward Association Executive committee, who agreed to the utilisation of

their respective client and employee distribution lists for purposes of

collecting data. Dr Jopie de Beer and Dr Nicola Taylor from JvR and

Associates: thank you for allowing me to use the MBTI® instrument for

purposes of this study and for your kind assistance in obtaining the data

from CPP.

Thank you also to my colleagues and friends at Nedbank, Sasol and

SARA who believed in me. I am especially indebted to Karen Booysen,

who assisted with the distribution and collection of questionnaires and for

always being prepared to assist in overcoming the software challenges.

To Surina Breedt and Petro van Niekerk, thank you for your assistance in

the administration of this document.

Annelie Harding, previously with STATKON, thank you for your

professional assistance.

Prof Riette Eiselen, thank you so much for your kind and willing

assistance in the professional review of the statisticalanalysis and for

your wise guidance.

Prof Craig MacKenzie, thank you for the comprehensive review and

professional editing of this document.

Thank you to all the respondents who wished to remain anonymous and

thus cannot be thanked personally.

This piece of work would not have been possible without the countless

blessings we receive from our God Almighty.

I dedicate this study to my late father, Hennie Greyling, who would have

been so incredibly proud of this moment.

ii

TABLE OF CONTENTS:

CHAPTER 1: INTRODUCTION...............•................................•.•.............•..•.•. 14

1. Introduction to the research problem '" , 14

1.1 Background to the study 16

1.1.1 Retention and engagement.. 16

1.1.2 Understanding employee preferences 17

1.1.3 Total rewards management.. 18

1.1.4 Workforce segmentation 19

1.2 Current levels of knowledge 2.1-

1.2.1 Determining reward preferences 22

1.2.2 The relationship between reward preferences and personality types 23

1.2.3 Personality type 25

1.2.4 Motivational theories 25

1.2.5 The total rewards framework 26

1.2.6 Employee Value Proposition ('EVP') 27

1.3 Research questions, constructs and design 28

1.4 Value-add of the research 29

1.5 Chapter layout 31

1.6 Conclusion 32

CHAPTER 2: LITERATURE REVIEW 33

2.1 Introduction 33

2.2 Personality Types and Traits 33

2.2.1 Cattell's personality theory 36

2.2.2 Eysenck's personality theory 38

2.2.3 The Five Factor Model of personality (FFM) 38

2.2.4 Jung's (1971) Type theory 39

2.2.5 Myers-Briggs Type Indicator® (MBTI®) 42

2.2.6 Interpreting the MBTI® Personality Type Code and Type Dynamics 47

2.2.7 Comparing the MBTI® with instruments developed by Cattell, Eysenck

and Costa and McCrae 50

2.3 The relationship between personality, culture, gender and earning

differentials or pay preferences 51

iv

2.4 Earnings differentials in a South African context 58

2.5 Measuring Personality and Individual Differences 60

2.6 Motivational Theories 61

2.6.1 Intrinsic and Extrinsic Motivation 64

2.6.2 Content theories 66

2.6.3 Process theories 74

2.6.4 Instrumentality theory 78

2.6.5 Additional perspectives on motivation 81

2.6.6 Organisational levers of motivation 83

2.6.7 The influence of rewards on the motivation levels of employees 85

2.7 Defining Total Rewards 88

2.7.1 Total rewards evolving 90

2.7.2 Strategic reward management 94

2.7.3 Total Rewards Models and Frameworks 100

2.7.4 Clustering total rewards categories 115

2.7.5 Components underlying the reward categories in total rewards models

and frameworks 117

2.7.6 Proposed theoretical total rewards framework 144

2.7.7 Total Rewards Statements 151

2.8 Employee Value Proposition (EVP) 153

2.9 Conclusion 158

CHAPTER 3: RESEARCH DESIGN 160

3.1 Introduction 160

3.2 Research objectives 160

3.2.1 Research questions 161

3.3 Research approach 161

3.3.1 Research design and variables 161

3.3.2 Measurement instruments 163

3.3.3 The Rewards Preferences Questionnaire '" 164

3.3.4 MBTI® assessments 172

3.4.1 Sampling methodologies 174

3.4.2 Sample size 175

3.4.3 Data-gathering methods 176

3.4.4 Response rate 177v

3.5 Validity and reliability of the measurement instruments 178

3.5.1 Validity and reliability of the Rewards Preferences Questionnaire 179

3.5.2 Validity and reliability of the MBTI® instrument.. 179

3.6 Data-capturing and preparation 180

3.7 Statistical analysis 182

3.7.1 Descriptive statistics 182

3.7.2 Factor analysis 182

3.7.3 Tests of homogeneity of variances 184

3.7.4 Analysis of variance (ANOVA) 184

3.7.5 T-Tests 184

3.7.6 Cronbach alpha (0) coefficient 185

3.7.7 Pearson correlation coefficient.. 185

3.8 Ethical issues and considerations 185

3.9 Conclusion 186

CHAPTER 4: RESEARCH RESULTS 187

4.1 Introduction 187

4.2 Analysis of data in response to primary research questions 187

4.3 Preferences for reward components as indicated in the Rewards

Preferences Questionnaire 191

4.4 Factor Analysis 196

4.5 Reward preferences in the empirical total rewards framework 208

4.6 Personality type distribution 212

4.6.1 Personality types and reward preferences 216

4.6.2 Personality preferences and reward preferences 218

4.6.3 Correlation between personality preferences and reward preferences 222

4.7 Rewards preferences for different demographic variables 224

4.7.1 Differences in reward preferences and gender types 224

4.7.2 Differences in reward preferences and race group 225

4.7.3 Differences in reward preferences and age groups 226

4.7.4 Differences in reward preferences for respondents with or without

children 228

4.7.5 Differences in reward preferences and highest educational qualification ...

............................................................................................... 228

vi

4.7.6 Differences in reward preferences and completed years of service with

current employer 231

4.7.7 Differences in reward preferences and marital status 233

4.7.8 Differences in reward preferences and job level 233

4.8 Preferences for theoretical reward categories 237

4.9 Attraction, retention and motivation of employees 240

4.10 Conclusion 241

CHAPTER 5: DISCUSSION AND INTERPRETATION.................•..........•.... 242

5.1 Introduction 242

5.2 Key literature and empirical findings 242

5.2.1 The impact of personality and motivation on reward preferences 246

5.2.2 Designing a total rewards framework 249

5.3 The influence of personality type on reward preferences 250

5.3.1 The influence of personality preferences on reward preferences 257

5.3.2 The correlation between personality preferences and preferences for

reward categories 263

5.3.3 Comparing the theoretical and the empirical total rewards frameworks264

5.3.4 The influence of demographic variables on reward preferences 269

5.3.5 The total rewards preferences framework 276

5.4 Conclusion 280

CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS 282

6.1 Introduction ' 282

6.2 Motivation for the study, aims and contributions 282

6.3 Value-add in terms of practice and theory 287

6.4 Suggestions for future research 288

6.5 Strengths and limitations of this study 290

6.6 Conclusions 291

Alphabetical List of References: 296

Appendix 1: Rewards Preferences Questionnaire 323

Appendix 2: MBTI® Form GRV questionnaire 334

Appendix 3: Glossary of terms 335

Appendix 4: Declaration of intent: Ethics in research 343

Appendix 5: Characteristics frequently associated with each Myers Briggs

Type® 344vii

Appendix 6: The extraverted and introverted mental functions associated with

each Myers Briggs Type® 346

Appendix 7: MBTI® Temperament Characteristics 347

viii

LIST OF TABLES:Table 1: Cattell's 16PF factors 37

Table 2: Jung's cognitive styles 41

Table 3: Characteristics of personality preferences 44

Table 4: MBTI® 16 personality types in the Type table ; 46

Table 5: MBTI® 16 personality types in the Type table 49

Table 6: Comparison of content motivational theories, personal needs and

transactional rewards 73

Table 7: CLC total rewards framework 103

Table 8: Armstrong and Thompson's model to total rewards 104

Table 9: Armstrong and Brown's total rewards model 105

Table 10: A clustered view of different financial and non-financial reward

categories 116

Table 11: Differentiating between workplace quality and work/home

integration programmes 134

Table 12: Proposed categories and components of the theoretical total

rewards framework 150

Table 13: Analysis of responses received and used 187

Table 14: Demographic profile of respondents 188

Table 15: Frequencies for responses in terms of Section 2(a) 193

Table 16: Frequencies for responses in terms of Section 2(b) 195

Table 17: Initial eigenvalues on First-Order Factor Analysis 197

Table 18: First-order factor analysis: Factor matrix 198

Table 19: Eigenvalues on second-order factor analysis 201

Table 20: Pattern matrix for second-order factor analysis 202

Table 21: Factors extracted on the second-order factor analysis 203

Table 22: Item statistics: Factor 1 - A conducive working environment 204

Table 23: Item statistics: Factor 2 - Remuneration and benefits 205

Table 24: Descriptive statistics for reward categories 206

Table 25: Categories and components in the empirical total rewards

framework 209

Table 26: Distribution of personality type (N =589) 213

Table 27: Test of homogeneity of variances 215

Table 28: Two-way ANOVA statistics 216

ix

Table 29: Summary Results of Multiple Comparisons using Post hoc tests 217

Table 30: Reward preferences for personality preferences E and 1.. 219

Table 31: Reward preferences for personality preferences Sand N 220

Table 32: Reward preferences for personality preferences T and F 221

Table 33: Reward preferences for personality preferences J and P 222

Table 34: Correlation between reward categories and personality preferences

.................................................................................................................... 223

Table 35: Differences in reward preferences between gender groups 224

Table 36: Differences in reward preferences and race groups 225

Table 37: Differences in reward preferences between age groups 226

Table 38: Post hoc (Scheffe) test results on significant mean differences in

reward preferences between age groups 227

Table 39: Differences in reward preferences for respondents with or without

children 228

Table 40: Differences in reward preferences for respondents with different

levels of educational qualifications 229

Table 41: Post hoc (Scheffe) test results on significant differences in reward

preferences between respondents with different levels of educational

qualifications 230

Table 42: Reward preferences for respondents with varied years of service

with their current employer 231

Table 43: Post hoc (Scheffe) test results on significant reward preference

mean differences by respondents with varied tenure with their current

employer 232

Table 44: Differences in reward preferences for respondents with different

marital status 233

Table 45: Differences in reward preferences and job leveL 234

Table 46: Post hoc (Scheffe) results on significant different preferences for

reward categories by respondents in different job levels 235

Table 47: Rankings for Theoretical Reward Categories 238

Table 48: Theoretical versus Empirical total rewards frameworks 264

Table 49: Descriptions for reward categories in the new total rewards

framework 268

Table 50: The Total Rewards Preferences Framework 277x

LIST OF FIGURES:

Figure 1: Research constructs 29

Figure 2: Tensions in pay 87

Figure 3: Strategic rewards management activities 96

Figure 4: Linking business strategy and strategic rewards management.. 97

Figure 5: Processes, components and stakeholders impacted by the

organisational reward strategy 99

Figure 6: WorldatWork's total rewards rnodel., 101

Figure 7: Towers Perrin's model of total rewards 106

Figure 8: Zingheim and Schuster's total rewards model. 107

Figure 9: Mercer Human Resources model of total rewards 108

Figure 10: B&Q's total rewards framework 109

Figure 11: Illustration of a flex fund 110

Figure 12: Menu of options under a flex fund 111

Figure 13: Integrating contemporary theories of motivation 112

Figure 14: Categories of the theoretical total rewards framework 148

Figure 15: Driving employee engagement.. 157

Figure 16: Research design framework 162

Figure 17: Distribution of item responses for two factors 207

Figure 18: Mean plot on personality types' preferences for reward categories

.................................................................................................................... 215

Figure 19: Impact of rewards on attraction, retention and motivation 240

Figure 20: Variables affecting reward preferences 279

xi

ABSTRACT

THE RELATIONSHIP BETWEEN PERSONALITY TYPES AND

REWARD PREFERENCES

By

Ronsl Nienaber

Promoter: Prof MHR Bussin

Co-Promoter: Dr C Henn

Department: Department of Industrial Psychology and People

Management

Faculty of Management

University of Johannesburg

Degree: D Comm (Leadership in Performance and Change)

Date: 17July2010

The aim of the study

Against the background of the continuously increasing need of

employers to attract and retain key employees and the utilisation of the

rewards offering in this process, the aim of this study was firstly to

determine the relationship between personality types and reward

preferences. In addition, the relationship between different reward

categories and underlying reward components in a total rewards

framework was identified, the relationships between identified

demographic variables and reward preferences were confirmed and the

1

reward categories that contribute most to the attraction, retention and

motivation of employees were identified.

Four main research constructs have been identified for this study,

indicated as follows:

Constructs 1 and 2 Construct 3 Construct 4

Personalitytypes and

preferences~ ~(1)

Influence Total rewards Total rewardframework (3) Enhances strategy and

Motivational EVP (4)theories (2)

Figure 1: Research constructs

From the research constructs it can be seen that personality types,

personality preferences and motivational theories influence the design of

a total rewards framework, which, in tum, enhances the total rewards

strategy and employee value proposition (EVP) of an organisation.

Literature review

The world we live in is in a constant state of flux. The literature abounds

with factors impacting on organisations that require change and

adaptation from employers. Some of these issues include inter alia the

changing demographics of the workforce and employees' attitudes

towards their employers (Hankin, 2005a; Linkow, 2006; Tulgan, 2003),

the potential impact of generational theory, life stages and the ageing

workforce in the workplace (Giancola, 2008) and the increasing shortage

of talent worldwide despite the slow-down in Western economies

(Corporate Leadership Council, 2008; Deloitte, 2004). The history of

apartheid in South Africa created a racial segmentation in the labour2

market that contributed significantly to disparities in earnings between

employees in different race groups. Job reservation for white males and

a comparatively lower level of skills training for black employees left a

legacy of significant pay differentials between different race and gender

groups, referred to as the apartheid wage gap. The apartheid labour

practices have also resulted in a labour market situation where there are

racially and gender based skills shortages (Horwitz, Browning, Jain &

Steenkamp, 2002).

As a result of the labour shortage, skilled employees are in a position

where they deliberately choose who they want to work for and for how

long (Herman & Gioia, 2000; Kaliprasad, 2006); they are also no longer

restricted by traditional borders (Berger & Berger, 2004). In fact Claus

(2007, p. 11) states that "employees do not work for organisations

anymore, they work for themselves". The workplace is becoming very

complex for employers to manage and the talent shortage exacerbates

the complexity.

It has been found that flexible total rewards offerings enhance efforts to

attract and retain key skills. Furthermore, when employee preferences

are taken into consideration, performance levels are optimised, as

employees are motivated to perform better (Bergmann & Scarpello,

2001). Reward systems can therefore be very powerful in the motivation

of employees but only if they are aligned with the needs and preferences

of employees (Herman & Gioia, 2000). Total rewards are defined as the

combination of all types of rewards, including financial and non-financial,

direct and indirect, intrinsic and extrinsic, that are made available to

employees (Armstrong, 2006). The design of a total rewards model or

framework is derived from the overall rewards philosophy, the people

strategy and the key strategic business drivers. Organisational values,

cost considerations and competitive market norms are additional

considerations (Menefee & Murphy, 2004). A well-designed total rewards

model or framework can improve employee commitment and

engagement and employee retention, and can assist in the reinforcement3

of organisational values and culture, thereby enhancing employee

motivation and improving the organisation itself (Accel-team, 2007).

A theoretical total rewards framework was developed from the

information collected by studying total rewards models and frameworks

that are being used by organisations and consulting houses. This formed

the foundation of the quantitative part of the study.

It is impractical for most large employers with standard enterprise-wide

human resources technology systems to craft reward offerings in

accordance with unique individual preferences, as this would be too

onerous to administer. Employee segmentation can be used as an

alternative. In this study, the following employee segments were

identified:

• Personality types and personality preferences

• Demographic groups segmented in terms of age, race, gender,

marital status, job level, number of children, educational

qualification and years of service with the current employer.

Personality type and personality. preferences are briefly defined as

follows:

• Personality preferences refer to the eight Jungian functions

reflecting opposite pairs of personality preferences (also referred

to as dichotomies) a combination of which forms an individual's

MBTI® personality type. The personality preferences also formed

the foundation for the MBTI® Step " facet scales that are

associated with a deeper understanding of each of the preference

dichotomies (Hartzler, McAlpine & Haas, 2005; Myers, 1998).

• Personality type refers to a combination of personality preferences

describing typical personality patterns in order to enhance

4

people's understanding of behaviour and their appreciation of

differences between people (Myers, 1998).

People are unique individuals and MBTI® types and preferences are

only indicative of the multifaceted, complex personalities of people.

Individual preferences provide insight into everyday, surface behaviour

that indicates deeper underlying patterns of mental functions and

preferences.

The literature study revealed that a range of financial and non-financial,

tangible and intangible rewards motivate employees. In addition,

personality influences which financial and non-financial rewards motivate

people. At the heart of this range of factors lies the employer-employee

relationship, where the reward preferences of employees and the reward

philosophy of the employer should align and where the total reward

framework (that forms part of the employee value proposition) aims to

encapsulate these important factors to create an attractive rewards

offering to current and prospective employees. Rewards are critical to an

organisation's EVP, which furthermore influences the attraction, retention

and motivation of employees (Giancola, 2008) on a broader spectrum

than only total rewards,

The empirical study

The aim of the study was to find empirical responses to the research

questions stated. The research design was quantitative and exploratory

relational. The research variables were defined as follows:

a) The independent variables were the employees' personality types,

preferences and temperaments as defined by the MBTI® instrument;

b) The dependent variables were the reward components that formed

part of the total rewards framework and that were identified through

5

the literature review - for example, base salary, incentives, benefits,

relationships with colleagues;

c) The influence of the demographic variables such as age, gender,

marital status and job level on reward preferences was also

measured.

Two measurement instruments were used. Through the literature review

a theoretical total rewards framework was designed consisting of a

number of different reward components and reward categories. From the

theoretical total rewards framework, the Rewards Preferences

Questionnaire was developed. In order to identify personality types and

personality preferences, the Myers-Briggs Type Indicator® (MBTI®)

Form GRV (global research version) was used. The MBTI® instrument is

one of the most popular and widely used personality assessments

globally used (CPP, 2008). It was important for the execution of the

study to be able to map the personality type of respondents (who

completed the respective surveys anonymously) with their stated

rewards preferences as indicated in the Rewards Preferences

Questionnaire.

The draft Rewards Preferences Questionnaire was sent to a pilot group

and finalised after incorporation of the suggested amendments. The

sample frame consisted of 5,000 potential respondents extracted from

the client list of 21st Century Business and Pay Solutions, one of the

largest consulting houses in the southern hemisphere; the member list of

the South African Reward Association, a non-profit South African-based

association aimed at promoting and developing the reward profession,

and Nedbank Group Ltd employees, based at its head office buildings in

Sandton, Johannesburg.

The two web-based questionnaires, namely the Rewards Preferences

Questionnaire and the MBTI® form GRV, were distributed

simultaneously to the respondents in electronic format. Although 894

completed Rewards Preferences Questionnaires and 787 Form GRV6

questionnaires were returned, the MBTI® personality types of only 589

of the respondents, could be matched to their responses on the Rewards

Preferences Questionnaire and used for the subsequent statistical

analysis. The reason for the large number of responses that could not be

matched (Le. the personality type from the MBTI® could not be

successfully matched with the reward preferences on the Rewards

Preferences Questionnaire) was the different passwords that were used

on the two surveys. Although the use of same passwords for both

questionnaires formed part of the instructions, this was not always being

done. As the passwords for the remaining completed Reward

Preferences Questionnaires did not match the MBTI® Form GRV

responses, these responses were discarded as the rewards preference

data could not be used for this study without a personality type attached

to the preferences.

In the first factor analysis, eight factors were extracted. However, due to

the large number of items that loaded high ratings on more than one

factor and the number of factors that loaded with only one item, a

second-order factor analysis was conducted. Two factors were extracted

from the second-order factor analysis which explained 60.6% of the

variances. Thirty items were included under the two factors. Good

reliability scores Were reported on both factors.

The following table shows the personality types that had statistically

significant different preferences for different reward categories.

7

Table 1: Statistically significant differences in preferences forreward categories between different personality types

r-~'--'-'---~-~"-.,.-_.,,"~ ._,--,-.--,._--,------_.,-_.- r, ;

! Whole 4 i MeanReward ! letter type iWhole 4 letter Difference

Category'" (I) type (J) (I-J) Sig.

,ESTJ 0.708 0.000

,INFP 0.860 0.000

.INTP 0.794 0.000ESFP

1 ISTJ 0.701 0.000

'ISFJ 0.660 0.031

INTJ 0.728 0.032

ESFJ INFP 0.733 0.027

INTP 1.045 0.001

ESFJ ISTJ 0.783 0.013

INFJ 0.956 0.012

2 INTP 1.131 0.000

ESFP ENTP 0.853 0.029

ISTJ 0.868 0.006

INFJ 1.042 0.006

*Reward category 1 - a conducive working environmentReward category"2"": remuneration and benefits

Table 1 indicates that for both reward categories, statistically significant

mean preference differences between some of the personality types

were observed. Statistically significant mean preference differences

between personality preferences in respect of the reward categories,

were also observed. Table 2 provides the data that supports these

results.

8

Table 2: Statistically significant mean differences betweenpersonality preferences and reward preferences

Personality preferences

Reward E -I S-N T-F J-Pcategories*

1. E (5.627) - T (5.414) -and I (5.328) and F

(5.572)2. E (4.521) S (4.449) T (4.256) -

and I (4.225) and N and F(4.254) (4.570)

Notes:Reward category 1: A conducive workingenvironmentReward category 2: Remuneration and benefits

There were statistically significant mean differences between

respondents with a preference for Extraversion versus Introversion in

respect of both reward categories. In both reward categories, the

respondents with a preference for Extraversion had a higher composite

mean preference score than the respondents with a preference for

Introversion. No statistically significant mean differences were observed

between personality preferences Judging and Perceiving in respect of

the two reward categories.

The reward preferences of respondents in accordance with different

demographic variables, were investigated and analysed. Table 3

presents a synopsis of these results.

9

Table 3: Summarised statistically significant mean differencesobserved in terms of reward preferences indicated by differentdemographic groups

Demographic groups

Reward Gender Race Age Educational Tenure Job level

categories qualification

*Respon-

dents with

0-2 years

had a

higher

Womenpreferen-

1 Black The older cethan The moreindicated

respondents the respon- those with senior thehigher

indicateda dents, the 3-6 job level, thepreferen-

higher lower the years' lower thecefor

preference prefe- service for prefe-renceboth

for both renee for reward for bothreward

reward cate- both cate- category 1 rewardcate-

goriesgories gories categories

The higher the

qualifications

2 the lower the

preferencefor

I reward

category 2

Note: Reward category 1: A conducive working environmentReward category 2: Remuneration and benefits

No statistically significant mean differences were observed in the reward

preferences of respondents with no children, one or more than one child.

Similarly, marital status did not significantly influence reward

preferences.

10

Strengths and limitations of the study

Strengths and limitations of this study were identified and outlined. The

Cronbach Alpha results measured on the Rewards Preferences

Questionnaire items and subsequent factors extracted confirmed the

reliability of the instrument. Due to the possibility that the data could be

skewed towards the views of people working within large corporate

environments, generalisation of results beyond corporate environments

(for example government sector) should be done with the required

caution.

Recommendations and contributions of the study

The following outcomes were obtained from this study:

a) The reward preferences for people with preferences for different

personality types and personality preferences were observed;

b) The significantly different reward preferences indicated by different

personality types and different personality preferences were

observed;

c) Through factor analysis, two reward categories were identified, with

underlying reward components, that formed the basis of the empirical

total rewards framework;

d) The critical importance of non-financial rewards to employees was

confirmed through the data analysis that confirmed that the non­

financial reward category a conducive working environment generally

attracted higher mean preference scores than the reward category

remuneration and benefits, indicating the relative importance thereof

to the respondents.

e) The influence of demographic variables on reward preferences was

established, confirming the need to differentiate in the reward offering

(and the leadership and management style) between people in

11

different demographic segments (for example race, gender, age,

position in the organisation); and

f) The reward categories (extracted from the theoretical total rewards

framework) that play the most important role in the attraction,

retention and motivation of employees were identified.

The critical role of the line manager has once again been emphasised

through this study. Line managers need to understand what motivates

employees in their teams, whether intrinsically or extrinsically, and create

reward offerings that address these motivational and other reward

preferences.

The study was undertaken to provide insight into the reward preferences

of employees within the South African corporate environment. Limited

previous research in this field could be identified and the results provide

support for the need to differentiate in the reward offering between

different employees, either in terms of their unique individual preferences

(if this is administratively possible) or in terms of the reward preferences

for certain employee segments.

Recommendations for future research were made.

12

"The process of addressing total rewards begins by balancing the

organisation's business strategy, capabilities and values with

employees' needs, abilities and values. It ends with assembling and

marketing a compelling rewards package that will attract, motivate

and retain people you need for organisational success. With the right

rewards strategy and programs in place, the organisation can

reasonably expect two interrelated outcomes: improved business

results and a positive shift in employee behaviour and contributions"

(Anne Ruddy, WorldatWork, 2007, p. 1).

13

CHAPTER 1: INTRODUCTION

1. Introduction to the research problem

The world we live in is in a constant state of flux. The literature abounds

with factors impacting on organisations that require continuous change

and adaptation from employers. These issues include the changing

demographics of the workforce and employees' attitudes towards their

employers (Hankin, 2005a; Linkow, 2006; Tulgan, 2003), the potential

impact of generational theory on the workplace, life stages and the

ageing workforce (Giancola, 2008) and the increasing shortage of talent

worldwide despite the slow-down in Western economies (Corporate

Leadership Council, 2008; Deloitte, 2004).

In the current period of labour shortage, skilled employees are in a

position where they deliberately choose who they want to work for and

for how long (Herman & Gioia, 2000; Kaliprasad, 2006), and they are no

longer restricted by traditional borders (Berger & Berger, 2004). In fact

Claus (2007, p. 11) states that "employees do not work for organisations

anymore, they workfor themselves". The workplace is becoming very

complex for employers to manage and the talent shortage exacerbates

the complexity.

The global talent shortage is also affecting South Africa. In the

September 2007 Financial Service Employment Index (Gray, 2007) it is

reported that financial services companies in London are searching for

South African professionals who are in high demand because of the

quality of their education, work ethic and the similarity between the

business cultures of the two countries. These programmes have a

negative effect on the skills available in South Africa. Kaliprasad (2006)

states that South African organisations have an even greater need for

retaining skilled employees, as they have to overcome the compound

14

effect of the apartheid legacy (which limited skills development,

education and training to a racial minority) and simultaneous loss of skills

through emigration. In addition, the HIV/AIDS pandemic may well cause

a shift in the South African population dynamic, adding to the already

complex South African work environment (Noumbissi & Zuberi, 2001).

The history of apartheid in South Africa created a racial segmentation in

the labour market that contributed significantly to disparities in earnings

between employees in different race groups. Job reservation for white

males and a comparatively lower level of skills training for black

employees left a legacy of significant pay differentials between different

race and gender groups, referred to as the apartheid wage gap. The

apartheid labour practices have also resulted in a labour market situation

where there are racially and gender based skills shortages (Horwitz,

Browning, Jain & Steenkamp, 2002). The ability to attract and retain key

skills in this working environment is therefore critical. It has been found

that flexible reward offerings enhance efforts to attract and retain key

skills (Wright cited in Corby, Palmer & Lindop, 2009). However, to craft a

compelling flexible rewards offer, the preferences of employees should

be taken into consideration (Deloitte, 2004).

Against the backdrop of the continuously increasing need of employers

to attract and retain key employees and the utilisation of the rewards

offering in this process, this study aims to extend existing knowledge on

the reward preferences of employees. As it is often impractical for large

employers to accommodate individual reward preferences in the

structuring of the offering, an alternative approach is to craft reward

offerings for different employee segments. This study therefore analyses

the reward preferences indicated for different personality types,

personality preferences and identified demographic groups that

constitute different employee segments.

The purpose of this chapter is to outline the background to the research,

to provide a high level summary of the current level of knowledge on the

research topic and to introduce the research constructs and questions.15

An overview of the research design will also be provided. This chapter

concludes with a description of the value-add of the research and the

chapter layout.

1.1 Background to the study .

The global shortage of key skills (CLC, 2008), the changing needs of

employees (Claus, 2007; Grant Thornton, 2008) and the worldwide trend

of moving towards more flexible employment practices (Abboud, 2007)

stage the background to this study. This section aims to provide the

introduction and background to the rationale for this study and provide

the reasons why the results of this study should be useful for employers

in enhancing their efforts to attract and retain key employees.

1.1.1 Retention and engagement

Worldwide there has been an increase in competition for highly skilled

employees, as they positively contribute to sustainable financial success

(Olson, Van Bever & Verry, 2008). Employers realise that the core asset

of the modern business enterprise does not lie in buildings and in

investments, but in the intelligence, skills and experience of employees

(Manville & Ober Cited in Harvard Business Review, 2003). The

attraction and retention of employees was in fact cited as the key priority

for Human Resources professionals in 2004 and continued to be at the

end of 2008 (Frank, Finnegan & Taylor, 2004; Giancola, 2008a).

Retention is critical for employers, as it influences expenses on two

levels, namely directly through staff turnover expenses (for example

recruitment costs, lost productivity costs, training and development costs,

lost opportunity costs) and indirectly through engagement (CLC, 2004).

Employees who are unhappy at work and planning to leave are less

engaged. Engagement is defined by Frank et al. (2004) as additional

sustained effort in the form of time, willingness to succeed, brainpower

16

and energy. The lack of engagement is estimated to cost the British

economy £37,5bn per annum, with less than one in four employees fully

engaged (Masarech, 2008). In the Watson Wyatt 2008/2009 Work USA

report (2008), it is confirmed that in organisations where employees are

highly engaged, productivity improves by 26%, total shareholder return is

13% greater than in competitor organisations and these organisations

are more likely to attract and retain talented employees.

Giancola (2007) states that the drivers of engagement include

remuneration, work/life benefits, performance, recognition, development

and career opportunities. These components also form part of what is

defined as total rewards. Retention, engagement and remuneration are

therefore closely linked constructs that contribute directly and indirectly

to organisational performance (Gebauer, 2009; Schaufeli & Enzmann,

1998). It is therefore critical for employers to have an understanding of

the relationship between these constructs.

1.1.2 Understanding employee preferences

Responding to today's workplace demands means, among other things,

that organisations need to understand the preferences and needs of

employees and offer more than just a good pay cheque (Linkow, 2006).

There are many rewards other than pay and the relative importance of

pay compared to other types of rewards should be considered by

management (Murlis, 1996). Grant Thornton (2008) indicates that

employees seek more meaningful and challenging opportunities, an

alignment between personal and organisational values as well as

tolerance for individual preferences and differences. Yet Armstrong

(2006) indicates that most employers do not have high levels of

sensitivity towards the preferences and needs of their employees, nor do

they differentiate between different types of rewards. This is mainly for

convenience and ease, claims the Accel-team (2007).

17

Employees, especially those with key skills, are becoming more

demanding and require organisations to make exceptions on the basis of

their individual preferences and needs (Herman & Gioia, 2000).

Kaliprasad (2006) confirms that when management actively listens to the

preferences and needs of employees, this results in higher levels of

motivation and engagement.

1.1.3 Total rewards management

One way in which employers can respond to the changing preferences,

needs and attitudes of employees is through a holistic, integrated and

business-aligned approach to reward management. Such an approach

includes all financial and non-financial, direct and indirect components of

rewards offered to employees in exchange for their competence, service

and time. The total rewards strategy flows from the organisation's

business and human resources strategies, and therefore aligns with the

organisational goals. However, for the strategy to be effective, it should

also consider employee preferences (Armstrong & Thompson, 2002). It

appears that limited empirical research has been done to date on reward

preferences and thus a study focusing specifically on this matter will add

value to organisations wishing to make more informed decisions on

reward structuring, when reward preferences are taken into

consideration.

A total rewards framework could allow for the design of flexible reward

profiles in accordance with reward preferences in terms of an individual

or workforce segmentation approach. For example, in recognition of

superior performance, employees in a certain age group may prefer to

attend an international conference instead of receiving five extra days'

leave, or a 10% reduction in salary in return for working five hours less

per week (for example working 4% days instead of 5 full days). Such an

inclusive, flexible approach to employee rewards, by offering an

integrated range of tangible and intangible rewards, increases employee

18

engagement levels, strengthens the employee value proposition and is a

win-win situation for the employer and the employee (Abboud, 2007;

Armstrong & Brown, 2006; Armstrong & Thompson, 2002; Cable &

Judge, 1993).

1.1.4 Workforce segmentation

Although total flexibility in reward offerings may sound appealing to many

employees, the reality is that for many large and medium-sized

organisations it is either impractical or even impossible to administer

thousands of different reward profiles on the basis of unique individual

preferences. The administration and governance burden would be too

onerous. A way of overcoming this difficulty is to segment the workforce.

Workforce segmentation stems from marketing methodologies where

customers are segmented in order to develop more effective marketing

strategies (Du Toit, Erasmus & Strydom, 2007).

A total rewards framework incorporates all financial and non-financial,

intrinsic and extrinsic types of rewards that are offered to employees or

employee segments, in terms of their reward preferences (Armstrong,

2006). There area number of different ways in which the workforce can

be segmented. Examples of segmentation include generation, gender,

age, family size, income, occupation, religion or educational level (Du

Tolt et aI., 2007). The identified reward preferences for different

employee groupings can assist employers to design and offer total

rewards frameworks that have maximum impact at no additional, or even

lower, cost (Gross & Edelsten, 2006; Harris & Clements, 2007).

Little evidence of previous research on the relationship between reward

preferences and personality types, personality preferences and

demographic variables respectively has been found and therefore a

study aimed at analysing this relationship is well justified.

19

1.1.4.1 Segmenting by personality type

Personality is considered to be formed as a result of a combination of

hereditary (genetic) and environmental factors, moderated by situational

conditions (Robbins, Odendaal & Roodt, 2003). Personality has a big

impact on how people are motivated (Murphy, 2008), which in tum

influences the direction, intensity and persistence of behaviour (Weiten,

1992). Managers have for many years been trying to understand what

factors motivate employees, as motivation directly influences individual

performance, which consequently contributes to organisational

performance (Du Toit et aI., 2007). The quest to understand and

influence motivation has partly resulted in the number and variety of

incentive schemes designed over the past number of years (Fumham,

2003).

People work for different reasons, including the need for extrinsic and

intrinsic rewards, social interaction, status or rank (Steers & Porter,

1991). Motivational theories examine the process of motivation and

purport to explain the behaviours of people and also the factors that drive

motivation levels. There is an abundance of different motivational

theories, each dealing with a subset of motivational factors (Steel &

Konig, 2006). It is important for managers to understand what motivates

and influences the behaviours of employees in order to create a working

environment and employment offerings that will encourage optimal levels

of motivation, performance and retention (Pfeffer, 1982). If personality

influences motivation levels, and levels of motivation are partly

influenced by the work environment and types of rewards offered in the

workplace (Miner, 2005), it is important for managers to understand more

about the personalities of their employees.

Personality is typically described in terms of traits or types. Personality

traits are characteristics exhibited in a large number of situations and are

used to describe people's behaviour in different situations (Robbins et

20

aI., 2003). Traits are relatively stable and enduring aspects of individuals

that distinguish them from other people (Martin, 2005).

Type theory identifies a number of types of personality that are linked to

descriptions of a combination of various traits and personality

preferences (Linder, 2000). Personality types, in terms of Jungian theory

(1971), refer to the mental functions involved in gathering information

and making decisions on the basis of this information (Kroeger &

Thuesen, 1988).

The Myers-Briggs Type® Indicator (MBTI)1 is a psychological instrument

that provides information about Jungian-based personality types. The

Myers-Briggs Type® assessment is one of the most popular and widely

used personality assessments in business and educational settings, with

more than two million instruments used each year by individuals and

organisations, including 89 of the Fortune 100 companies (CPP, 2008;

DuBrin, 2005; Reinhold, 2008).

The MBTI® instrument is not an assessment of mental health,

intelligence or deficiencies but is intended for self-discovery of one's

motives, behaviours and interactions with others. This instrument is used

to determine personality type in order to address the primary research

questions.

1.2 Current levels of knowledge

This section provides a brief overview of the extant literature on the

research constructs as well as the areas where limited empirical data is

available and hence supports the rationale for this study.

1 MBT/, Myers-Briggs, and Myers-Briggs Type Indicator. and the MBT/logo aretrademarks or registered trademark of the Myers-Briggs Type Indicator Trust in theUSA and other countries.

21

1.2.1 Determining reward preferences

People's thoughts and attitudes about rewards (type and quantity)

underlie most of their related behaviours (Linder, 2000). Behaviour is

furthermore influenced by personality, stage of life, ethnicity and social

class (Giancola, 2008), among other things.

To analyse and understand the relationships between reward

preferences (which could influence attitudes and behaviours) and

personality types and personality preferences (which influence

behaviour), reward preferences need to be identified, demographic data

has to be collected and analysed and personality types and preferences

need to be confirmed.

There is paucity of empirical research on the efficacy of different

components of the total rewards framework for different segments of

people. The Corporate Leadership Council (CLC) conducted a study in

2002 (CLC, 2002a) where employee preferences for the attributes of the

employee value proposition model (as stated by the CLC) were

identified. These attributes are similar to what are included in Armstrong

and Thompson's (2002) definition of total rewards. Remuneration and

benefits were, as a collective, ranked as the most important attribute.

Then came development and the work environment, followed by work/life

balance and, lastly, company environment. Evidence from this study

confirms that employees have different reward preferences, that different

categories of the rewards framework has different value for employees

and ultimately that understanding and meeting employee preferences

drive commitment, engagement and retention (CLC, 2002a; Lawler,

2000).

A different study on reward preferences was undertaken by Gunkel

(2006). The focus of the study was to determine reward preferences of

22

employees working for the same organisation but located in China,

Japan, USA and Germany respectively. The results reflected distinct

differences in reward preferences and reward motivators among

employees in the different countries. Gunkel's (2006) findings are

corroborated by Rehu, Lusk and Wolff (2006) who found that inter alia

pure monetary rewards are less desired in countries with high tax rates

and that monetary rewards complemented by non-financial rewards are

far preferred by employees.

These studies illustrate the differences in reward preferences and

motivators of employees working in different geographic locations. The

results support research initially conducted by Hofstede (Chiang, 2005;

Gunkel, 2006; Hofstede, 1980), who proposed that reward practices

should be tailored according to cultural differences to increase their

motivational effectiveness. The research results were supported by

MacGrain Herkenhoff (2000), who suggests that national cultural

differences could indeed be seen as an asset when used to improve the

effectiveness of reward systems. Although Hofstede's theories are

contradicted by Milkovich and Bloom (as cited in Reynolds, 2001), who

believe that culture is relatively unimportant as it could lead to

stereotyping, they do support the view that organisations should use

flexibility in their reward practices to tailor the reward system to fit the

context in which it competes within a framework of corporate principles.

The findings of these studies therefore support the need for differentiated

reward offerings in international locations.

1.2.2 The relationship between reward preferences and personality

types

Limited literature is available on the relationship between personality and

rewards, but some research has been conducted on the relationship

between personality traits and rewards preferences or the role of

rewards in the working environment. Gray's theory (1973) postulates that

extraverts are more indined to be motivated by money, where introverts23

are more motivated by fear of punishment (Fumham, 2003). The

motivating effect of reward and punishment are however not mutually

exclusive, as elements of both drive motivation for different types of

people. Furnham (2003) states that the implication of Gray's theory for

organisational incentives (performance-driven rewards, .promotions) or

disincentives (disciplinary actions) is that these incentives will not have

the same impact on all people. The relationship between the personality

trait conscientiousness and rewards was researched and it was found

that conscientious people are more sensitive to comparative inequality in

reward systems and that equity is preferred over equality (Furnham,

2003).

Bowles, Gintis and Osborne (2001) report the results from a longitudinal

study that confirmed that individual differences in personality traits

account for substantial differences in earnings. The traits aggression and

withdrawal both indicate a negative relationship with wages.

Furthermore, in high status jobs, women confront significantly greater

penalties than men for having aggressive personalities. For men,

aggression is highly rewarded in high-status occupations. This pattern is

different for the trait withdrawal: women in high-status occupations are

rewarded for withdrawal, while men are heavily penalised. The

differences between male and female earnings have been well

researched and reports indicate that differences in earnings are not

necessarily gender-related, but are rather a function of differences in

personality traits, gender role orientation or occupational choices

(Bartlett, Grant & Miller, 1990; Fortin, 2008; Judge & Livingstone, 2008;

Muller & Plug, 2005).

Although research has been conducted on similar or related constructs

such as personality traits, gender-related rewards or rewards that act as

motivators, limited evidence could be found of empirical research that

aims to specifically understand the relationship between personality

types and reward preferences. This lack of research is surprising given

the universal importance of money and the role that rewards play in the24

attraction and retention of employees. Previous research on similar or

related constructs was conducted mostly in North American or European

locations, and confirmed the relationship between culture, gender and

personality traits and reward preferences or earnings levels.

1.2.3 Personality type

Individual differences are embraced in the psychological construct of

personality. Personality eludes precise definition and many writers have

attempted to define the construct. One common view is that personality

is considered to represent those personal characteristics that result in

consistent patterns of behaviour (Martin, 2005). Personality types are a

combination of a number of different personality traits (Linder, 2000). The

personality types identified by Jung led to the design of the Myers-Briggs

Type Indicator® by Katherine Myers (later joined by her daughter Isabel

Myers-Briggs). MBTI® theory posits that each person is a unique

individual, that his or her personality type is an important element in his

or her individuality and that his or her behaviour is influenced by his or

her personality type (Bayne, 2004).

Personality and motivation therefore go hand in hand. Different

personalities are motivated by different drives (Steel & Konig, 2006). As

personality has an impact on how people are motivated it is also relevant

to obtain an understanding of what motivates people to perform optimally

(Murphy, 2008). This information will be used to inform the different

categories of the total rewards framework.

1.2.4 Motivational theories

Motivation is widely described and refers holistically to an internal desire

to satisfy a need that energises, directs and sustains behaviour for a

certain amount of time, towards a particular goal (Steers & Porter, 1991;

Weiten, 1992). When this definition is read, it appears that motivation

25

can only be influenced from within an individual. However, according to

Stein (2007), motivation in the workplace originates not only from within

an individual, but also from beyond, namely the work environment.

Motivational theories highlight the complexity of human behaviour.

Over many years, a number of different motivational theories have been

developed. The theories and principles developed by researchers have

considerable appeal to many people; however, the prevailing view in the

academic literature is that there is limited empirical evidence to support

all the theories, in all types of circumstances and for all types of people

and cultures (Lawler, 2000; Martin, 2005). The importance of these

theories in understanding individual behaviour should not be

underestimated though, as "a theory need not be perfect to make a

valuable contribution" (Gerhart & Rynes, 2003, p. 53). The challenge for

employers is to design reward practices in such a manner that

employees are optimally motivated, for business goals to be achieved

and for employees to be retained. An improved understanding of these

motivational factors can also lead to a more engaged and emotionally

connected workforce (Du Toit et aI., 2007).

1.2.5 The total rewards framework

The total rewards model or framework evolves from an organisation's

reward strategy and is defined as the combination of all types of rewards,

namely financial and non-financial, as well as intrinsic and extrinsic

rewards that are made available to employees. Total rewards combine

what is referred to as transactional rewards (tangible rewards including

pay and benefits) and relational rewards (referring to intangible rewards

for example learning and development, recognition and status;

challenging work) (Armstrong, 2006; Milkovich & Newman, 1999).

For most organisations the cost associated with salaries, incentives,

benefits and perks is the largest expense on their income statement,

varying from 50% to 65% (Gerhart & Rynes, 2003; Milkovich & Newman,26

1999). Yet most organisations offer the same reward package to all

employees without differentiating according to individual preferences

(Menefee & Murphy, 2004). This means that organisations are offering

benefits, perks, incentives and other types of rewards to employees and

potentially receive limited return on their investment, as the offering may

not align with employees' specific preferences (Grant Thornton, 2008).

Employee reward preferences are important considerations in designing

the total reward strategy and the total rewards framework or model

(Harris & Clements, 2007; Menefee & Murphy, 2004). Corsello (2006)

states that the total rewards model positively influences the

organisation's Employee Value Proposition and builds the organisation's

reputation as an Employer of Choice for current and prospective

employees.

1.2.6 Employee Value Proposition ('EVP')

The terms EVP and total rewards are often used interchangeably. The

EVP refers to the total employment experience that employees

experience in terms of their relationship with an organisation, and is a

broader construct than total rewards (CLC, 2007a). Considering however

that total rewards are' a critical component of the EVP, any change to the

rewards model will be driven from the total rewards strategy and directly

impact the EVP (Giancola, 2008; Kaliprasad, 2006).

Organisations need to be creative in addressing the unique reward

preferences and reward related needs of their employees. Countering

different reward preferences with more cash may just end in an ever­

increasing spiral of increased remuneration costs. A comprehensive total

rewards model or framework addresses the reward preferences and

requirements of different employee segments (Linkow, 2006).

27

1.3 Research questions, constructs and design

The purpose of this research is to find empirical answers to the following

research questions:

The primary research question is:

What is the relationship between personality types and personality

preferences as defined by the MBTI® instrument, and reward

preferences?

The secondary research questions are:

a) What is the relationship between the reward categories and

underlying reward components of the total rewards framework?

b) What influence do the demographic variables have on reward

preferences?

c) What categories of the theoretical total rewards framework contribute

to the attraction, retention and motivation of employees?

Four main constructs have been identified and are depicted in Figure 1.

28

Constructs 1 and 2 Construct 3 Construct 4

Personalitytypes and .. ..

preferences(1)

Influence Total rewards Enhances Total rewardframework (3) strategy and

Motivational EVP (4)

theories (2)

Figure 1: Research constructs

The literature review in Chapter Two describes the respective research

constructs and uncovers the inter-relatedness between these constructs.

The research design is quantitative and exploratory relational. The

sampling frame consisted of 5,000 people extracted from the client listing

of 21st Century Business & Pay Solutions, one of the largest reward

consulting practices in the southern hemisphere; the member list of the

South African Reward Associations, a non-profit South African based

association aimed at promoting and developing the reward profession,

and Nedbank Group Ltd employees employed at its head office buildings

in Sandton, Johannesburg. The measuring instruments consist of a

Rewards Preferences Questionnaire (Appendix 1) and the web-based

MBTI® Form GRV (global research version) questionnaire (refer to

Appendix 2).

1.4 Value-add of the research

It was envisaged that the following information would be obtained

through this research study:

29

a) a deeper understanding of the relationship between personality types

and personality preferences as defined by the MBTI® instrument and

reward preferences;

b) enhanced insight into the influence of different demographic

variables, for example race, gender, educational qualification, job

level on reward preferences;

c) the design of a total rewards framework consisting of financial, non­

financial, intrinsic and extrinsic reward components that includes an

analysis of which rewards would be most preferred by different

segments of people. The rewards framework will aid organisations to

build a more attractive employee value proposition and enhance their

ability to attract, retain and motivate employees; and

d) empirical results indicating which reward categories included in the

theoretical total rewards model mostly contribute to the attraction,

retention and motivation of employees.

Segmenting the workforce for purposes of reward management on the

basis of different demographic factors and particularly personality types

and personality preferences is novel and likely to enhance organisations'

employee value propositions. Organisations with stronger EVPs are

viewed as more attractive employers for current and prospective

employees (Gross & Edelsten, 2006).

Empirical evidence will confirm the reward preferences of employee

segments as well as the theoretical reward categories which play the

most important role in attracting, retaining and motivating employees.

Although the research results are not intended to present a total solution

to the retention and attraction issues that organisations face, it is hoped

that they will make a positive contribution to managing rewards more

optimally, effectively and cost-effectively in a challenging work

environment. In addition, research results will also add to existing levels

of knowledge on reward preferences, and more specifically how these

relate to personality types, personality preferences and demographic

variables such as race, gender and job levels.30

"Organisations that choose to respond to the unique needs of their

employees by offering flexible reward models will be in a more

favourable position to attract, retain and motivate the best employees. In

addition, productivity and engagement levels will be positively influenced"

(Hay Group, 2002, p. 5).

1.5 Chapter layout

The study is structured as follows:

Chapter One is an introduction to the research and primarily has an

orientation function.

Chapter Two contains the literature review. A literature review can be

defined as a sharp, precise, systematic study of existing literature

concerning a specific problem (Smith, 1993). Chapter Two focuses on

the individual research constructs, namely personality type and

preferences, motivational theories, the total rewards framework and the

employee value proposition. The constructs are described in terms of

literature studied and the inter-relationships between the research

constructs are identified and conceptualised. The review covers a

diverse range of literature, including books, academic journals,

unpublished and published research reports, professional subject matter

journals and research articles from the databases of the University of

Johannesburg.

Chapter Three defines the quantitative research design and

methodology followed in collecting the empirical data to address the

research questions.

Chapter Four describes the results of the empirical study and provides a

statistical analysis of the quantitative data collected in relation to the

variables. Preliminary findings are also noted.31

Chapter Five provides an interpretation of the results of the quantitative

research. The results are contextualised in terms of the primary and

secondary research questions.

Chapter Six is a summary of the study, with concluding remarks on the

research findings and the research limitations. It also contains

suggestions regarding future fields of study which could be embarked on

as a result of this research.

1.6 Conclusion

Different degrees of emphasis are placed on rewards and other work­

related benefits. Better alignment between the rewards framework and

rewards preferences will contribute to better employee effectiveness,

levels of engagement and an increase in the value of the reward offering

(CLC, 1999b; Gerhart & Rynes, 2003). In addition, the organisation's

EVP and employer brand are strengthened, and this enhances retention

efforts (Hankin, 2005b).

This chapter provides a high-level executive summary of the rationale for

the study, which is primarily motivated by employers' needs for more

attractive employee value propositions, of which total rewards are part, to

attract, retain and motivate key employees and to increase levels of

engagement, which leads to improved profitability. The next chapter

provides a review of the literature to ascertain the current level of

knowledge on each of the research constructs, to understand the

interdependencies between the research constructs and to design a total

rewards framework from the information collected.

"One cares about the preferences of those with whom one interacts in

part because these preferences affect not only the degree of conflict in

the interaction, but also the effectiveness of the incentives that one may

deploy ... n (Bowles et al., 2001, p. 1).

32

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

The primary purpose of this study is to investigate the relationship

between personality types, personality preferences and reward

preferences. As part of this process, the reward preferences of

respondents will be determined, and this will inform the development of a

total rewards framework. This chapter covers the literature pertaining to

the respective research constructs and aims to illustrate the relationships

between the research constructs identified. The literature review also

provides input into the total rewards framework used in the quantitative

part of the study.

The review of the literature commences with a study of the personality

types, temperaments and personality preferences classified in terms of

Jungian theory and formalised in the Myers Briggs Type Indicator®.

Behaviour is influenced inter alia by personality and motivators. To

understand how behaviour can be optimally influenced, motivational

theories are outlined. Different total rewards models and frameworks

available in the workplace are studied, leading to the development of a

total rewards framework. Finally, an overview is presented of the role of

total rewards in an organisation's employee value proposition.

2.2 Personality Types and Traits

Most managers are concerned about how to motivate the people who

report to them (Fumham, 2003). The literature abounds with research

that confirms that well-motivated employees are more productive and

engaged and that the inverse is also true (Aceel-team, 2007; Mkhehlane,

2008; Schaufeli & Enzmann, 1998).

33

•

Different personalities are motivated by different drivers (Murphy, 2008).

Personality eludes precise definition, as it cannot be directly observed,

and many writers have attempted to define personality (Martin, 2005).

One of the most frequently cited definitions of personality was produced

by Allport (1937, p. 48), who states that personality is "the dynamic

organisation within the individual of those psychophysical systems that

determine his unique adjustments to his environment." The APA (n.d.)

defines personality at a high level as individual differences in typical

patterns of thinking, feeling and behaving. The more detailed description

refers to the configuration of characteristics and behaviour that

comprises an individual's unique adjustment to life, including major traits,

interests, drives, values, self-concept, abilities and emotional patterns

(VandenBos, 2007). Although there is no single definition of personality

that are accepted by all theorists, one common view is that personality is

considered to represent those personal characteristics that result in

consistent patterns of behaviour and the way behaviour is organised and

coordinated when a person interacts with the environment (Armstrong,

2006).

The construct personality has been studied in a number of different

ways, with the two major approaches being nomothetic and idiographic

theories. Nomothetic theories study personalities of groups of people in

general in order to identify universal characteristics and general

principles that explain behaviour. These theories assume that the genetic

determinants of personality are the most significant. Within the

idiographic perspective, personality is largely a function of the dynamic

interaction between the individual and the environment within which a

person lives. The focus is on understanding uniqueness in what the

individual experiences (Martin, 2005). The idiographic approach is also

referred to as the clinical approach (Moller, 1995). For purposes of this

study, the focus is on personality type and personality preference

assessment in terms of the nomothetic theory.

34

A number of theories about psychology have been developed by

prominent psychologists such as Eysenck, Cattell, Erikson, Freud, Kelly

and Kohler. Personality theories are typically sorted into trait theories,

behavioural theories and psychoanalytic or humanistic theories. As the

focus of this study is to understand the relationship between personality

types (vis-a-vis personality traits) as measured by the MBTI® instrument

(based on Jung's theory (1971», and reward preferences, personality

theory per se has not been analysed or attended to in detail. Trait

theories are focused on identifying and measuring individual personality

characteristics. The trait concept of personality can be defined as the

relatively stable and enduring aspects of individuals that distinguish them

from other people (Martin, 2005). Traits therefore refer to the consistent

patterns in the way individuals behave, feel and think and can be used to

summarise, predict and attempt to explain behaviour (Taylor, 2010).

Some of the well-known trait theorists are Allport, Cattell and Eysenck

(Allport, 1937; Cattell, Eber & Tatsuoka, 1970, Eysenck & Eysenck,

1975).

Type theory identifies a number of types of personality which are linked

to the descriptions of a combination of various traits and preferences.

The underlying assumption of type and trait theories is that these

characteristics are relatively stable and therefore predictors of future

behaviour (Hodson, 2001). Pearman and Albritton (1997) warn against

the exclusive use of personality type to predict behaviour, as there are a

number of other factors, such as age, gender, education, life

experiences, and inborn dispositions such as intelligence, that also

influence behaviour and should be taken into consideration in the

analysis of personality type and behaviour in general.

The MBTI® instrument is specifically used for determining the

relationship between personality type, personality preferences and

reward preferences. This information will enhance the existing body of

knowledge regarding reward preferences as well as the typical

descriptors of personality types and personality preferences and more35

specifically what the reward preferences are for these personality types

and personality preferences According to Allport (1962), personality

types and traits are used to consider the commonalities and

comparabilities across individuals, while the unique individuality of

people is still borne in mind. Demographic variables contribute to the

unique individuality of people, and as they could potentially influence

reward preferences they are also investigated with a view to expanding

the existing body of knowledge on reward preferences for different

demographic groups.

2.2.1 Cattell's personality theory

Raymond Cattell is well known for his work in the fields of personality,

intelligence and motivation. Cattell's major contribution to the field of

psychology is his work on defining sixteen lower-order personality traits

that were identified through factor analysis. He also developed the

Sixteen Personality Factor Questionnaire, an assessment instrument

known as the 16PF, which is still widely in use today (Cattell, 2009).

Table 1 provides the sixteen factors that form Cattell's personality theory

and the foundation for the assessment instrument.

36

Table 1: Cattell's 16PF factors(Martin, 2005, p. 132 - Reproduced from 16PF 5th edition administratorsmanual by special permission from the publishers)

+-+-Scale of measurement runs from 1 - 10....-+....-+

Factor Left meaning Right meaning

Warmth Reserved, impersonal, Warm, outgoing, attentivedistant to others

Reasoning Concrete AbstractEmotional stability Reactive, emotionally Emotionally stable,

changeable adaptive, matureDominance Deferential, cooperative, Dominant, forceful,

avoids conflict assertiveLiveliness Serious, restrained, careful Lively, animated,

spontaneousRule-consciousness Expedient, non-conforming Rule-conscious, dutifulSocial Boldness Shy, threat-sensitive, timid Socially bold,

venturesome, thick-skinnedSensitivity Utilitarian, objective, Sensitive, aesthetic,

unsentimental sentimentalVigilance Trusting, unsuspecting, Vigilant, suspicious,

accepting sceptical, waryAbstractedness Grounded, practical, Abstracted, imaginative,

solution-oriented idea-orientedPrivateness Forthright, genuine, artless Private, discreet, non-

disclosingApprehension Self-assured, unworried, Apprehensive, self-

complacent doubtinq, worriedOpenness to change Traditional, attached to Open to change,

familiar experirnentinqSelf-reliance Group-oriented, affiliative Self-reliant, solitary,

individualisticPerfectionism Tolerates disorder, Perfectionistic, organised,

unexactinq, flexible self-disciplinedTension Relaxed, placid, patient Tense, high energy,

impatient, driven

The sixteen personality traits determined by Cattell have been found to

be mostly constant sources of behaviour and that behaviour can be

predicted in specific situations by assessing prevalence for the specific

traits (Robbins et aI., 2003).

37

2.2.2 Eysenck's personality theory

Eysenck developed his model of personality based mostly on psycho­

physiology. His theory is described in terms of three higher-order factor

(super factor) or orthogonal dimensions, namely Extraversion (the

tendency to enjoy pleasure through social interaction with others),

Neuroticism (the tendency. to experience negative emotions) and

Psychoticism (the tendency to be reckless, have disregard for common

sense and inappropriate emotional expressions), commonly referred to

as the P-E-N model of personality. Originally, Eysenck theorised about

only the two factors neuroticism and extraversion, but later realised that

psychoticism was also a contributing factor to personality and added this

dimension to his model (Eysenck & Eysenck, 1975). One of the strengths

of Eysenck's model is the provision of a theory based on the causes of

personality.

2.2.3 The Five Factor Model of personality (FFM)

Cattell's and Eysenck's theories have been the subject of extensive

research, with some theorists being led to believe that Cattell focused on

too many traits while Eysenck focused on too few (Cherry, 2009). As a

result, a new trait theory called the five factor model of personality (FFM),

also referred to as the "Big Five", was developed in the 1990s from a

factor analysis that was conducted on a number of completed personality

questionnaires. The five factors that were identified were extraversion,

agreeableness, conscientiousness, neuroticism and openness. The Five

Factor model was extended to define these factors on a scale, with

extreme opposites indicating the following personality traits (Armstrong,

2006; Costa & McCrae, 1985).

38

'.

a) neuroticism or instability versus stability: anxiety, depression,

hostility, self-consciousness, impulsiveness, vulnerability and

measured on a scale from calm, composed and poised versus

worrying, uncertain and insecure;

b) extraversion versus introversion: warm, gregarious, assertive,

activity and excitement-seeking, positive emotions and measured

on a scale of reserved, reticent to affectionate, sociable and

adventurous;

c) openness to experience versus conforming: flexible, imaginative,

original, independent, creative, daring versus rigid, conventional,

conforming, non-creative and timid;

d) agreeableness versus antagonism: trust, straightforwardness,

altruism, compliance, modesty, tender-mindedness are typical

descriptors that are measured on a scale of ruthless, hostile and

spiteful to soft-hearted and cooperative;

e) conscientiousness versus un-directedness: competence, order,

dutifulness, achievement striving, self-discipline and deliberation,

measured on a scale of negligent or disorganised to conscientious.

In summary, there is agreement among researchers that individuals differ

on broad dispositions and traits. Trait theorists agree on certain high level

principles but adopt different approaches in terms of the number of triats

studied and the methodology followed.

2.2.4 Jung's (1971) Type theory

Personality type for purposes of this study is considered in terms of

Jung's theory (1971, originally published in 1923) and the method of

assessment directly associated with this theory being the MBTI®

instrument. Jung concluded that differences in behaviour result from

people's inborn tendencies to use their minds in different ways.

According to him, many of the differences are apparent in behaviour and

are attributable to basic differences in the deployment of mental

processes. As people act on tendencies, they develop predictable39

patterns of behaviour. In terms of Jung's theory, people differ

systematically in what they perceive and in how they reach conclusions.

It is reasonable for them to differ correspondingly in their interests,

reactions, values, motivations and skills (Jung, 1971; McCaulley, 1998).

Personality influences individuals' cognitive styles, the mental processes

used to perceive and make judgements from information. Jung (1971)

stated that the manner in which people gather and evaluate information,

determines their cognitive style. The meaning of the word preference

used in this typology is illustrated through the use of hands. Although

most people have two hands, they have a specific preference to use the

one hand over the other. A preference is typically where an individual

feels more comfortable in a way of behaving (Bayne, 2004). People

therefore have the ability to behave in different ways but have a

preference for a specific way of behaving.

Jung (1971) further reasons that there are certain dimensions of

psychological functioning, namely:

a) Relating to other people: Introverted versus Extraverted: Introverts

are oriented towards the inner world of ideas and feelings, while

extraverts are oriented towards the outer world of people and objects.

These two constructs refer to where individuals receive their energy

from and how they distribute energy. This description is in contrast

with the more familiar definition of extraversion, which refers to

gregarious behaviour, and introversion, which refers to withdrawn and

shy behaviour (Pearman & Albritton, 1997).

b) Use information to make decisions: Thinking versus Feeling: Thinkers

prefer to make decisions logically based on facts and figures and

cause and effect analysis. Feelers base decisions on more subjective

information influenced by personal values and relational impact.

c) Gathering information: Sensing versus iNtuition: Sensing individuals

prefer to concentrate on the details and have a preference for using

sensory data through the use of the five senses. Intuitive individuals40

prefer to focus on broader, big picture issues and have a preference

for recognising relational, abstract data through intuition (Armstrong,

2006; CPP, 2008; DuBrin, 2005; Myers, 1998).

Jung believes that every individual develops a dominant type early on in

life, which remains dominant, although it can change over time (Millner,

2008). Jung attributes typical characteristics, information processing and

work preferences to the different cognitive or mental styles (which are a

combination of some of the preferences), as shown in Table 2:

Table 2: Jung's cognitive styles(Martin, 2005, p. 140)

Sensing/ iNtuition Sensing/Feeling iNtuition/Feeling

Thinking /Thinking (SF) (NF)

(ST) (NT)

Prefers Facts Possibilities Facts Possibilities

Personality Pragmatic, Logical, but Sympathetic, Energetic,

down to ingenious sociable insightful

earth

Work Technical Theoretical Providing help and Understanding and

preferences skills problem services to others communicating

solving with others

Physician, Scientist, Sales person, Artist, writer,

accountant, corporate social worker, entertainer

computer planner, psychologist

programmer mathematician

The language used in the descriptors and the practical application of the

typology as indicated in Table 2 make it a popular methodology in the

workplace (Pearman & Albritton, 1997). In terms of Jung's theory, people

may be expected over time to develop a greater skill with the processes

they prefer to use. For example, if people prefer extraversion, they are

likely to be more effective in dealing with social relations around them

than with their inner world of concepts and ideas. On the other hand, if a41

'.

person prefers introversion, then he or she is more likely to be in tune

with his or her inner world of possibilities, concepts and ideas (Martin,

2009). Jung regarded Extraversion and Introversion as mutually

complementary attitudes that generate a tension that is importance for

the maintenance of society and individuals (McCaulley, 1998).

2.2.5 Myers-Briggs Type Indicator® (MBTI®)

The psychological types identified by Jung led to further research and

ultimately the design of the MBTI® instrument of personality typology by

Katherine Myers and Isabel Myers-Briggs. According to Martin (2009),

personality type is more than simply the four basic personality

preferences: it is a dynamic and complex interrelated system of

personality that forms a part of a lifelong development process. The

MBTI® instrument is based on Jung's theories of perceptions and

judgement and the way in which these dimensions are used in the

mental processes of different types of people. The aim of the MBTI® is

to identify, on a self-reporting basis, four personality preferences so that

these preferences, singly or in combination as a personality type, can be

used to understand human differences (Myers et aI., 1998).

The MBTI® instrument is one of the most popular and widely used

personality assessments (CPP, 2008; Reinhold, 2008). The MBTI®

instrument has applications in diagnosing organisational issues,

teamwork (particularly quality systems), communication, counselling,

careers, strategic thinking, performance appraisal, leadership and stress

management (Geyer, 2008). Since its inception in 1942, the MBTI®

instrument has been continuously developed and refined to enhance

validity and reliability, to stay aligned with the changing social desirability

of items and to delete differential weightings used for women and men

(Myers, McCaulley, Quenk & Hammer, 1998).

In Myers's research of Jung's theories, she concludes that there are four

ways in which people differ from each other. These differences are42

"

labelled preferences. The preferences are independent of each other

and are not set on a continuum. The model is based on the theory that

people have access to the skills associated with the different personality

preferences, but prefers to act according to their preferred type (Bayne,

2004).

The four polar dimensions of Extraversion (E) and Introversion (I),

Sensing (5) and Intuition (N), Thinking (T) and Feeling (F) and Judging

(J) and Perceiving (P) make up a psychological typology. Different

combinations of the mental processes form the foundation underpinning

the MBTI® types indicating a combination of personality preferences.

The fourth dimension used in the MBTI® instrument "orientation to the

external world" (Thinkers and Feelers) assessed through

judging/perceiving was not originally part of the Jung model and was

later added by Katherine Briggs and Isabel Briggs-Myers. Thinkers prefer

to make decisions logically based on facts and figures and cause and

effect analysis. Feelers base decisions on more subjective information

based on personal values and relational impact (Myers, 1998). These

two dimensions are mostly used in the context of the original four

dimensions (Martin, 2005; Pearman & Albritton, 1997).

Table 3 provides the shortened descriptions of the characteristics of the

eight different personality preferences, of which a combination of four

forms a person's personality type (Myers, 1998; Reinhold, 2008):

43

Table 3: Characteristics of personality preferences

Extraversion (E):

o Act first, think or reflect later

o Need interaction with the

o Prefer one:one communication and

relationships

o Like silence to concentrate

o Enjoy focusing on a project or a task

o Learn new tasks by reading, reflecting

Introversion (I):

o Think/reflect first, then act

outside 0 Require regular "private time" to

recharge

by the 0 Motivated internally and develop ideas

internally, mind is sometimes "closed"

to the outer world

world and people

Open to and motivated

outside world

Enjoy wide variety, change in

relationships and action

Learn new tasks by talking and doing

Develop ideas through discussion

o

o

o

o

Sensing (5):

o Mentally live in the "now", focus on

immediate issues

o Create practical and realistic

solutions

o Memory recall is rich in detail of facts

and past events

o Improvise from past experience and

draw on their own and others'

experience

o Prefer dear and concrete information

o Build to conclusions by collecting

facts

Intuitive (N):

o Mentally live in the future, attending to

future possibilities

o Use imagination and create/invent

new possibilities

o Memory recall emphasises patterns,

contexts and connections

o Improvise from theoretical

understanding and enjoys solving

new, complex problems

o Comfortable with ambiguous data

o Start with big picture and fill in the

facts over time

o Follow their inspiration

o Provide connections and meaning

o Prefer change and new ways of doing

things

44

Thinking (T):

o Instinctively search for facts and

logic before decisions are made

o Naturally notice tasks and work to be

accomplished

o Easily able to provide an objective

and critical analysis

o Accept conflict as a part of natural

and normal relationships

o Want mutual respect and fairness

among colleagues

o Are firm-minded, can give criticism

when appropriate

o Apply principles consistently

Judging (J):

o Plan details in advance before

moving to action

o Focus on task related actions;

complete meaningful segments

before progressing

o Work best and avoid stress when

keeping ahead of deadlines

o Use targets, dates and standard

routines to manage life

o Reach closure by deciding quickly

Feeling (F):

o Instinctively employ personal feelings,

personal values and impact on people

in decision situations

o Naturally sensitive to the needs of

people and seek harmony

o Seek consensus, are empathetic and

prefer to accommodate - hence tend

to follow popular opinions

o Unsettled by conflict

o Apply values consistently

Perceiving (P):

o Plan on the go - comfortable to move

into action without a plan, flexible

o Enjoys mUlti-tasking, variety, mix work,

and play, feel restricted by structure

and schedules and focus on enjoying

the process

o Tolerant of time pressure; work best

close to deadlines and under pressure

o Avoid commitments which interfere

with flexibility, freedom and variety

o Spontaneous

Sixteen possible combinations of the personality preferences in Table 3

form 'types' and are indicated by a combination of the four letters of the

preferences (Hartzler et aI., 2005). The four-letter type formula is a

shorthand way of describing the order in which a person prefers to use

the mental functions. The 16 different types are illustrated in Table 4 in

typical Type table format (Martin, 1997; McCaulley, 1998; Myers &

Myers, 1995).

45

Table 4: MBTI® 16 personality types in the Type table

Introvert

Extravert

Sensing Types Intuitive Types

Thinking Feeling Feeling Thinking

-ST- -SF- -NF- -NT-

I-J ISTJ ISFJ INFJ INTJ

I-P ISTP ISFP INFP INTP

E-P ESTP ESFP ENFP ENTP

E-J ESTJ ESFJ ENFJ ENTJ

The layout of the different MBTI® personality types as done in Table 4 is

what is referred to as the Type table and the most common manner in

which the personality types are positioned. It is a device that enables

viewing of all the types in relation to each other. The types are arranged

in such a way that those types in specific areas of the Type table have

certain preferences in common and hence share whatever qualities arise

from those preferences (Myers, 1998). Appendix 5 contains a synopsis

of characteristics that are frequently associated with each type that

confirms that the sixteen types are measurably different from each other.

Although the MBTI®was designed to sort individual preferences into one

of sixteen preferred type categories, the mechanism for doing so is via

the determination of preferences for eight personality preferences

depicted on continuous scales. These scales allow the MBTI® to be

used for the assessment of both traits and types (Myers et aI., 1998).

The underlying assumptions of the MBTI® instrument are that true

individual preferences exist, that individuals self-report their preferences,

that the preferences are dichotomised on two different poles which are

each equally valuable and the combination of preferences leads to the

characteristics of the sixteen different personality types (Sieff, 2005).

46

The MBTI® instrument is different from other psychometric

assessments, as it does not evaluate mental health and thus results are

never considered to be bad, unhealthy or undesirable. This is

accomplished by identifying specific patterns of preferences and not by

measuring the degree of a specific trait. The MBTI® instrument does not

compare results to those of other people, nor does it evaluate people by

comparing them to norm groups or standards. It allows people to self­

report on their preferences and the process also offers people the

opportunity to validate the results (Myers-Briggs Foundation, 2008).

In the current study, the MBTI® instrument was purely used for the

identification of the respondents' personality type in order to

operationalise the research questions and no research was conducted

on the psychometric properties of the instrument per se.

2.2.6 Interpreting the MBTI® Personality Type Code and Type Dynamics

In order to fully understand the relationship between the different MBTI®

types and reward preferences, the typology must be fully described.

Type theory suggests that as people cannot access all mental functions

and attitudes at the same time, they use and are mostly aware of mental

functions in a particular order. The middle two letters of the personality

type code refer to what is called the mental function (Sensing, iNtuition,

Thinking, and Feeling). Of the mental functions, Sensing (5) and iNtuition

(N) are considered perceiving functions (information gathering). Thinking

(T) and Feeling (F) are considered judging functions (decision-making).

Perceiving and Judging are essential components to all cognitive

processes. A person's most preferred perceiving function, combined with

the most favoured judging function, forms the core of personality type.

One of the two most favoured functions takes the lead and is termed the

Dominant function. The dominant function for all types is superior in

awareness, utility and reliability, but not necessarily in the strength of its

influence on behaviour (Pearman & Albritton, 1997).

47

Appendix 6 contains a table stipulating the extraverted and introverted

mental functions typically ascribed to the 16 personality types. The

terminology is important in the ultimate analysis and descriptors of the

typologies.

A second mental function that operates in a supportive mode is termed

the Auxiliary function. This function provides balance to the dominant

function but generally people are slightly less aware of this mental

function. If the dominant function is extraverted, then the auxiliary

function will be introverted and vice versa. Two personality profiles may

therefore share the same two middle letters in the type profile (for

example ESTP and ESTJ) but their dominant and auxiliary functions can

be reversed. A person with an ESTP type profile is Sensing dominant

supported by a Thinking auxiliary function (because of the Perceiving

preference at the end of the profile). A person with an ESTJ type profile

is Thinking dominant supported by an auxiliary Sensing function

(because of the Judging preference at the end of the profile) (Myers,

1998; Kroeger &Thuesen, 1988).

The tertiary and inferior functions are the third and fourth preferred

functions that explain certain behavioural responses but are different

from the dominant and the auxiliary functions. As these functions are

deeper in the unconscious mind, people are typically not that aware of

them and consequently refer to and use them less frequently. Type

theory posits that all people use and have access to all eight mental

functions to serve conscious and unconscious purposes. However, the

emphasis is on the use of the four primary mental functions that are used

to explain conscious choices and behaviour (Martin, 1997; Pearman &

Albritton, 1997). It furthermore suggests that if a person does not have

opportunities to use the dominant function sufficiently, he or she is likely

to feel unfulfilled. The dominant function therefore plays the most

important role in people's personality type and behaviour (Bayne, 2004).

48

Another two-letter combination is referred to as temperament.

Temperament is referred to as a sub-set of behaviour and establishes

the foundation of a person's personality type. Temperaments describe

four broad patterns of interrelated characteristics. The temperament

pattern from the MBTI® instrument is determined as follows:

a) If the second letter is an S (for Sensing), the last letter of the type is

added to become a two-letter temperament code.

b) If the second letter of the type is an N (for Intuitive), the third letter of

the code is added to become a two-letter temperament code.

The four temperaments are: NF, NT, SJ and SP. Each one of the sixteen

types falls into one of the four temperaments, as indicated in Table 5.

Table 5: MBTI® 16 personality types in the Type table

NF

ENFJ INFJ

ENFP INFP

NT

ENTJ INTJ

ENTP INTP

SJ

ESTJ ISTJ

ESFJ ISFJ

SP

ESFP ISFP

ESTP ISTP

The four temperaments indicated in Table 5 can be combined in four

variations representing the sixteen personality types. Temperaments are

useful, as they afford a wide base of behavioural predictions as

illustrated in Appendix 7, but should not be used in isolation from

personality types and preferences (Myers, 1998; Kroeger & Thuesen,

1988; Linder, 2000).

Personality type can provide insightful information in different ways, for

example by combining the different personality preferences, or through

temperaments or the use of personality preferences. Personality

preferences are a popular way of interpreting behaviour. The four

preferences that form the personality type are on the opposite sides of

49

the four other preferences. These are also referred to as the MBTI®

dichotomies, namely E - I, S - N, T - F and J - P (Myers, 1998).

The preferences reflected through the MBTI® assessment also indicate

the relative clarity of preferences, namely how clear a person was in

expressing their preference for a particular pole over its opposite. This is

known as the preference clarity index or pci (Reinhold, 2008).

2.2.7 Comparing the MBTJ®with instruments developed by Cattell,

Eysenck and Costa and McCrae

For Cattell, personality is best described in terms of sixteen lower-order

personality factors (Cattell, Eber & Tatsuoka, 1970). The personality

model of Eysenck (Eysenck & Eysenck, 1975) is best known for its three

higher-order dimensions and the Five Factor Model (Costa & McCrae,

2001) is based on five big factors of personality. The personality

structure described by the FFM model has been the object of many

studies and psychologists argue that virtually any personality construct

can be mapped into the FFM (MOiler & Plug, 2005). This is relevant for

the purposes of this study, as high correlations have been found

between the Myers-Briggs Type Indicator® and four of the five

personality domains (with only neuroticism not being included in the

MBTI®) (McCrae & Costa, 1991). Correlational analysis of the

personality measures included in the FFM indicates a strong relationship

with the MBTI®. Extraversion (FFM) correlated with Extraversion­

Introversion (MBTI), Openness (FFM) correlated with Sensing-Intuition,

Agreeableness (FFM) correlated with Thinking-Feeling (MBTI) and

Conscientiousness (FFM) correlated with Judging-Perceiving (MBTI)

(Fumham, Moutafi & Crump, 2003).

According to Francis, Craig and Robbins (2007), the model of personality

proposed by Jung in the form of the MBTI® instrument differs from the

personality models proposed by Eysenck, Costa and McCrae and Cattell

in two ways. Firstly, the MBTI® sets out to assess mental processes as50

Another two-letter combination is referred to as temperament.

Temperament is referred to as a sub-set of behaviour and establishes

the foundation of a person's personality type. Temperaments describe

four broad patterns of interrelated characteristics. The temperament

pattern from the MBTI® instrument is determined as follows:

a) If the second letter is an S (for Sensing), the last letter of the type is

added to become a two-letter temperament code.

b) If the second letter of the type is an N (for Intuitive), the third letter of

the code is added to become a two-letter temperament code.

The four temperaments are: NF, NT, SJ and SP. Each one of the sixteen

types falls into one of the four temperaments, as indicated in Table 5.

Table 5: MBTI® 16 personality types in the Type table

NF

ENFJ INFJ

ENFP INFP

NT

ENTJ INTJ

ENTP INTP

SJ

ESTJ ISTJ

ESFJ ISFJ

SP

ESFP ISFP

ESTP ISTP

The four temperaments indicated in Table 5 can be combined in four

variations representing the sixteen personality types. Temperaments are

useful, as they afford a wide base of behavioural predictions as

illustrated in Appendix 7, but should not be used in isolation from

personality types and preferences (Myers, 1998; Kroeger & Thuesen,

1988; Linder, 2000).

Personality type can provide insightful information in different ways, for

example by combining the different personality preferences, or through

temperaments or the use of personality preferences. Personality

preferences are a popular way of interpreting behaviour. The four

preferences that form the personality type are on the opposite sides of

49

the four other preferences. These are also referred to as the MBTI®

dichotomies, namely E - I, S - N, T - F and J - P (Myers, 1998).

The preferences reflected through the MBTI® assessment also indicate

the relative clarity of preferences, namely how clear a person was in

expressing their preference for a particular pole over its opposite. This is

known as the preference clarity index or pci (Reinhold, 2008).

2.2.7 Comparing the MBTI® with instruments developed by Cattell,

Eysenck and Costa and McCrae

For Cattell, personality is best described in terms of sixteen lower-order

personality factors (Cattell, Eber & Tatsuoka, 1970). The personality

model of Eysenck (Eysenck & Eysenck, 1975) is best known for its three

higher-order dimensions and the Five Factor Model (Costa & McCrae,

2001) is based on five big factors of personality. The personality

structure described by the FFM model has been the object of many

studies and psychologists argue that virtually any personality construct

can be mapped into the FFM (MOiler & Plug, 2005). This is relevant for

the purposes of this study, as high correlations have been found

between the Myers-Briggs Type Indicator® and four of the five

personality domains (with only neuroticism not being included in the

MBTI®) (McCrae & Costa, 1991). Correlational analysis of the

personality measures included in the FFM indicates a strong relationship

with the MBTI®. Extraversion (FFM) correlated with Extraversion­

Introversion (MBTI), Openness (FFM) correlated with Sensing-Intuition,

Agreeableness (FFM) correlated with Thinking-Feeling (MBTI) and

Conscientiousness (FFM) correlated with Judging-Perceiving (MBTI)

(Fumham, Moutafi & Crump, 2003).

According to Francis, Craig and Robbins (2007), the model of personality

proposed by Jung in the form of the MBTI® instrument differs from the

personality models proposed by Eysenck, Costa and McCrae and Cattell

in two ways. Firstly, the MBTI® sets out to assess mental processes as50

opposed to a total description of personality. The notion of neuroticism or

a similar dimension is not included in the MBTI® as the model does not

purport to be concerned with human differences in terms of emotionality,

anxiety or psychopathology. Secondly, the MBTI® does not aim to

identify personality in terms of a number of personality traits, but rather in

terms of sixteen personality types. The models of Eysenck and Myers­

Briggs can however be considered as related and interacting in a

dynamic way due to the results of a study performed by Francis et al.

(2007), where a number of statistically significant relationships emerged

when the two models were compared. Substantively significant

relationships were reported between the MBTI® preference for

Introversion-Extraversion. Also, the personality preference Perceiving in

the MBTI® correlates significantly with the dimension Psychoticism in

Eysenck's model, and the personality preference Judging in the MBTI®

correlates negatively with the dimension Psychoticism. While most

personality theorists agree that personality can be described in terms of

traits, the debate continues in terms of the number of basic traits that

make up personality.

2.3 The relationship between personality, culture, gender and

earning differentials or pay preferences

Organisational behavioural theorists have conducted extensive research

concerning motivational aspects of intrinsic factors such as job

satisfaction. Only in the last twenty years have researchers started to

investigate in more depth the motivational impact of extrinsic rewards

such as remuneration and benefits. The common assumption of labour

economists that skill gets rewarded has been challenged over the past

twenty years and has led to attempts to understand the factors that

predict wage differentials and optimal levels of performance (Nyhus &

Pons, 2004). These attempts have resulted in a number of studies

conducted with a focus to understand inter alia the relationship between

earnings differentials and personality traits, earning levels and gender;

the wage gap and gender role orientation; locus of control and earnings;51

and reward preferences across different cultures (Bartlett, et aI., 1990;

Bowles et aI., 2001; Cable & Judge, 1993; Chiang, 2005; Fortin, 2008;

Furnham, 2003; Gunkel, 2006; Hofstede, 1980; Judge & Livingston,

2008; MacGrain Herkenhoff, 2000; Nyhus & Pons, 2004). Bowles et al.

(2001) furthermore report from empirical studies that personal

characteristics, such as beauty, height, obesity and domestic

cleanliness, which would intuitively be considered to be irrelevant in the

labour market, are indeed robust predictors of earnings.

Human capital theory features prominently in the analysis of differentials

in earnings levels. In fact, wage inequality receives frequent media

coverage (Crotty & Bonorchis, 2006; McKinsey, 2009; Sherk, 2007).

Although a number of different studies have been conducted with the

purpose of understanding the reason for the differential in earnings

between men and women, more than half of the variance in wages

remains unexplained (Nyhus & Pons, 2004). Meulders, Plasman and

Rycx (2004, p. 245) identified the following factors that indeed contribute

towards the gender pay ratio:

a) Differences in human capital

b) Sectoral and occupational segregation and/or concentration

c) Working time .

d) The overall pay structure

e) The existence and level of minimum wages

f) The access to internal and public training schemes, the organisation

of training time

g) The industrial organisation and

h) Women's representation to trade unions, employers' organisations

and bargaining or representative bodies.

Judge and Livingstone (2008) posit that women in general earn less than

men regardless of thefr gender role orientation and therefore that gender

role orientation in itself is not a predictor of earnings. In fact, differences

in earnings between men and women can partly be traced back to52

differences in occupational choices and not to the gender factor per se.

Bowles et al. (2001) concur that gender earning differentials can be

attributed to different personality traits, as these have a different labour

market value. In addition, women tend to dominate certain occupations

that involve care for other people and that generate a lower wage. In

contrast, Babcock and Laschever (2003) argue that the wage gap

between men and women is as a result of women having a lower sense

of entitlement to high salaries and being typically less likely than their

male counterparts to negotiate higher remuneration. In a longitudinal

survey conducted by Fortin (2008), results confirmed that wage

differentials between men and women can be attributed to the

importance that the gender groups attach to factors such as money and

being successful at work. For example, men generally tend to be more

ambitious than women, and value money more, which leads to specific

behaviours that will result in the achievement of these personal goals.

Understanding the gap in earnings, and the factors contributing thereto is

becoming increasingly important as, despite the stress of separation

from very young children and the regret that is often experienced at

missing out on developmental years of children, women increasingly

prefer to take up the role of primary breadwinner as opposed to primary

caregiver and will increasingly be expecting equal treatment in the

workplace to their male counterparts (Grbich, 1994).

MacGrain Herkenhoff (2000) reports that national culture, individual

characteristics, corporate culture and professional culture positively

correlate with a broad spectrum of individual values that include

remuneration values. Westerman, Beekun, Daly and Vanka (2009) used

the FFM to assess the relationship between pay package preferences

and personalities as well as the role of national culture in such

preferences. A weak relationship was found between the pay package

preferences and the individual personality variables. The results of this

study did however find significant relationships between personality and

pay package preferences when examined cross-culturally. The study

found significant differences specifically in terms of pay package53

preferences between collectivistic and individualistic cultures. Although

the relationship between remuneration preferences and national cultures

is not the focus of this study, the findings that indicated significant

differences in reward preferences between people from different cultures

do add to the rationale that employers, especially those in multinational

organisations, should move away from a 'one-size-fits-all' approach in

their remuneration models or frameworks and consider individual

preferences as well as the impact of national cultures on individual

preferences.

In addition, it was found that non-cognitive traits such as low self-esteem

and external locus of control are associated with comparatively lower

salaries, compared to earnings of people in similar positions but with

high levels of self-esteem and a predominantly internal locus of control

(Coleman & DeLeire, 2003). This relationship can be explained by the

view that individuals with an external locus of control (who believe that

their efforts will not be rewarded) are likely to expend lower levels of

effort on the job and individuals with low levels of self-esteem generally

operate at a lower level of productivity than those with high levels of self­

esteem (Judge, Tippie and Bono, 2001 cited in Fortin, 2008).

The contribution of personality traits to earning differentials has been the

topic of research for many years. Personality dimensions emotional

stability, agreeableness, autonomy and conscientiousness contribute to

pay differentials (Nyhus & Pons, 2004). Furthermore, extraverts and

introverts typically have significantly different career orientations and

require different working environments to perform optimally (Gray &

Starke, 1988). Extraverts are more suited to positions that require

interaction with others and operate within a team environment, whereas

introverts are more inclined to excel at tasks that require thought and

analytical skills (Cable & Judge, 1993; Lindley & Borgen, 2000). In terms

of office ergonomics, extraverts adapt more easily to open-plan offices,

whereas introverts prefer quiet personal areas away from crowds of

people. Extraverts have a higher preference for incentives, as they tend54

to be more risk-tolerant (Gray, 1973) and the more individualistic people

are and the greater their need for self-efficacy, the greater prominence

they ascribe to individualised remuneration structures (Cable and Judge,

1993). Also, the more neurotic people are, the less likely they are to take

risks and the greater the preference for fixed remuneration. They

furthermore posit that the more materialistic people are, the higher their

preference for financial as opposed to non-financial rewards.

Stewart and Barrick (2004) report that more conscientious people have a

greater need for learning and development opportunities and attach

more value to a working environment that is characterised by good

social relationships, challenging jobs and quality colleagues.

Vandenberghe, St-Onge and Robineau (2008) further determined that

the prominence given to work prestige (or job level) correlates with the

personality traits "openness to new experiences" and "extraversion". In

addition, quality of work and social relationships, development and

career opportunities, variable pay, indirect pay, flexible working

conditions and prestige are reward factors that affect individuals'

attraction to certain organisations.

Bowles et al. (2001) report from empirical studies that three traits such

as degree of future orientation, personal efficacy and the difference

between a worker's marginal utility derived from work and marginal

disutility of effort should be incentivised by employers in what is referred

to as an incentive-enhancing behavioural wage model. It is believed that

these traits would contribute to greater levels of personal effort and

performance and should thus be incentivised. Nyhus and Pons (2004)

concur with Bowles et al. (2001) that personality traits should be

included in wage determination models, as they found that there was a

general pattern of reward (in terms of actual earnings) for certain

personality traits across different occupations. The relationships between

earnings levels and personality traits can partly be explained through the

market value of certain personality traits as not all personality traits are

equally productive or valued (Muller and Plug, 2005). It could therefore55

be assumed that if some personality traits are more valued in certain

jobs than in others occupational sorting can be done where employees

choose jobs that offer the highest rewards for personality traits.

If the theory of individual dispositions is applied to the attraction potential

of different positions, it is presumed that different people ascribe different

levels of importance to various components of total rewards based on

their respective personality traits (Gerhart & Rynes, 2003). However,

certain personality traits also positively correlate with higher levels of

productivity (such as emotional stability and conscientiousness), and if

remuneration is linked to output, then the personality trait directly

contributes to differences in remuneration levels. If organisations seek to

attract skilled employees, who are agreeable, emotionally stable and

conscientious, they must be competitive with regard to salary, fringe

benefits, pension plans, job security and leave benefits. They should

also take into consideration that these desirable personality traits

contribute to higher levels of output and should ensure that personal

preferences are taken into consideration. This should be done to not

only retain these individuals but also to motivate them to perform at

continuously higher levels.

Initial research has furthermore been done on the relationship between

personality temperaments and monetary spending patterns. According to

Bayne (2004), each temperament tends to have a natural and different

approach to money. The temperament SP may be likely to spend money

more freely without budgets and financial planning - they have a

tendency to win and lose big, as money is something for the moment. In

comparison, the temperament SJ will tend to be more careful with

spending patterns in order to achieve more security and stability. SJs

tend to be the money people of the world - the bankers, accountants,

lawyers and stockbrokers - who conservatively guard society's trust

funds. It is further indicated that the temperament NT will try to spend

money in a perfect manner (as competence is their core motive) with

well-designed financial plans, and sometimes high-risk ventures. In56

contrast, the temperament NF may well ignore money (as their core

motive is not materialistic) and will tend to consider money as something

to be used for, but not at the expense of, their ideals (Bayne, 2004). This

initial research supports the view that different people, in relation to their

personality type or temperament, will demonstrate different monetary

spending patterns (Kroeger & Thuesen, 1988).

The relationship between rewards and personalities has evoked interest

among researchers for many years, yet limited empirical findings have

been reported to date. Several authors have expressed the need to

better understand individual differences with respect to total reward

components to help employers attract, retain and motivate employees.

Despite the transparency on remuneration maters in the media, people

often choose not to discuss their earnings with relatives or friends.

Furnham and Argyle (1998) believe that people are hesitant as they do

not want others to be envious. They might also be superstitious about

the effects of discussing money in public and might consider talking

about money to increase greed, need and vulnerability. The psychology

of money lies in material symbols which are proof of a person's alleged

financial status (Ware, 2001). Such displays can lead to an enhanced

self-esteem, determine a person's professional status and social class,

contribute to the creation of a self-identity and thus influence behaviour

(Furnham & Argyle, 1998). A model that assists individuals in

understanding what remuneration means to them and who they are in

relation to money will enhance people's self-insight in terms of their

attitudes towards monetary and non-monetary rewards and how these

attitudes can affect their success or failure (Linder, 2000).

Although previous studies that have been conducted on determining the

relationship between personality traits and reward preferences have

yielded positive results, no specific deductions could be made from the

previous research undertaken on the relationship between reward

preferences and personality types. Reward preferences do not

necessarily influence performance but can be associated with higher57

levels of engagement, productivity, retention and a stronger employee

value proposition (Frank et aI., 2004; Gebauer, 2009; Giancola, 2006a).

2.4 Earnings differentials in a South African context

Pay inequalities in developed economies such as the United States

continue to grow due to the increase in the number of skilled jobs and

the reduction in the number of unskilled jobs - a phenomenon primarily

caused by the quick pace of technological enhancements, and the

effects of globalisation that increase the demand for skilled workers

worldwide. The history of apartheid in South Africa created a racial

segmentation in the labour market that contributed significantly to

disparities in earnings between employees in different race groups. Job

reservation for White males and a comparatively lower level of skills

training for Black employees left a legacy of significant pay differentials

between different race and gender groups, referred to as the apartheid

wage gap. The apartheid labour practices have also resulted in a labour

market situation where there are racially and gender based skills

shortages. For example, Black women were largely confirmed to

domestic work whilst white women were typically relegated to female

specific jobs such as secretarial and nursing positions. Black employees

were prohibited from obtaining blasting certificates in the mining industry

resulting in only white employees having the opportunity to obtain these

skills. These shortages contribute to skills based premiums for certain

demographic groups both in South Africa's history (where White

employees were favoured and in short-supply for certain skills) and

continue to exist in the current market due to the severe shortage of

Black skills in certain professions (Booysen & Nkomo, 2010; Horwitz et

al.,2002).

The term glass ceiling has been used worldwide to describe the issues

that women face in their attempt to reach executive positions within

corporate organisations that result in generic inequality in senior levels in

the organisation. Mathur-Helm (2006) reports that the South African58

culture of long working hours and demanding job requirements (and

mainly male values) discourage women from entering the most senior

levels in the organisation and they therefore decline opportunities. It is

furthermore stated that the emphasis on racial discrimination in the

South African context overshadows any other form of discrimination and

therefore gender inequalities are often marginalised and not effectively

addressed. In 1996, the South African Government authorised the

International Convention on the Elimination of All Forms of Discrimination

against Women (CEDAW) by passing the Gender Policy Framework

(GPF). The main purpose of the GPF was to design and integrate

policies with a specific focus on gender that ensured that:

a) Women's rights are perceived as human rights

b) They are considered and treated as equal citizens

c) Their economic empowerment is promoted

d) Their social uplift is given priority

e) They are included in decision making in all forums

f) They are beneficiaries in political, economic, social and cultural

areas, and

g) Affirmative action programs targeting women are designed and

effectively implemented (Mathur-Helm, 2004, p. 57).

Although apartheid formally ended with the first democratic elections in

1994, race and gender inequality still exist. According to the Department

of Labour's Commission for Employment Equity Annual Report (2008­

2009), White men still dominate the most senior positions in

organisations (61.1% of top management and 47.4% of senior

management levels) followed by White females, Black males and Black

females. Black, Indian and Coloured Women are the most under­

represented groups in the professional and management occupational

levels (Department of Labour, 2009).

The apartheid wage gap has since 1998 been addressed through

statutory means in the form of the Employment Equity Act (No. 55 of59

1998) which aims to ensure that the legacies of apartheid in the South

African workplace will be redressed. The Employment Equity Act

amongst others, require employers to annually submit to the Department

of Labour a statement on remuneration and benefits paid to employees

in occupational categories and levels, broken down by race groups. The

employer is furthermore required to state what measures are taken to

eliminate any income differentials that are reported in Form EEA4. The

purpose of this legislation is to promote equal opportunities and fair

treatment of all employees regardless of race and gender orientation,

over time through the implementation of very specific affirmative action

measures (Republic of South Africa, 1998).

Globally, social exclusion on the basis of race or gender has received

more attention particularly after the 2001 United Nations World

Conference Against Racism that was hosted in South Africa (Arias,

Yamada & Tejerina, 2004). In a country riddled with the effects of the

apartheid era, employers should actively participate in efforts to reduce

the apartheid wage gap and make conscious decisions around fair and

equal employment, skills development and reward practices that will in

tum increase the return on investment for shareholders and enhance the

organisation's EVP.

2.5 Measuring Personality and Individual Differences

Personality differences can be assessed through different inventories.

The most popular methods of measuring behaviour and mental

processes are psychological tests, questionnaires, inventories and

projective techniques. A psychological test is defined as "a set of tasks

presented in a standard form and which produces a score as the output,

allowing for comparison with population norms" (Martin, 2005, p. 145).

This practice of uslnq psychological assessments is referred to as

psychometrics.

60

Occupational psychometric assessments typically include all or a

combination of the following measures: intelligence tests, personality

questionnaires, interest questionnaires, tests measuring values and

attitudes and aptitude tests. The purpose of these assessments is to

select employees and to place new and current employees in positions

most suited to their abilities and personalities. Psychometric

assessments are also utilised in research to investigate constructs such

as personality in an attempt to enhance the understanding of people's

behaviour, which in tum enhances peoples' ability to predict behaviour.

Assessments are useful in counselling, selection, and other applied

contexts as well as in research into differential psychology. A

psychometric test needs to be reliable and valid for the results to be

trusted and should be administered and interpreted by a trained

practitioner (Aiken, 1999; Gray & Starke, 1988, Hodson, 2001).

Personality assessments are becoming more popular, and their

widespread use indicates that the test results influence the probability of

getting a job. Research has also indicated a positive relationship

between personality traits, earnings and success (Bowles et al. 2001;

Cable & Judge, 1993; Chiang, 2005; Gerhart & Rynes, 2003; Nyhus &

Pons, 2004). As employers have access to these test results, they can

start to use the information to influence the design of remuneration

models to enhance the organisational EVP (CLC, 2007a).

2.6 Motivational Theories

The disciplines of economics, psychology and sociology share a

common desire to understand human nature - character, disposition,

personality and temperament. There is an abundance of motivational

theories, with multiple subdivisions of the theories within different

disciplines (Nohria, Groysberg & Lee, 2008; Steel & Konig, 2006).

61

Motivation involves goal-directed behaviour (Weiten, 1992). The focus of

this study is on work motivation as a subset of motivation. Vroom (Vroom

& MacCrimmon, 1968) concluded that work motivation does not differ

extensively from other kinds of motivation. Motivation is one of the main

factors that determines the work performance of employees and typically

covers all the reasons why people choose to behave in a certain manner

(Viorel, Aurel, Virgil & Stefonia, 2009). Work motivation is defined by

McCormick and ligen (1987, p. 268) as "conditions which influence the

arousal, direction, and maintenance of behaviours relevant in work

settings". A motivated employee is willing to exert a particular level of

effort (intensity), for a certain amount of time (persistence), toward a

particular goal (direction) (Weiten, 1992).

In organisations, managers always seek different and more optimal ways

to motivate employees to be more productive, to offer a better quality

service or to reduce costs. One of the essential tasks of leaders is to

motivate and guide performance (Moss-Kanter, 2003). Personal factors

that influence motivators include age, gender, race, education and

abilities (Gray & Starke, 1988). For managers to effectively motivate

employees, they need to understand human needs and the influences

that affect levels of performance. Changing individual performance starts

with identifying factorsfhat the manager can influence (Steers & Black,

1994).

According to Bergmann and Scarpello (2001), the link between reward

systems and human needs exists on three levels, namely:

a) Motivating individuals to join an organisation

b) Motivating employees to stay with an organisation

c) Motivating employees to perform

However, individuals also bring to the workplace a variety of personal

characteristics and attributes that strongly drive their behaviour and

performance. Each employee is motivated by a unique combination of62

factors that are influenced by his or her age, gender, race, level of

education and position in the organisation. It is line managers' most

important responsibility to understand employees' motivators and to use

these to influence behaviour and reward employees (Gray & Starke,

1988). Reward systems can be powerful in the motivation of employees.

To increase motivation through the use of reward systems, it is important

first to understand what motivates people and how motivation levels can

be optimally influenced. Motivation can be influenced on an intrinsic or

extrinsic level, and the role that managers play mostly influences

motivation on an extrinsic level.

Variables affecting motivation within the organisational context can be

found on three levels, namely:

a) Variables that are unique to individuals, for example interests, ability

and personal motivation;

b) Variables arising from the nature of the job, for example degree of

control or level of responsibility;

c) Variables found in the organisational context or in the external

environment, for example organisational culture and climate,

systematic rewards, management and supervisory practices (Du Toit

et aI., 2007; Herman &Gioia, 2000).

As the organisational context in the form of organisational culture affects

motivation, it has to be defined. Organisational culture is defined by

Tagiuri (cited in Gray & Starke, 1988, p. 208) as "a relatively enduring

quality of the internal environment of an organisation that (1) is

experienced by its members, (2) influences their behaviour, and (3) can

be described in terms of the values of a particular set of characteristics

(or attributes) of the organisation". Organisational climate is therefore

both a determinant and a consequence of motivation and can facilitate or

inhibit individual performance. Therefore, organisational culture needs to

be positive before individuals will be motivated to perform. Individuals are

however motivated by different factors and it is important for managers to63

establish these reasons in order to motivate employees more effectively.

Work serves as a social function where employees meet new people and

build relationships. Work is important to earn monetary income, it offers

status or rank within the community and also offers personal meaning or

fulfilment to people (Steers & Porter, 1991). It is understandable that,

given the wide range of factors that influence motivation and behaviour,

so many different and wide-ranging motivational theories have been

formulated.

Most psychological theories of motivation are founded on the principle of

hedonism, which states that individuals tend to seek pleasure and avoid

pain. Hedonism dates back to the Greek philosophers, but only towards

the end of the 19th century did motivational theories move from the realm

of philosophy to more empirically based psychology. Motivation is a

dynamic of personality and provides reasons for behaviour (Moller,

1995).

2.6.1 Intrinsic and Extrinsic Motivation

Motivation furthermore takes two forms: intrinsic and extrinsic motivation.

Intrinsic or internal motivation originates from the satisfaction that a

person experiences when a job is performed well. It is based on the

desire for competence, achievement and self-determination and has

emotional value (Frank, Finnegan & Taylor, 2004; Mouton, 2008).

Intrinsic rewards (for example a feeling of accomplishment, a challenging

job) are typically an integral part of the task and are administered by the

individual who performs the task (Gray & Starke, 1988). External

motivation is when a person is motivated in anticipation of some reward,

typically in the form of financial or non-financial recognition (Kohn cited in

Harvard Business Review, 2001). Extrinsic rewards (for example

remuneration, promotions, recognition) are typically independent of the

task performed and controlled by other people (Gray & Starke, 1988).

64

Intrinsic and extrinsic motivators are evident in the workplace. According

to Thomas (2002), extrinsic motivation supplements intrinsic motivation

and extrinsic motivation has a greater influence on behaviour when

intrinsic motivation is moderate to low. But if intrinsic motivation is

already high, monetary incentives provide little or no additional

motivation. Therefore, in organisations that have a culture of high

intrinsic motivation, pay systems may not necessarily have such a major

impact on performance as meaningful work, engagement and sound

performance management processes. It is however widely believed that

organisational culture can potentially impact significantly on

organisational performance (Gray & Starke, 1988). Thomas's comments

(2002) contradict a large body of research that states that rewards

should be contingent on performance (Menefee & Murphy, 2004;

Milkovich & Newman, 1999). What is clear from the different viewpoints

is that intrinsic and extrinsic motivation work in unison, and where

rewards are an integral part of a task, extrinsic rewards do not reduce

intrinsic motivation. However, when the reward is not seen as an integral

part of the task, extrinsic rewards may reduce intrinsic motivation (Gray

& Starke, 1988). It is thus likely that the nature of the task, its magnitude,

the timing, the organisational culture and the type of feedback received

on performance can affect the relationship between intrinsic and extrinsic

motivation.

Although doubt has been cast by many researchers over the past 50

years on the effectiveness of money per sa as a motivator, it remains a

means to achieve different ends. Money links directly or indirectly to the

satisfaction of different personal needs, ranging from basic needs such

as survival and security to higher-order needs such as status and

prestige. Financial incentives motivate people who are strongly

motivated by money and whose expectations that they will receive a

financial reward are high. Money can therefore provide positive

motivation in the right circumstances, not only because people need and

want money but also because it is a highly tangible form of recognition

(Armstrong, 2006). The implication of this is that organisations can65

provide schemes, policies and processes which will motivate individuals

to perform in particular ways. Line-of-sight schemes (referring to people

being able to influence the reward they receive through their

performance or behaviours - as per Lawler, 2000) also positively impact

motivation, as employees feel that they are responsible for, and in

control of, the rewards they receive.

It is management's responsibility to be well informed about employees'

needs, intentions, preferences, comparisons and goals. In being

sensitive to employees' needs, well-informed and respectful of them, and

responsive to these needs, a culture of trust is formed which is a

cornerstone of the EVP and critical for motivation. Lastly, for rewards to

be a motivator, the types of rewards offered need to be of value to the

person receiving the reward (Mkhehlane, 2008).

Motivational theories are classified into content, process and

instrumentality theories. As no one motivational theory covers all

aspects, an overview is provided of the most relevant and well-known

theories.

2.6.2 Content theories

Content or need theories concentrate on identifying the motives that

produce behaviour, and are grounded in the belief that behaviour is

mainly motivated by the drive to address unsatisfied needs (Armstrong,

2006). These theories attempt to explain why people work and have

identified certain needs, aspirations, incentives and the work content as

motivators that drive specific behaviours (Analoui, 2000). Some of the

most well-known content theories are described in the next section.

66

2.6.2.1 Maslow's (1943) hierarchy of needs

Maslow (1943) developed one of the best-known motivational theories.

He argued that people have a hierarchy of different needs that drives

purposeful behaviour.

The five levels included in this hierarchy are defined as follows:

a) Physiological needs, which include a wide range of basic needs that

humans have to fulfil in order to stay alive and function normally - for

example, food, rest, water, air and shelter.

b) Safety needs, including the security of people in their normal

environment, for example shelter, and the need to be free from harm,

and to be in an environment that is predictable and where people

have a sense of control.

c) Social needs include friendship and a sense of belonging. In an

organisational context, this can include being part of a bigger team.

d) Esteem needs include a desire for personal achievement and

recognition by others, a need for adequacy, reputation, self-respect

and status.

e) Self-actualisation needs refer to the feeling that a person has truly

achieved his or her full potential (Maslow, 1943).

Maslow (1943) described physiological, safety and social needs as

deficiency needs on the grounds that people will put a great deal of effort

into obtaining them, and he believed that meeting these needs is a

prerequisite for good psychological and physiological health.

According to Martin (2005), Maslow's theory displays the following

priorities:

a) The hierarchy of needs assumes that basic physiological needs must

be satisfied reasonably well before higher-order needs are activated.67

b) Once a need is satisfied, this need no longer acts as a motivator.

c) If a person is deprived of the source of satisfaction from a lower-order

need, it will again become a motivator.

d) The self-actualisation need differs from the other four needs, as it

deals with the realisation of personal goals, which differ from person

to person.

Although useful, Maslow's theory has several shortcomings, including a

focus on personal needs only. There is no differentiation between the

needs of people with different backgrounds and cultures or reference to

life-stage. The theory has not been adapted for the work environment

(Thomas, 2002). Maslow's needs hierarchy does however have validity if

it is applied to society as a whole instead of at an individual level. People

have over the past 75 years become more concerned with satisfying

higher-order needs, and where lower-order needs are not less important,

people seem to wish to satisfy all needs identified in the hierarchy (Gray

& Starke, 1988). The first four needs are primarily met either directly or

indirectly in the workplace. Remuneration, relationships with colleagues

and peers, the environment within which people work and status in an

organisation are therefore factors likely to motivate employees to

perform better (Hodson, 2001).

2.6.2.2 Alderfer's (1972) Existence, Relatedness and Growth (ERG)

theory

Alderfer (1972) refined Maslow's five-level hierarchy into three core need

categories:

o Existence needs (similar to Maslow's physiological and safety

needs, and grounded in survival or continued existence);

o Relatedness needs (similar to Maslow's affiliation/social needs, and

based on the need for people to live and function in a social

environment); and

68

o Growth needs (similar to Maslow's self-esteem and actualisation

needs, and grounded in the need for people to develop their

potential) (Alderfer, 1972).

Alderfer does not prescribe a hierarchy of needs and his theory suggests

that two or three need categories can influence behaviour

simultaneously. This theory drew similar criticism to Maslow's theory as it

does not differentiate between different cultures and has strong

underlying assumptions that can be challenged (Du Toit et al., 2007).

Alderefer questioned the efficacy of remuneration as a motivator.

However, money may not be a specifically stated need or motivator, but

is needed to satisfy most needs at the levels stated and is therefore

considered as a means to an end in both a direct and indirect manner.

Research conducted by Gerhart and Rynes (2003) contradict these

theories: they found that pay (namely monetary rewards) is a major

determinant of work motivation and plays a significant role in

organisational success.

2.6.2.3 Herzberg's two-factor theory

Herzberg believed that previous researchers confused motivational

factors and job satisfaction. He developed the two-factor motivational

model, which consisted of hygiene (maintenance) and motivational

(growth) factors. Herzberg prefers the term motivation-hygiene, although

subsequent writers have adopted other terms such as maintenance and

growth factors. Herzberg made a critical distinction between factors that

cause unhappiness at work and those factors that contribute to job

satisfaction (Herzberg, Mausner & Snyderman, 2004; Miner, 2005).

Hygiene factors are described as aspects that employees consider

important in the work environment but that are not motivational in nature

(for example, equipment, supervision, organisational policy and

administration, salary, status, working conditions, work security and

interpersonal relationships at work). Herzberg suggests that when these69

factors are present in a job, people's needs will be satisfied and they are

likely to experience job satisfaction. Dissatisfaction will occur if these

.needs are not met. However, hygiene factors cannot be relied on to

motivate higher levels of performance (Hodson, 2001). In contrast,

examples of motivating factors include recognition, sense of

achievement, responsibility, nature of the work, growth, job enrichment

and advancement (Herzberg cited in Harvard Business Review, 2003;

Herzberg et aI., 2004).

Herzberg's and Maslow's theories can be positively compared, although

Herzberg did not claim a hierarchical relationship for the two factors.

Herzberg's hygiene factors are similar to the lower-order or extrinsic

needs of Maslow and Alderfer, while the motivators are similar to the

higher-order or intrinsic needs. The nature of motivators, as opposed to

hygiene factors, is that they have a much longer-term effect on

employees' attitudes. It is claimed that Herzberg through his theory has

exploded the myth about the positive and motivational impact that

benefits such as shorter work weeks, increased wages, communication,

and increased fringe benefits have (Accel-team, 2007). However,

Herzberg's theory has also received its fair share of criticism. In research

conducted by Katz (1978) it was proved that job satisfaction changes

throughout a person's' working life and does not stay constant. It can

therefore be deduced that job satisfaction is far more complex than

Herzberg suggests.

The primary implication of both Maslow's and Herzberg's theories is that

management should be aware of the different needs of employees

(Manville & Ober cited in Harvard Business Review, 2003), as these

differ depending on the job levels of the employee, the age group, the

type of personality and the working environment within which they work ­

all factors contributing to the level of motivation the employee

experiences.

70

2.6.2.4 McClelland's (1961) Achievement Theory

McClelland's (1961) theory suggests that people firstly work to fulfil an

internal need for achievement. McClelland proposes through his theory

that needs or motives are learned and reinforced until they become a

hierarchy which differs from individual to individual and which influences

behaviour. His theory has been actively supported and continues to

contribute to the thinking of other researchers (Miner, 2005).

McClelland's theory focuses on three primary needs, namely:

o Need for achievement - a need to succeed, to be successful or to

exceed a set standard (nAch)

o Need for power - A need to be influential, to control and a desire for

status (nPow)

o Need for affiliation - A need for interpersonal relationships and to

be liked and accepted by others. This involves co-operation rather

than competition, and positive relationships with peers are more

important than being promoted (nAft) (McClelland, 1961).

All people have these three primary needs, but McClelland believes that

the need for Achievement (nAch) is the most dominant. However, when

this need is too strong, managerial effectiveness is reduced (Martin,

2005). Subsequent research has suggested that different cultures attach

different interpretations to the word 'achievement' and hence the

applicability of this theory across all cultures is questioned (Hodson,

2001).

Managers should attempt to develop an understanding of whether and to

what degree their employees have one or more of the needs addressed

by these motivation theories and to what extent the job and job

environment can be restructured to satisfy these needs and positively

influence motivation. WoridatWork (2007) has, in response to the71

different content theories that propose a positive correlation between

rewards and motivation, drafted a comparison between Maslow's

hierarchy of needs and the components of the transactional reward

model. Martin (2005) compares the theories of Maslow, McClelland,

Alderfer and Herzberg, and Barret (1998) compares the different types of

rewards and work with human needs. If the comparisons between the

different motivational theories and reward models are combined and

integrated, they provide an overall view of the alignment between

rewards, personal needs and different types of motivation, as illustrated

in Table 6.

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Table 6: Comparison of content motivational theories, personal needs and transactional rewards

Human Needs Personal Maslow Herzberg McClelland Alderfer Components of the Type of Type of Work

Motivation Transactional Reward model Reward

9. Service Self-actuallsatlon AdvancemenUGrowth/Affirmation Mission- work

8. Makinga (reachingfull corresponds withSpiritual difference potential) Need for inner passion,find

Aestheticneeds achievement Interesting,challengingwork personalfulfilment

7. Meaning (order and Motivatjonfactors: Growth Intemal

beauty) Worl< content needs

6. Personal Cognitiveneeds Responsibility Leaming and development Career-fulfils

Mental growth (knowledge& physical, emotional

5. Achievement understanding) and mental needsNeed for and offers longer

power term security

Esteemneeds Motivationfactors: Recognition, promotion and

(positiveself- Recognition performancefeedback

4. Self-esteem image) Status Job-primarily about

Emotional Advancement Relatedness short-term security.

Social,belonging Hygiene factors: Needs Affiliation and co-workers Fulfils physicaland

3. Relationships and/ove Socialnetwork Extemal emotional needs

(affection, Supervision Need for

identification affiliation

within a group)

Safely & security Hygienefactors: Financial security

2. Health needs (long-term Policy/administrative Existence Health& welfare

Physical survival) Needs

Physiological Hygiene factors: Base salary,hourly wage

1. Safety needs (short-term Security,salary,

survival) workingconditions

" •• ',_' __._,.. _"·_"~"'···~··_____,.•• ___¥,_.k ___ .• __•... _. __.,,_,_,.•.. _.,~ .• ~_._~_._._

73

The comparison of motivational theories, personal needs and

transactional rewards in Table 6 indicates a sound alignment with the

areas specified under the human needs (Barrett, 1998) column.

Maslow (1943), Herzberg (Herzberg et aI., 2004), McClelland (1961)

and Alderfer's (1972) models are well aligned with the transactional

reward model and a clear differentiation is made in all theories where

the motivational factors align with internal or external rewards. This

model illustrates the alignment between motivational theories and

total rewards models.

A consistent thread through all the content-based motivational

theories is that there should not be too much reliance on financial

reward only as a source of employee motivation. Financial rewards

are also described as addressing certain lower-order needs, but do

necessarily function as a motivator for higher levels of effort and

better performance. Motivation is a function of a diverse range of

factors, including the desirability of the outcome of behaviour.

Process theories offer a different perspective on motivation and are

covered in the next section.

2.6.3 Process theories

Process theories emphasise those psychological processes or forces

that direct, encourage and sustain motivation. Process theories

provide a model of the interactions between the variables involved in

the motivation process and how they influence behaviours (Analoui,

2000). Armstrong (2006) states that process theories (also referred

to as cognitive theory) are more useful to managers than needs (or

content) theory, as they provide more realistic guidance and

principles regarding motivation techniques and understanding of the

interactions that take place in the workplace.

74

2.6.3.1 Vroom's Theory of Work and Motivation

Whereas Maslow and Herzberg focus on the relationship between

internal needs and the resultant effort in fulfilling these needs, Vroom

differentiates between effort (which arises from motivation),

performance and outcomes. Vroom's expectancy theory emanates

from a belief that people prefer certain goals or outcomes over

others, and that behaviour results from conscious choices among

alternatives whose purpose it is to maximise pleasure and minimise

pain. The three key parts to this theory, termed beliefs, are:

• Expectancy (E), which refers to employees having different

expectations and levels of confidence about their own ability to

perform and achieve;

• Instrumentality (I), which refers to the perception of employees

as to whether or not they will actually receive the reward that

they have been promised by a manager; and

• Valence (V), which refers to the depth of the employee's need

for extrinsic and intrinsic rewards.

Vroom postulates that employees' beliefs interact and create a

motivational force that results in behaviour that brings pleasure and

avoids pain (Vroom & MacCrimmon, 1968). The implication of this

theory for management is that employees should be rewarded with

what they, rather than management, perceive as important. In

addition, employees will consider the outcomes associated with

various levels of performance and pursue the performance level that

generates the best reward. Expectancy theory postulates that

alternative types of rewards will become increasingly attractive as

personal efforts, results and outcomes become more directly aligned.

Line-of-sight incentive schemes are therefore more appealing than

group incentive schemes, as the individual has greater control over

75

the outcome than he or she would have in a group scheme (Cable &

Judge, 1993).

Criticism of this theory includes the objection that the theory does not

fully acknowledge the role of emotions in employee effort and

behaviour, although it highlights the need for management to seek to

understand What inspires and motivates employees (Du Toit et aI.,

2007).

2.6.3.2 The Porter-Lawler (1968) Model

Porter and Lawler (1968) present a model that draws heavily on

Vroom's theory, but also links motivation and performance. The

model suggests that when the value of reward and the effort-reward

probability are multiplied, effort is produced, as indicated in the

following formulae (Steers & Porter, 1991):

Value of reward x effort-reward probability =effort

Therefore, where performance results in increased rewards, the

effort-reward probability is increased and when satisfaction is

experienced after receiving a reward, the future value of the reward is

positively influenced. People who view monetary rewards as

important and who perceive that they have control over their

performance will put more effort into their work (Steers & Porter,

1991).

As long ago as 1968, Porter and Lawler had the foresight to

recommend that employers should engage more closely with

employees in order to understand their needs, motives and

aspirations so as to improve overall performance. The Equity theory

and the Porter-Lawler model are the only two motivational theories

that demonstrate the importance of avoiding discriminatory reward

practices.

76

2.6.3.3 Adams's (1965) Equity theory

Adams (1965) introduced the Equity theory in a quest to explain how

employees respond cognitively and behaviourally to perceived

unfairness in the workplace. The theory is premised on the balanced

ratio of inputs in relation to outputs. In addition, the ratio of an

individual's outcomes to inputs is compared to the efforts" and

rewards of other employees in similar situations. In order to reach a

conclusion on fairness, people need a point of reference against

which to judge what they actually experience, and the main source of

such comparisons is the perceived treatment of other people in

similar situations. The foundation of this motivational theory is that

employees must be rewarded equitably in relation to their efforts and

that the output should be fair in relation to others. Therefore both

underpayment and overpayment can influence subsequent behaviour

(Adams, 1965).

Further research has also indicated that it is not only the actual

rewards that need to be fair: the allocation processes must also be

perceived as fair (Martin, 2005). The RlE ratio is therefore important,

where "R" =reality and "E" =expectation (personal interview, Tom

Boardman, 1 March 2007). Employers therefore have to ensure that

the expectations of employees are managed and that distribution

practices (resulting in reality) are perceived as fair and equitable and

in line with expectations. The result of perceived inequity is

dissatisfaction, which in tum impacts negatively on motivation and

resultant efforts.

2.6.3.4 Goal-setting theory

The Goal-setting theory developed by Locke and Latham (2002)

suggests that people's objectives playa significant part in formulating

their behavioural patterns. It is built on the assumption that the

77

performance of individuals will improve if they strive towards a

definite, specific goal or standard as opposed to ambiguous goals

(for example to do your best as opposed to achieve 80% in a test).

The crux of this theory is that the more difficult the goal, the higher

the level of performance of the employee if he or she is committed to

achieving the goal. This theory confirms that monetary incentives are

effective when they are linked to performance levels, as they

contribute to task, goal acceptance and commitment. However, in

addition, regular feedback on performance (the performance

management part of the total rewards model) is critical. Factors such

as individual differences, personality, previous experience, education,

and training influence the validity of the goal-setting model.

2.6.4 Instrumentality theory

Instrumentality theory postulates that rewards or punishments serve

as the means of ensuring that people behave or act in desired ways.

This theory, in its most basic form, states that individuals only work

for money and that they are only motivated when rewards and

penalties are tied directly to their performance. Rewards are

therefore contingent upon performance. Instrumentality theory has its

roots in Taylorism, which is the theories and methods of Taylor

(1911) and is based on the premise of reinforcement (Armstrong,

2006).

2.6.4.1 F.W. Taylor's theory

Taylor's (1911) theory of scientific management is based on the

following four process principles, namely:

a) Analyse the job in a comprehensive, scientific manner to

understand the detailed tasks that need to be completed.

b) Select the right person for the job and provide training rather than

leaving people to train themselves.

78

c) Provide employees with the tools required, detailed instructions to

complete an assignment and close supervision.

d) Differentiate between management and operational or specialist

jobs in order to allow managers to apply scientific management

principles to the planning and execution of tasks.

Taylor's process theory enhances understanding of the importance of

scientific management, performance management and

standardisation of processes in a work environment. Criticism of this

theory, however, is that it is based exclusively on a system of

external controls and fails to recognise human needs and

preferences (Henderson, 2003).

Line management should therefore not only be aware of what

motivates employees, but also what processes need to be followed in

order for employees to perform optimally.

2.6.4.2 Skinner's theory

Skinner's (1953) research focuses on learned behaviour or operant

conditioning, with a primary focus on the person-environment

interaction. His theory posits that the environment shapes, changes

and directs behaviour, and that behaviour is also influenced by

consequences thereof. Skinner emphasises reinforcement

processes, which are seen as primary in the shaping of behaviour.

Four reinforcement approaches are used to encourage and achieve

desired behaviour, namely:

o Positive reinforcement

o Punishment

o Negative reinforcement

o Extinction

79

Both positive and negative reinforcement can strengthen behaviour

or increase the probability that a specific behaviour will recur.

However, Skinner posits that positive reinforcement is more effective

at influencing behaviour than negative punishment - a theory that

has specific application in learning and education disciplines. He was

outspoken about the fact that negative reinforcement may merely

teach people to avoid punishment, and not to correct behaviour

(Skinner & Holland, 1961).

As the reward manager is mostly concerned with the development of

reward systems through which employee behaviour can be

influenced or reinforced within the work environment, this theory adds

to the understanding of human motivators and behaviour (Bergmann

& Scarpello, 2001).

According to Du Toit et al. (2007), most modern approaches to work

motivation are based on process theories. These theories have some

predominant themes that are important for the overall understanding

of work motivation. The themes are described as follows:

a) Intention and objectives playa key role in motivated behaviour.

b) Feedback is important to motivate employees.

c) Process-based theories all have a rational element, with

employees critically gathering and analysing information.

d) The theories include some form of self-assessment, where

employees assess their own performance in relation to required

levels.

e) A non-rational component such as values, culture or the feeling

that arises from the self-efficacy belief is important in the work

environment and in designing a comprehensive total rewards

model or framework that takes individual motivators into

consideration.

80

2.6.5 Additional perspectives on motivation

To provide a broad overview on motivational theories, some

additional perspectives that are not categorised into process, content

and instrumentality theories are provided. The following section is

included in order to ensure sound coverage of core views of what

motivates employees. This understanding will then be used to

develop the total rewards framework.

2.6.5.1 McGregor's Theory X and Y (1960)

McGregor (1960) introduced a set of underlying assumptions

concerning human motivation with Theory X and Y. In essence, the

theory posits that managers hold beliefs about people that classify

individuals into either categories X or Y. The belief that people have

about their employees' abilities and attitudes affects their behaviour

towards these people, which in return influences the level of

individual performance (Kopelman, Prottas &Davis, 2008).

The two groups of people are those who dislike work and have to be

effectively coerced into doing it, and those who enjoy work and

responsibility and will always seek more of both. The foundation of

McGregor's Theory Y is the assumption that employees are (1) not

inherently lazy, (2) capable of self-control and (3) capable of

providing creative ideas to improve organisational effectiveness. The

application of this motivation theory to reward practices is that,

typically, this group of employees (Theory Y) can be motivated by

responsibilities, belongingness, pride in their work and a sense of

achievement. Theory X describes people who are lazy and unable to

contribute to sustainable organisational improvement, and who

require immediate gratification and tangible rewards in order to do

their work (Wintzel, 2008).

81

Management's behaviour towards employees can therefore have a

serious impact on their willingness to perform and ultimate levels of

performance.

2.6.5.2 Ouchi's Theory Z (1981)

Ouchi (1981) based his theory on the work of McGregor, and

investigated different ways in which Japanese and American

managers manage employees. In doing so, a number of different

cultural differences were identified and Theory Z was developed. It

has a strong Japanese theme in that Theory Z advocates a

combination of Theory Y characteristics and Japanese management

style that largely places freedom and trust in employees and

assumes that employees are loyal and interested in teamwork.

Ouchi's theory also addresses the influence that reward processes

have on shaping organisational culture. If a rewards system

recognises and rewards tenure, then the organisational culture

values long-term commitment. However, if the rewards system

recognises individual performance through aggressive incentive

plans, then the organisational culture values mostly the top­

performing employees, for the period that they are performing

(Ivancevich & Matteson, 1990).

The essence of the theory suggests that the best way to motivate

people is to design reward systems that are in alignment with the

values of the organisation. In addition, to get commitment and buy-in,

employees should be involved in the design process, and their views,

desires and preferences should be taken into consideration. If this is

done, the motivation levels will be positively influenced and there will

be strong alignment between the organisational strategy,

management style, culture, values and the reward system

(Armstrong & Murtis, 2007; Martin, 2005).

82

2.6.5.3 Self-Oetennination Theory (SOT)

Deci and Ryan (2000) developed the Self-Determination Theory,

which questions the efficacy of remuneration as a motivator. The

theory proposes that people who receive extrinsic rewards for

performing a task (which they find interesting and are happy to do)

will attribute the cause of their behaviour to the extrinsic reward (as

opposed to their level of interest) and thus discount their interest in

the task per se as the cause of their behaviour and effort. This

means that when extrinsic rewards are introduced, people feel

controlled by the external rewards, prompting a shift in perceived

locus of causality for the motivation for the behaviour to move from

internal to external. The SDT therefore places strong emphasis on

monetary, extrinsic rewards as a powerful alternative source of

motivation. In addition, threats, deadlines and evaluation undermine

intrinsic motivation, presumably as they shift towards a more external

perceived locus of causality. However, providing choice and flexibility

enhances intrinsic motivation (Deci &Ryan, 2000).

Modern research tends to support the concept that employees at all

levels in an organisation believe that pay, or at least a portion of total

remuneration, . should be tied to performance and therefore

performance management should be included in the holistic rewards

management process (Henderson, 2003).

2.6.6 Organisational levers of motivation

Nohria et al. (2008) recently investigated the drives that motivate

employees. The indicators of levels of motivation used in the study

were the following:

a) engagement

b) satisfaction

c) commitment and

83

d) intention to quit

Following the study, four drives that underlie motivation were

identified:

a) the drive to acquire: referring to people's drive to acquire goods

(physical goods and experiences) in order to enhance their sense

of well-being.

b) the drive to bond: this drive is associated with strong positive

emotions like love and caring, and, if not met, results in

loneliness. The drive to bond relates to a sense of belonging to an

organisation or a team and having a sense of pride. When people

leave an organisation this often results in a drop in morale.

c) the drive to comprehend: refers to the need to make sense of

the world and to be challenged.

d) the drive to defend: is rooted in the fight-or-f1ight response and

the need for security.

According to Nohria et al. (2008), each of the drives is independent:

they cannot be ordered hierarchically or substituted for another.

Studies show that an organisation's ability to meet the four

fundamental drives fundamentally impacts the level of individual

performance. Certain drivers were also found to influence

motivational indicators more than others. FUlfilling the drive to bond

has the greatest effect on commitment, whereas meeting the drive to

comprehend is most closely linked to employee engagement. Overall

motivational scores can best be improved if all four drives are met in

concert. The reward system supports these organisational levers of

motivation, as it contains a number of the different drives.

84

2.6.7 The influence of rewards on the motivation levels of

employees

The theories and principles developed by the researchers described

in this section have considerable appeal to many people; however,

the prevailing view in the academic literature is that there is limited

empirical evidence to support all the theories collectively, in all types

of circumstances (Bergmann & Scorpello, 2001; Du Toit et aI., 2007;

Hodson, 2001; Lawler, 2000; Martin, 2005). Different theories will

therefore apply to different people, and this could be circumstantial.

However, the influence of these theories on individual behaviour

should not be underestimated, as there is considerable evidence that

people work to fulfil intrinsic and extrinsic work and personal needs

(Gerhart & Rynes, 2003).

Staunch advocates of intrinsic motivation such as Deming (cited in

Lawler, 2000), Pfeffer (1982) and Deci and Ryan (2000) dismiss the

role that reward plays in the motivation of employees and support

strategies such as equal and fair pay for all employees. Herzberg

views punishment and rewards as two sides of the same coin, as

both manipulate behaviour. Kohn (2001, pp. 31 & 32) states his

personal views clearly: "Incentives do not alter the attitudes that

underlie our behaviours and rewards do not create lasting

commitment. They merely, and temporarily, change what we do." He

concludes that the results of many studies proving the relationship

between performance and rewards are questionable, and that, by

contrast, training and goal-setting programmes, have a far greater

impact on productivity than performance-based incentive plans

(Kohn, 2001).

However, there are many contrary views that rewards, of which

money is but one part, can when effectively used, pay an important

85

role, either directly or indirectly, in the motivation of employees. "I'll

accept that elephants cannot fly and that fish cannot walk, but Kohn's

argument that incentives plans cannot work defies the laws of nature

at Tyco laboratories" (Kozlowski cited in Harvard Business Review,

2001, p. 66).

The challenge is to design reward practices in such a manner that

business goals are achieved in support of sound management

practices, motivating employees to perform at consistently high

levels. Consequently, need theories provide remuneration decision­

makers with useful guidance as to the kinds of needs that may be

satisfied by a given reward system. As there will always be

differences in the needs and preferences of employees and groups of

employees at certain points in time, organisations that link rewards to

a variety of lower- and higher-order needs are likely to provide

stronger inducements for performance and other desired work­

related behaviours.

There is no simple answer to the question of how people are

motivated. Motivation undoubtedly consists of internal and external

motivators, and in implementing total rewards both internal and

external motivators can be influenced positively. Can money

motivate? There is no doubt that we live in a money-motivated world,

but money alone is not enough. Motivation has to be tailored to each

employee, according to his or her individual needs and preferences.

It is furthermore clear that a perpetual exchange process takes place

between employers and employees. Individuals choose to work for

specific organisations on the basis of what they believe they will

receive from the relationship. Employers employ individuals on the

basis of what they believe they will receive from the employees. The

basis of a sound reward system is therefore the shared perception

that both the employer and the employee are treated fairly in the

exchange process (Bergmann & Scarpello, 2001). This shared

perception of fair exchange is referred to by Corby, Palmer and

86

Person

Lindop (2009) as a tension between employer and employees on

remuneration-related matters. Pay resembles a cost to the

organisation, a method to recruit, retain and motivate employees. For

employees, pay is not only their source of livelihood; it is also a

reflection of their social identity. Therefore, the type of benefits and

amount of pay offered by employers are the outcome of implicit or

explicit distributional conflict and bargaining with employees, often

reflect the balance of power, custom and practice. The tensions

between pay, individual needs and other factors are illustrated in

Figure 2.

Economics

Labour market

~/Bestfit ~<----- Pay ) Bestpractfce

EquitySocialpsychology

Figure 2: Tensions in pay(Corby, Palmer & Lindop, 2009, p. 10)

Job type

The resolution of the different types of tension indicated in Figure 2

may vary from organisation to organisation, may change over time

and location depending on market conditions and may not be similar

for all employees within one organisation. However, this diagram

depicts the complexity of remuneration practices, something that

87

relates not only to the current labour market (with a number of

different factors impacting thereon), but also to the complexity of

remuneration and its managementwithin organisations.

There are a number of internal and external factors that impact on

reward management. The tension between best fit (in other words

responding to the internal and external factors impacting on

remuneration) and best practice (referring to solutions successfully

implemented in other organisations) is particularly relevant to

organisations. Many organisations choose to follow a best practice

approach to reward management without understanding the specific

and unique nature of the organisation or employee segment

preference. This could result in a less effective reward management

solution, as it has been indicated in the research that rewards models

that integrate individual preferences are more effective, and positively

contribute to an organisation's EVP, retention of key talent and levels

of engagement. Research furthermore indicates significant gaps

between what employees report as their top reasons for joining and

leaving organisations and what employers think these reasons are

(Ellis, 2009).

This section provided a theoretical framework for understanding

human behaviour through different motivational theories. The reward

strategist must understand why people behave the way they do in

order to develop reward systems and frameworks that have the

ability to motivate behaviour that aligns with organisational goals, the

organisational culture and individual objectives (Lawler, 2000).

2.7 Defining Total Rewards

There is no accepted dictionary definition of total rewards and

organisations typically arrive at their own definitions of total rewards

and brand it accordingly. The terms used to refer to total rewards

also differ. Examples of different terms used are total compensation,

88

the compensation and benefits package, the employee value

proposition (EVP), total remuneration or cost to company (Armstrong,

2006; CLC, 1999b; Lawler, 1990, Milkovich & Newman, 1999). Some

organisations are more creative and adopt terms that support the

nature of the organisation or the type of culture management wishes

to create: for example, a coffee company refers to its version of the

total rewards model as "the special blend" and a large manufacturing

company refers to their offering as "the deal" (Keuch, Chuang, May &

Sheldrake, 2006, p. 39). Total rewards as a term is sometimes used

in the same context as EVP and it is important to distinguish between

these terms.

For the purpose of this study, total rewards are defined as the

combination of all types of rewards, including financial and non­

financial rewards, indirect as well as direct, intrinsic and extrinsic,

which are made available to employees individually or in aggregate in

exchange for something of value (Armstrong, 2006; Mahomedy,

2007). The categories that make up total rewards are variously

referred to as transactional rewards (tangible rewards including pay

and benefits) and relational rewards (intangible rewards - for

example, learning and development, recognition and status;

challenging work; employment security; the work experience or the

work environment) (Armstrong, 2006; Milkovich & Newman, 1999).

The definitions of the terms relational and transactional rewards

closely align with Herzberg's hygiene and motivational factors

(Herzberg et aI., 2004).

According to Mercer Consulting (cited in CLC, 2005), a broader

definition of total rewards that encompasses remuneration, benefits

and career programmes fits more closely with employees' perception

of the value of working for an organisation. However, the definition of

total rewards should not be confused with the definition of the EVP,

as they are distinctly different and the EVP is considered a unique

and proprietary way in which organisations attract, retain and

89

motivate employees (Christofferson & King, 2006) (something that

will become evident later in this chapter).

The old perception of total rewards or total remuneration, which

referred to pay and benefits, has changed to a broader definition

including career development and other intrinsic factors such as

working environment (Gross & O'Malley, 2007). There is a clear

move away from the more traditional perception of rewards being

only pay and benefits (or total remuneration), to total rewards that are

more inclusive and integrated with the EVP.

2.7.1 Total rewards evolving

"An individual's desire to join an organisation, to remain with an

organisation and to increase effort for the organisation is a function of

the design and implementation of the organisation's compensation

system" (Bergmann & Scarpello, 2001, p. 4).

Total rewards management is a complex and often confusing topic. It

is a multi-dimensional construct and is developed from an array of

different disciplines. Reward practices are based on theories and

concepts from the disciplines of economics, psychology, sociology

and accounting. Reward practices have to be flexible and need to

respond to environmental, individual and organisational changes in

order to remain key levers to motivate, attract and retain talented

employees. In addition, Lawler (1990) attributes productivity

increases of up to 35% to strategic changes in remuneration design.

Martin and Tulgan (2006) conducted extensive research on changes

that took place in the workplace during the period 1993-2003, and

that have manifested in significant changes in reward practices,

namely:

90

a) Work has become more demanding on employees;

b) Employers are moving away from long-term employment

relationships;

c) Employees have fewer expectations for long-term rewards and

more expectations for short-term rewards;

d) Immediate supervisors are now the most important people in the

workplace; and

e) Supervising employees now requires more time and skill on the

part of managers.

The business case for organisations to move away from total

remuneration to a total rewards approach includes the following:

a) The erosion of the core components of total remuneration. Pay,

bonuses and long-term incentives are no longer sufficient to offer

a differentiated and compelling value proposition to employees.

Relational rewards build a positive psychological contract, which

enhances the organisation's EVP and is much more difficult to

replicate than individual pay practices.

b) Components which form part of a total rewards framework can

present a major cost to organisations. By including components

which employees value, employment related costs can be

managed more efficiently and with greater impact. Employees

tend to value the total cost of their employment, as it is more

visible in a total rewards approach.

c) Employees seek more flexibility and choice, and a total rewards

approach can satisfy individual needs.

Total rewards tie remuneration and benefits into a broader package

that aims to attract, motivate and retain employees in this changing

world of work. The goal of total rewards has changed from merely

91

remunerating employees to one that rewards and motivates (Hankin,

2005a).

Moss-Kanter (2003) adds to this list by stating that employer­

employee relationships have become less hierarchical and more

transactional and new leadership styles have to be acquired to

respond to these relationships. Hankin (2005a) furthermore identifies

five major trends that organisations should recognise and respond to

in time, to be ahead of the curve. Although she based her trends on

her experience of the workforce and the environment in the USA,

they could apply to South Africa as well. The following five future

trends have a significant impact on the structuring of reward practices

and strategies:

a) Longer, healthier and more productive people who will seek

meaningful work at a much older age.

b) As many as five generations working side by side. In addition, a

recent Deloitte survey (2008) revealed that 32% of respondents

indicated that they have made, or are planning to make, changes

to their total rewards programmes with generational or age

differences in mind.

c) The workforce' will be highly diverse, with differences in race,

gender, culture, background, religion, generation, sexual

preferences, disability, language and so forth. Optimising these

differences and harmonising across them will be a minimum

requirement for human resources professionals.

d) The traditional nuclear family will change to heterosexual

(unmarried) couples, gay couples (with or without children),

female primary earners, families with adopted children, single­

mother and single-father households and grandparents as

primary caregivers. The more understanding human resources

professionals are of the different household types which are and

will be more prevalent in the future, the more they will be able to

adapt benefits and human resources policies accordingly.

92

e) A continuously increasing need for work/life balance, flexibility

and a work environment where trust and respect are paramount.

The implications of these current and predicted future trends are that

employers will have to be proactive in terms of their human resources

and reward policies and practices and adopt a more flexible

approach. Remuneration systems act as signalling devices to current

and prospective employees, providing information about the less

visible organisational attributes, its philosophies, values and

practices. Talented people whose ideas, knowledge and skills give

them the potential to produce disproportionate value compared to

their average peers are more mobile than ever before and therefore

the preferences of these people have to be understood and

responded to through a comprehensive total rewards model in order

to retain them (Hill &Tande, 2006; Linkow, 2006; Menefee &Murphy,

2004). Bowles et al. (2001, p. 1) aptly state that: "there are many

reasons why an employer would care about the preferences of his

employees, since the employee's preferences affect the cost of

securing the labour services".

A total rewards survey obtaining employees' preferences for different

types of rewards will provide the information organisations need on

how to be more strategic and innovative in the design of reward

programmes. This information will enable an understanding of what

will attract, motivate and retain employees, and will support a flexible

approach where reward structures can be designed for different

employee segments (Frank et aI., 2004; Giancola, 2008). In the 2008

Deloitte Consulting LLP survey, 56% of employers who responded

indicated an intention to move towards an approach where

employees are given more choice in terms of reward management ­

a move towards addressing 'total rewards consumerism' (sometimes

referred to as employee empowerment) in an endeavour to positively

influence employee engagement levels. There is no doubt that this

93

approach will enhance the attractiveness of these organisations for

prospective and current employees (Lawler, 2000).

2.7.2 Strategic reward management

Strategic reward management is visionary and forward-looking, and

is characterised by an emphasis on integrating reward strategies with

business and human resources strategies. Strategic reward

management therefore deals with the formulation and implementation

of strategies, policies and practices that aim to reward people fairly,

equitably and consistently in accordance with their value to the

organisation. These reward processes and practices are geared to

improving organisational, team and individual performance. The main

areas of reward management for which strategies are developed

consist of processes for valuing jobs, grade and pay structures, pay

adjustments, performance management, contingent and variable pay,

employee benefits and recognition (Armstrong & Murlis, 2007).

Due to the complexity of total rewards, it is an arena that is fertile

ground for confusion. The same term can have different meanings

derived from different situations and contexts. It is therefore important

to clarify a few related terms on the basis of the most widely used

interpretations. Some elements of a reward system are the following:

a) policies that provide guidelines on managing rewards, for

example the comparisons to market, internal equity versus

external equity, the composition of the total reward offering, the

role of line managers in decision-making, governance

concerning pay decisions, transparency;

b) types of reward, referring to the nature of the reward itself (for

example, financial and non-financial; extrinsic and intrinsic);

c) practices or systems that provide for the methods that

organisations use to determine employee reward outcomes (for

example, bonus amounts, pay increases). These methods

94

typically include performance or non-performance practices.

Performance-oriented systems remunerate employees

according to their performance, whereas non-performance

systems refer to the determination of remuneration according to

different criteria - for example, seniority or competencies;

d) processes concerned with total rewards - for example,

evaluating the relative size of jobs (job evaluation) and

assessing individual performance (performance management);

e) procedures operated in order to maintain the reward system and

to ensure that it operates efficiently and flexibly and provides

value for money;

f) reward criteria refers to the basis on which organisations

determine and distribute rewards - for example, performance­

or non-performance-oriented;

g) reward strategy, which sets out what the organisation intends to

do in the longer term to develop and implement reward policies,

practices and processes to support the achievement of business

goals and meet individual needs (Armstrong, 2006, Chiang,

2005; Gross & Friedman, 2007; Milkovich & Newman, 1999);

h) The remuneration philosophy underpins the reward strategy and

articulates an organisation's strategic direction for human

resources . and reward management. It provides general

guidelines for reward decisions taken. Some aspects that could

be covered in the philosophy document are the role of corporate

governance and its influence in the design of reward policies

and practices, the influence of accounting, tax and cash-flow

consideration in the design of reward schemes, the strategic

intent of each component of the reward model and the

communication methodology adopted by the organisation on

rewards management (Henderson, 2003; Joyce, 2006).

Armstrong and Brown (2006) developed a diagram (see Figure 3) to

illustrate the development of strategic reward management

processes in an organisation:

95

Internal and external

environment

Analysis

..Current

reward

practices

Diagnosis of issues including employee and stakeholder needsi .Formulation of gUiding principles

iCreation of total reward approach

iDevelopment of reward strategies

--1---1-Financial

• Base pay

• Incentive pay

• Variable pay

• Employee benefits

• Pensions

Non-financial

• Recognition

• Scope for development,

growth and autonomy

• Working environment

• Workllife balance

lImplementation and review

Figure 3: Strategic rewards management activitiesArmstrong and Brown (2006, p.15)

It can be seen from Figure 3 that a reward strategy is systemic in

nature. It operates within the context of the business environment

and the needs of stakeholders (including employees). It ensures that

the organisation is directing its reward investments appropriately to

result in the greatest impact (Gross & Edelsten, 2006).

An important link which is not indicated in the previous model is the

impact of the organisation's strategy on the development of a reward

strategy. The following diagram illustrates the linkages between the

organisational strategy and the rewards strategy where employee

needs are also considered.

96

Business requirements >:2 Employee >req uirements

How is the Key business What does the Implications formarket imperatives? organisation total rewards?

changing? need to do to besuccessful?

il il il ilWhat: Business

Base salary

Business Strategy Bene ts

Strategy, plan and keyres ults N1nual incentives

Plan & business How: Long lerm Incentives

Values imperatives OrganisationalCar er opponunities

Workllifecapabilities

requirements

Figure 4: Linking business strategy an d strategic rewardsmanageme nt(Burchman, Jones & Toumey, 2007 , p. 92)

The previous two diagrams illustrate the place of the reward strategy

in the context of the organisation's strategy and also the processes to

be followed in the development thereof, including the incorporation of

employee needs to enhance the effectiveness of this process. Within

this context, the purposes of rewards management are to:

a) reward people accord ing to what the organ isation values and the

desired behaviours and outcomes;

b) support the development of a performance-based culture;

c) attract, retain and motivate high-quality people and obta in their

commitm ent and engagement;

d) create total reward proce sses that recogn ise the importance of

both financial and non-financial rewards;

97

e) develop a positive employment relationship and psychological

contract;

f) align reward practices with both business goals and employee

values; and

g) ensure fair, consistent, transparent and equitable application of

reward policies and processes (Armstrong, 2006; Martin, 2004).

The design of a total rewards approach or methodology should be in

line with the overall organisational remuneration philosophy,

competitive market norms, organisational values and cost

considerations (Menefee & Murphy, 2004). A well-designed total

rewards strategy can improve employee commitment and

engagement and employee retention, and can assist in the

reinforcement of organisational values and culture. Therefore by

enhancing employee motivation, contribution and performance,

organisational performance will improve (Accel-team, 2007).

Following the design of a total rewards strategy, the underlying

processes need to be identified to understand the full spectrum of

rewards management. Rewards management consists of a number

of different processes that are all integrated. The following diagram

depicts the positioning of the different reward components and

processes within the context of the organisational and total rewards

strategy and also what key decisions need to be taken relating to

these processes.

98

Considerationsandactivities

Extemalbenchmarking onpay & benefits

Relative worthofiobs insideorganisation:·Job ana!ysis·Job description.Job eva! uation

Relative worthofPeople:·Merit pay·Bonus pay·Incentivepay

I Decisions I

Pay levelPay structureBenefit levelBenefitstructure

Economy Legislation I I Unions

Constraints

Internal labourmarket

Extemallabourmarket

"

Figure 5: Processes, components and stakeholdersimpacted by the organisational reward strategy(Bergmann & Scarpello, 2001, p. xvi)

Figure 5 illustrates the point that a well-designed total rewards

strategy takes into account internal and external factors that impact

the organisational strategy, and that directly and indirectly influence

the resultant reward processes and the key decisions that follow from

this model. The total reward strategy needs to be aligned with the

rewards philosophy and be very clear in its intent. It is also indicated

that the total reward strategy drives reward policies that determine

matters such as the positioning of pay against benchmarks, whether

internal equity takes precedence of external equity and the links

between performance management and remuneration. Successful

execution of the rewards strategy lies in the implementation of the

rewards policies. The decisions on reward related matters lies in the

domain of mostly the line manager and it is also important that line

99

,.

managers are adequately educated on reward management to

ensure that they can implement the policies effectively, fair,

consistently and with the required judgement.

Once an understanding of the internal and external factors impacting

reward management is obtained, and the underlying policies and

processes understood, an organisation can proceed with the design

of a total rewards framework. The essence of total rewards is that all

things that employees value in the employment relationship are

bundled together to ensure that organisations optimise their ability to

attract, retain and motivate staff in the most cost-effective way. The

components of the total rewards framework or model (depending

whether an organisation chooses to use a model or a framework) will

form the different options (types of rewards) that employees may

choose from. Once they have selected their choices, the total value

of the benefits can be monetised and included in a total rewards

statement.

2.7.3 Total Rewards Models and Frameworks

Over the past number of years, a number of different total rewards

models and frameworks have been developed by organisations and

consulting firms. It is appropriate to understand some of the total

rewards models previously developed in order to obtain a

comprehensive understanding of all the reward-related components

that are used in these models.

A number of different examples of total rewards models available in

the literature are presented here. Thereafter the underlying rewards

components that form part of the respective total rewards models will

be described. From the literature review, a comprehensive total

rewards framework will be designed that forms the basis of the

quantitative study and subsequent analysis.

100

2.7.3.1 WorldatWork's total rewards model

WorldatWork, the largest global not-for-profit professional associa tion

dedicated to knowledge leadership in total rewards , defines total

rewards as containing five core reward categories, shown as follows:

Figure 6: WorldatWork's total rewards model(WorldatWork, 2007 , p. 7)

The core elements of the WorldatWork model are :

a) Remuneration (compensation as referred to in the model refers to

a combination of variable and fixed pay components)

b) Benefits

c) Work/l ife

d) Performance and recogn ition and

e) Development and career opportunities (WorldatWork, 2007 )

The World atWork model is well known among reward practitioners

globally . It is a popular framework that includes the relationsh ip with

101

the organisational and human resources strategies and

organisational culture, and indicates the consequential influence on

business performance. This model is used by many organisations as

the starting point to design their own unique total rewards model.

2.7.3.2 Corporate Leadership Council total reward framework

The CLC defines total rewards from a philosophical point of view as

consisting of the following categories (CLC, 2005):

a) Base Pay

b) Health and Well ness Benefits

c) Leave benefits

d) Retirement benefits

e) Bonus and Incentives

f) Family-friendly benefits

In comparison to the WorldatWork model, the processes relating to

performance management and learning and development are totally

excluded and work/life is partially included with the reference to

family-friendly benefits. In an update of the categories published in

2007 (CLC, 2007a), the definition of total rewards evolved into the

following categories:

a) Remuneration and benefits (changed from compensation to

remuneration)

b) Work environment

c) Work/life balance and

d) Organisational environment

This latest definition of total rewards by the CLC (CLC, 2007a)

includes the wider work environment, namely organisational

environment, that refers to the organisational culture. Work/life

102

balance is also more specifically stated, which aligns well with some

of the other reward models.

To enhance the understanding of what is meant by the different

categories, the components that underlie these categories are

included in Table 7.

Table 7: CLC total rewards framework(CLC, 2007a, p. 17)

Remuneration and Benefits:

0 base salary

0 bonus as percentage of base

salary

0 health benefits

0 retirement benefits

0 share options

0 internal equity

0 external equity

Work/Life balance:

0 location

0 t1exitime

0 child care

0 hours

0 telecommuting

0 travel

0 vacation

Work environment:

0 manager quality

0 co-worker quality

0 recognition

0 cutting-edge work

0 empowerment

0 role clarity

0 work challenge

0 internal mobility

0 project responsibility

Organisational environment:

0 risk-taking

0 company reputation

0 senior team reputation

0 company size

0 employee development

0 reputation

0 technology level

0 respect

0 meritocracy

0 ethics

It is interesting to note from Table 7 that processes and perceptions

such as internal and external equity and senior team reputation are

included as reward components in the previous table. Organisational

environment is also included as a separate category with different

103

reward components compared to the categories that are included in

the WorldatWork total rewards model and could therefore be seen as

an additional category to the WorldatWork model.

2.7.3.3 Armstrong and Thompson's total rewards model

In this model (Table 8), the quality of working life is included in

comparison to the later version of the model developed with Brown

(2006) that refers to the work experience.

Table 8: Armstrong and Thompson's model to total rewards(Armstrong & Thompson, 2002)

Total

r:=::::> Reward

Career

Opportunities

Quality of

working life

Recognition

Opportunity

to develop

skills

Non-

+ financial

rewards

Total

r:=::::> Remu­

nerationShare

Ownership

Benefits

Base pay

Variable

PayFinan­

cial

rewards

Armstrong and Thompson (2002) include in Table 8 mostly common

components in their model, and it aligns well with what is available in

the market. In fact, these last four models are closely aligned, with

the one big difference being the reference to work/life balance,

working life, work experience and work environment, which refer to

the same concept, although different terms are used. Towers Perrin

(Armstrong & Brown, 2006) also refers to the work environment in

their model.

104

2.7.3.4 Armstrong and Brown's total rewards model

Another additional component to the WorldatWork total rewards

model is added by Armstrong and Brown (2006), who include the

work experience as an additional reward category in their model.

They also refer to transactional and relational rewards in their

description of total rewards as well as a reference to non-financial or

intrinsic rewards depicted in Table 9.

Table 9: Armstrong and Brown's total rewards model(Armstrong & Brown, 2006)

Base PayTransactional Total

rewards Contingent Pay remuneration

Employee Benefits Total rewardNon-

Relational Learning and financial/rewards Development intrinsic

The work experiencerewards

Work/life balance is not included in Table 9, but is referred to in the

definition of the work experience. With the exception of performance

and recognition, this model is very similar to the WoridatWork model.

2.7.3.5 Towers Perrin's total rewards model

Towers Perrin continues with the differentiation between relational

(tangible) and transactional (intangible) rewards as well as a

reference to individual versus communal rewards (Armstrong &

Brown, 2006). This reference has not been found in any other

rewards model but is very descriptive in terms of the nature of the

rewards. The following figure illustrates the Towers Perrin total

rewards model.

105

Transactional (tangible)

Pay Benefits

• Base pay • Pensions

• Contingent pay • Holidays

• Cash bonuses • Health care

• Long-term incentives • Other perks

• Shares • Flexibility

• Profit-sharing

16Learning and 16development Work environment c:;:, ;:,

"tJ Workplace learning & Core values of the E:~ • •"tJ development organisation Ee 0

• Training • Leadership 0

• Performancemanagement • Employee voice

• Career development • Recognition

• Achievement

• Job design and roledevelopment(responsibility,autonomy,meaningful work, thescope to use anddevelop skills)

• Quality of working life

• WorkJIife balance

• Talent Management

Relational (intangible)

Figure 7: Towers Perrin's model of total rewards(Armstrong & Brown, 2006, p. 25)

Towers Perrin in Figure 7 supports a more inclusive total rewards

framework. Although the model has only four categories, it resembles

the WorldatWork model by and large, as the only outstanding

category performance and recognition is included as components

under learning and development and work environment respectively.

106

2.7.3.6 Zingheim and Schuster's total rewards model

A model that initially appears different from the WorldatWork total

rewards model was designed by Zingheim and Schuster (2007).

According to their total rewards model, rewards are clustered into

three categories, namely total pay, performance or people

management and other types of rewards, with respective supporting

components that aid in the understanding of what is meant by the

respective categories. The Zingheim and Schuster model is shown in

Figure 8.

Total Pay

o Base payo Variable payor

incentiveso Recognition and

celebrationo Benefitso Reward customisationo Fairness

Performancemanagement andmanagement ofpeople

o Goal-setting(cascading and thatcan be influenced byindividuals)

o Performancemanagement (settingexpectations,feedback, coaching,results, evaluation)

o Superkeepers(Identify and rewardthose with criticalskills andcompetencies thatare translated intoresults - now andpotential for future)

o Managing out poorfit/poor performers

Total Rewardsother than Pay

o Individual growth(career paths,competencymanagement, buildcapabilities forcompetitiveadvantage)

o Compelling future(win-win over time)

o Positive workplace(Work/life balance,shared accountabilityand celebration ofsuccesses,consistent 2-waycommunications)

o Change (flexible,agile, good atplanning andexecuting)

Figure 8: Zingheim and SChuster's total rewards model(Zingheim & Schuster, 2007, pp. 3-4.)

Zingheim and Schuster (2007) suggest that organisations need to

differentiate their total rewards offering in terms of people who are

107

defined either as 'keepers' (80% of employees) or 'super-keepers'

(top 20% of employees). Through this process, an organisation's

talent, performance and succession management processes are

integrated with the rewards process. Although the terminology used

is different from the WorldatWork model, on deeper inspection the

concepts and underlying meaning are similar. What makes this

model so popular is the integration with other human resources

processes and the reference to retention of key skills, which is critical

for most leaders in organisations (CLC, 2008).

2.7.3.7 Mercer Human Resources Consulting's total rewards

framework

A more limited total rewards framework was developed by Mercer

Human Resources Consulting, which defines total rewards as

consisting of three main categories namely, pay, benefits and

career (indicated in Figure 9).

Pay

Base Pay

Overtime pay

Short-term incentives

Other lump sums

Cash profit sharing

Long-Term Incentives

- performance plans

and equity

Benefits

Retirement (DB

and DC)

Healthcare

(medical, dental

and vision)

Paid time off

Income protection

Death benefits

Work/life

programmes

Non-traditional

benefits

Career

Buy-build strategy

Skills enhancement

training/development

Career opportunities

Employment stability

Nature of work

Figure 9: Mercer Human Resources model of total rewards(Gross & Friedman, 2007):

108

In this model there is no reference to performance management or

recognition. Work/life programmes are categorised under benefits. In

comparison to all the other models studied, this model offers the

most limited view on the total rewards framework. There is also no

clear relationship indicated between the different reward components

and the three reward categories namely pay, benefits and careers.

2.7.3.8 B&Q's total rewards framework

Most organisations use theoretical models available in the public

domain and customise these according to the organisational culture,

the strategic issues and the reward philosophy. An example of a

company that customised its total rewards framework is B&Q, which

used parts of the rewards models and frameworks described in this

section to develop a unique frameworks for its organisation, shown in

Figure 10:

Total Pay

Base Pay

Variable Pay

Benefits

Recognition

Individual growth

Investment in people

Development and training

Performance management

Career enhancement

Compelling Future

Vision and values

Growth and success

Stakeholdership

Positive workplace

People focus

Leadership

Colleagues

Work

Involvement

Trust

Open communications

Figure 10: B&Q's total rewards framework(Armstrong & Thompson, 2003, p. 17)

In terms of this customised framework, transactional and relational

rewards are combined. Four definite reward categories (Total pay,

109

Compelling future, Individual growth and Positive work place) with

underlying reward components have been defined but with no direct

or indirect relationship betwee n each other. The model is likely to be

very powerful, as it not only integrates the different reward categories

but also cons iders the organisational culture and strategy.

2.7.3.9 Crawford and Giowa's flex fund

Crawford and Giowa (2008) suggest that the total rewards framework

should be personalised as much as possible, without increasing the

cost for the employe r. They suggest a flex fund that is used by

employees to select the benefits they prefer, within the total agreed

employment cost. In Figure 11, the authors indicate the change from

the current practice of prescribing benefits to the new proposed

practice of a 'flex fund '.

Other pay & benefi ts Other pay & benefits

V ari able pay Variable pay

Holiday and vacation >IC om pany car

Flex fundLife and disability insurance

Medical and denta l insu rance

Base Salary Base sa lary

Figure 11: Illustration of a flex fund(Crawford and Giowa's (2008, p. 14)

The flex fund illustrated in Figure 11 can be used to select from a

broad menu of options (reward components), depending on the

reward preferences of the employee. An example of this flex fund is

included as Figure 12.

110

Lifestyle Options• Fitness memberships• Childcare services• Conciergeservi ces• Environmental choices• Community servi ce

-Time off options-Msdicel examinations-Eldercareservi ces-LitestvleI wellness account-Transportanon I parking

Development Options-Personal developmentItraining-Coachinq fees·Internal assignmentsoExternal assignments·Business I computerequipment

Financial options-Retirernent plansoMortgage subsidies-Financial planning-Retirement planni ngoTax preparation-Educationsavings-sooos I servi ces discounts-Cash

oLife insuranceoMedical insurance-Dental insuranceopet insurance

Providing for the unexpected• Disabilityinsurance• Healthcare spending account• Critical illness insurance• Vehicle insurance

Figure 12: Menu of options under a flex fund(Crawford & Giowa, 2008 , p. 14)

Crawford and Giowa (2008 ) state that the degree and scope of

flexibility offered to employees must be anchored in the overall

employee value proposition. The degree of flexibility offered depends

on the overall bus iness approach , the level of education of

employees, the organisationa l culture and the current reward

strategy.

Therefore, in structu ring the total rewards model, the rewards

philosophy should first be agreed . Once an organisation understands

the needs of individuals with regard to the compo sition of the total

rewards model, the information can be used to identify the optimal

mix of reward components that will focus on retention initiatives and

enhance the employer brand (CLC, 1999a).

111

2.7.3.10 Integrating motivational theories with total rewards

The function of remuneration within and outside the work

environment is complex and any simple statement with regard to the

importance of remuneration in the work environment , would be

inappropriate. Figure 13 illustrates how the key components of the

motivational theories can be integrated with rewards management.

Opport unity

---I r

Ability

Highachievement

need

Performanceevaluation

criteria

Equitycomparison

"

I

II

Personal goals

Dominant needs

.

,I

Organisat ionalrewards

j

Re inforcement

Goal-direct edbehaviour

Individu alperformance

-r--r-r-w-

1Objective

performanceevaluation

system

Ind iv idual effort

Figure 13: Integrating conte mporary theories of motivation(Robbins et aI., 2003 )

The foundation for Figure 13 is Vroom's expectancy theory (Vroom &

MacCrimmon, 1968), which emanates from a belief that people make

conscious decisions about the achievement of certain goals through

considering the opportunity for being successful and the relationsh ip

between success and effort. Their drive or motivation to perform

stems from the need for the specific intrinsic or extrinsic reward that

will follow from being successful in achieving the goal. This cycle

112

starts with an opportunity given to an individual. To be successful

some effort (varying from little to extensive effort) as well as specific

abilities, are required. The individual's ability and levels of effort can

be positively influenced through an objective performance evaluation

system (including the setting of objective performance criteria) where

the line manager provides regular, fair and constructive feedback

regarding the levels of performance in relation to the goal (Locke &

Latham, 2002). Taylor's theory of scientific management (1911)

explains the individual's need for close supervision, understanding

the detailed tasks that need to be performed, provision of tools and

training to be optimally effective, as well as continuous reinforcement,

and how these will contribute to higher levels of motivation and

performance.

A detailed assessment of the competencies required for the job

(abilities), the provision of a work environment and tools and

predetermined specific goal-setting also drive motivation (Locke &

Latham, 2002). Skinner's reinforcement theory (Skinner & Holland,

1961) indicates the interaction between individual performance and

the consequential rewards that follow. Through positive

reinforcement, behaviour can be shaped more effectively and

influenced towards goal achievement. The rewards offered through

the organisational rewards schemes should be worthwhile to produce

the required levels of effort (Steers & Porter, 1991). In terms of

Adams's Equity Theory (1965), employees may compare the

performance assessment feedback and resultant rewards they

receive, with their peers. Should there be inequity, subsequent

behaviour and effort could be negatively influenced. Perceptions of

need satisfaction are typically determined by individual expectations

(in relation to the actual reward received), which in turn are

determined by what others have received relative to their effort and

responsibility.

113

In terms of the self-determination theory (SDT) organisational

rewards in the form of financial incentives could cause motivation to

move from being intrinsic to extrinsic which is considered less

desirable (Deci & Ryan (2000). Organisational rewards (total

rewards) could however consist of a range of financial and non­

financial rewards, and should this meet the individual's needs (with

reference to the theories of Maslow, Alderfer and Herzberg), the

individual's personal goals are then achieved and motivation levels

will remain high towards further goal-directed behaviour.

Financial rewards have different meaning for different people. For

some people, financial rewards serve as a means to satisfy lower­

order needs, whereas for others, financial rewards are used to satisfy

higher-order needs such as social status. Herzberg et al. (2004)

maintain that remuneration is not a motivator and if the level of

remuneration is satisfactory and meet expectations, the employees

will be satisfied. However, when remuneration does not meet

expectations, employees will be dissatisfied. According to McClelland

(1961), high achievers are not motivated by money or performance

management processes, but rather by the need to achieve. It is

generally believed, however, that high performers measure their

success in terms of the rewards that they receive and that the

rewards earned are an important feedback mechanism for them

(Gray & Starke, 1988).

Organisations that have a strong performance culture generally

attract individuals with a need for power and achievement

(McClelland, 1961). These types of organisations generally have

reward systems with direct line-of-sight and robust performance

management processes (including feedback processes). As

organisational climate positively influences individual performance,

the organisational climate should be positive, as McGregor argues

(Kopelman et aI., 2008). McGregor maintains that the Theory Y

manager provides a positive work environment where people can

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excel. It is important for line managers to understand what the

individual dominant needs are in order to provide adequate types of

rewards (both intrinsic and extrinsic) and an organisational climate

that can drive optimal levels of motivation and individual

performance.

2.7.4 Clustering total rewards categories

From the different total rewards models studied, it can be seen that a

combination of different reward categories and components is used.

For the purposes of an initial overview in the current study, all the

components and categories have been combined into one table. This

can be considered the first step in the development of a

comprehensive total rewards framework. The reward categories

identified in the models from the literature review have been

clustered into eight categories as indicated in Table 10. The

components included under each category are also indicated in this

table. The latter will eventually also inform the nomenclature of the

different reward categories used in the total rewards framework

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Table 10: A clustered view of different financial and non­

financial reward categories

TRANSACTIONAL or FINANCIAL or TANGIBLE REWARDS

o Remuneration (including base pay

and contingent/variable pay and

share ownership benefits)

o Also referred to as Total

Pay/Remuneration or Cost to

Company

o Health and Wellness benefits

o Family-friendly benefits

RELATIONAL or NON-FINANCIAL or INTANGIBLE REWARDS

o Work/life quality

o Work/home integration

o Development and career

opportunities

o Learning and development

o Individual growth

o Compelling future

o Performance and recognition

o Performance management

and management of people

o The work experience

o Workplace quality

o Positive workplace

As can be seen from Table 10, total rewards consist of financial and

non-financial components, and remuneration and other benefits

should all be included in the reward offering. It is clear from the

literature review that development and career opportunities, the work

experience, performance and recognition, and work/life quality should

all form part of the total reward offering designed within

organisations. These factors are key requirements in the light of the

motivational theories discussed earlier on.

Motivation theories are not in competition with one another, but

mostly complementary to each other and to the rewards

management process. A number of different motivation theories can

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therefore be addressed through rewards management processes in

addition to a total rewards framework. The total rewards framework,

resultant policies and the implementation processes need to be

designed in an integrated manner, as they all playa critical role in the

motivation of employees.

2.7.5 Components underlying the reward categories in total rewards

models and frameworks

There is a wide range of approaches taken by consulting houses and

organisations in the development of total rewards models and

frameworks. It can be seen from the literature review that although

similarities exist, there is no one total rewards model that is

agreeable to all. Although there appear to be differing opinions

around the nomenclature used in the reward categories, and the

categorisation thereof, the inherent meaning of the different

categories is mostly similar. In analysing the components underlying

the reward categories, there is agreement on the reference to

financial and non-financial rewards, although some of the

components are not used by the different originators of the models.

Interest in reward practices has increased significantly over the past

10-15 years, emanating from the initial basic understanding of pay

and benefits to what is now commonly categorised into financial, non­

financial, intrinsic and extrinsic rewards as part of a total rewards

model (Du Toit et al., 2007; Milkovich & Newman, 1999;

WorldatWork, 2007).

In order to understand the reward preferences of employees, a more

detailed analysis of the reward categories is required. The elements

that make up the categories are referred to as reward components

and were identified in the literature review. The reward preferences

will be assessed in relation to the respective reward categories and

underlying reward components. These components are covered in

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more detail in the next section of this chapter. The extent to which

there are different beliefs around the diversity and value of the

respective reward components and categories supports the need for

this research, which aims to design an empirically supported total

rewards model.

2.7.5.1 Financial types of rewards

Financial rewards are also referred to as total remuneration, or

tangible or transactional types of rewards, and the most common

descriptor is total remuneration (Milkovich & Newman, 1999). Total

remuneration therefore excludes non-financial and non-tangible

benefits which the employee receives as part of the employment

relationship. The following components are collectively referred to as

total remuneration:

a) Base pay

Base pay is also referred to as remuneration and is the agreed cash

salary paid to an employee. Base pay is considered an entitlement

once agreed to between the employer and the employee and is

considered the most powerful driver of employee attraction (CLC,

2004). Base pay is furthermore informed by the pay philosophy of the

employer mostly in terms of the organisation's desired pay position

against the external market (McAdams, 1996). Determining base pay

levels is an important aspect when an organisation plans

remuneration. However, as it is not relevant for purposes of this

study, and so the researcher has deliberately excluded literature

covering the determination of pay levels.

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b) Benefits

Benefit programmes are holistically referred to as health, wellness or

family-friendly benefits. A typical benefit solution has several

components that are used to supplement cash, including health,

income protection, savings and retirement programmes. These are

often referred to as programmes that protect families from financial

risk. Employee benefits are considered an integral part of total

rewards (Giancola, 2008).

Although traditional benefits typically refer to health care, retirement

plans, life cover, accident cover, disability cover and paid time off

(typically statutory leave such as annual, sick, maternity and family

responsibility leave types), many organisations are including more

creative benefit options. Meyer (2006) highlights the fact that

employers are increasingly offering alternative types of benefits such

as matching charitable donations (31%) and free products and

services (12%). Personal and financial security (for example, car and

housing loans) and discounts on organisational goods and services

also form part of benefits. GlaxoSmithKline (GSK) includes under its

pension plan an opportunity for employees to participate in a

ShareSave and ShareReward plan that encourages shareholding in

the organisation. This is also tied to retirement benefits.

Benefits as a component of total remuneration, however, exclude

offerings such as cafeteria services, tuition reimbursement, non­

statutory leave types (for example, study and sabbatical leave),

which have been included under the Work/Life rewards category

(Armstrong & Brown, 2006).

Benefits and services affect the employee's current and future

standard of living. They are typically considered hygiene factors and

seldom impact performance (Henderson, 2003). Benefits cost

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organisations between 35% and 40% of base salary and according to

Herman and Giowa (2000) the value of these benefits is often

determined by the perceived value for employees as opposed to the

monetary value thereof. Services and benefits vary widely from

country to country. For example, in response to shortages and high

costs of housing in Korea, Hyundai shipyards include dormitories and

apartments as well as transportation allowances in the remuneration

offered to employees (Milkovich & Newman, 1999).

Benefits are often considered an entitlement and taken for granted.

They are not connected to individual performance and are mostly

considered an employee-related expense. In a study undertaken by

Giancola (2008), 70% of employees indicated that they do not require

more benefits but a greater choice of benefits at the same total cost.

This is supported by Phillips and Connell (2003), who state that

individuals sometimes have a greater need for a variety of benefits

than for pay. In response to the needs of the multi-generational

workforce, many employers are shifting from a paternalistic approach

to one of flexibility, and a shared responsibility where benefits are not

only offered for the benefit of the employee but also for their families.

c) Guaranteed remuneration

Guaranteed remuneration typically represents the cost of base pay

plus the employer cost for benefits offered as well as fixed

allowances (for example, housing and car allowances) including the

13th cheque. Guaranteed remuneration excludes the cost of

incentives and non-financial rewards (personal communication, Dr.

Mark Bussin, 12 June 2008).

Since the late 1990s, most South African organisations have

converted their remuneration approach from the traditional base pay

plus benefit approach to guaranteed remuneration. Synonyms for

guaranteed remuneration are total remuneration package, cost to

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company or a cafeteria approach. With this new approach employees

are allowed, within policy constraints, to structure the benefits they

wish to receive as part of guaranteed remuneration. The guaranteed

remuneration approach was mostly introduced to enable external and

internal comparisons of reward packages, to provide flexibility for

employees and to enhance their understanding of the cost of the

benefits that are offered to them. Although tax structuring was an

added advantage during the late nineties, this has mostly

disappeared with the tax reform and little opportunity for opportunistic

tax structuring currently exists (Thomson & Westcott, 2004).

Organisations continue to follow this approach, however, as it is

considered to enhance the value of the reward offering to employees

(Lawler, 2000).

d) Variable pay

Variable pay is also referred to as contingency pay. Variable pay is

offered in different forms under the headings short- and long-term

incentives. WorldatWork (2007) states that 79% of organisations in

the USA offer variable pay programmes to their employees. In the

United Kingdom, 90% of executives participate in incentive

programmes (Cohen, 2006). Short- and long-term incentives will be

explored in more detail.

Short-term incentives are tied to the performance of the individual,

the team, the organisation or a combination of these. Short-term

incentives are typically once-off incentives which are offered prior to

the actual required performance, paid out when the performance

targets have been reached and therefore do not permanently

increase the salary bill. They have to be re-earned each performance

period (WoridatWork, 2007). Short-term incentives have become

more popular over the past few years, both in terms of participation

and the actual amounts paid out (Corsello, 2006).

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A well-designed short-term incentive scheme should reward

employees for work done over and above the normal call of duty,

namely an additional return for extra intellectual, emotional and/or

physical efforts. Incentives therefore provide employees with a share

of the profits. In sharing profits with employees, a message is sent

that they are not only contributors but shareholders in the

organisation. Incentives play an important role in recognising top

performance, which satisfies an intrinsic need for recognition

(Henderson, 2003).

A typical reward structure in most organisations would include base

pay and benefits, short-term incentives and, for management and

more senior employees, long-term incentives.

Long-term incentives account for more than 50% of total chief

executive remuneration in large USA organisations and 30% of

executive and senior management total remuneration (Rappaport

cited in Harvard Business Review, 2001). According to Hall and Knox

(2003), more than 40% of USA organisations have broad-based

share option programmes with grants to, on average, 50% of

employees. Long-term incentives are mostly offered as a wealth

accumulation vehicle, a retention scheme, to encourage individual

performance and to align employee and shareholder interests (CLC,

2007b).

Large gains accrued from the exercising of long-term incentives

(without corresponding sustainable organisational performance) have

been the subject of much negative publicity over recent years. Elson

(2003, p. 72) states the following: "... we've turned CEOs into casino

operators who hype up the stock in the short term without creating

value in the long term ... " This view is confirmed by Rappaport (2001,

p. 3), who is quoted as saying that lithe huge gains from options for

below-average performers should give pause to even the most

ardent defender of current corporate pay systems". Following the

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dismissals of high-profile CEOs of large companies such as AT&T,

Sears, IBM, General Motors and Compaq Computers (due to poor

performance), as well as the excessive gains made from long-term

incentives exercised during the stock market ascent in the mid­

1990s, boards have been questioning the appropriateness of long­

term incentives (Rappaport cited in Harvard Business Review, 2001).

Furthermore, a study conducted by Salomon Smith Barney (Balsam,

2002) found that the organisations that allocated the largest grants of

options diluted share value, meaning that the increase in shareholder

value that should have been derived from the incentives did not

outweigh the dilutive effect of the share option grant.

It has also been noted that boards increasingly start to require

executives to own shares of the organisations that employ them as

opposed to selling options and taking the cash the moment the

incentives vest (Lawler, 2000; Seegers & Hopkins, 2009).

Examples of typical long-term incentive plans implemented are:

a) Share option schemes

b) Premium-priced share option schemes

c) Share purchase plans

d) Share Appreciation Rights (cash or equity settled)

e) Restricted Share schemes

f) Conditional or Performance share schemes

g) Phantom schemes

h) Deferred annual bonus share plans and co-investment plans

(Armstrong, 2006; Hopkins, 2005; Reynolds, 2001).

Although organisations use a range of different long-term incentive

vehicles, the most prevalent are options, restricted shares and

performance awards, with 90% of organisations linking LTis to

corporate performance vesting conditions which are mostly (80%)

internal, absolute goals (CLC, 2007b).

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According to Crotty and Bonorchis (2006), recent tax and accounting

changes in South Africa have forced many organisations to review

their long-term incentive plans. A variety of new plans have been

designed in the last few years in order to offer optimum benefit to

staff at the lowest possible cost for organisations. The trend in South

Africa is that organisations are reviewing traditional share option

plans and either replacing them or enhancing them with restricted

share and share appreciation right schemes.

One of the concerns with long-term incentives is that even at small

award levels, the eligibility to participate in the scheme creates a

perceived (sometimes unrealistic) value to participants and often

employees over-value their first option grant due to lack of

understanding of the mechanism (CLC, 2007b). In addition, the long­

term incentives only have a retention value for the vesting period, as

most employees sell options or shares as soon as restrictions are

lifted. Similarly, underwater options (that is, where the issue price is

higher than the market value of the share) and long-term incentive

vehicles with performance vesting conditions have a reduced

retention value (Hall & Knox, 2003). It has therefore been very

difficult to determine the effectiveness of long-term incentives for

purposes of retention, although they remain a popular form of

remuneration (Balsam, 2002). It suffices to say that long-term

incentives are quite controversial; yet although the incentive

instruments may change in form over time, there is no sign of these

being removed from reward offerings (Seegers & Hopkins, 2009).

Best Buy, one of the largest electronics retailers in the USA, has

improved the perceived value of its long-term incentive schemes by

including different choices that employees can choose from in terms

of their individual preferences and appetite for risk. Choices include

different wealth accumulation vehicles, flexibility in the timing of

realisation of earnings and different performance measures (Abboud,

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2007). These matters need to be considered in great detail by

remuneration committees when an organisation's remuneration

philosophy is determined (Thomson & Westcott, 2006b). It is widely

recommended that organisations provide choice between long-term

incentives to employees, as this allows employees to adjust their

financial portfolios in terms of their personal preferences and offers

them the opportunity to take accountability for, and a keen interest in,

their own equity portfolios. A recent study showed that only 4% of

respondents in the survey offer choice to their participants in terms of

types of long-term incentives (CLC, 2007b).

The concept of expected value of share awards refers to the

probability-weighted present value of the cash flows arising from the

instrument. For share options, this value is influenced by the

prevailing interest rates, the share price, volatility, the dividend yield,

the expected time to exercise and other factors such as vesting

conditions. A number of different valuation models are available, of

which the three most popular models are the Black-Scholes option

pricing formula, the Binomial tree model and the Monte Carlo model

(Hopkins, 2005). The expected value of the share-based awards is

also used in the accounting thereof. The expected value of share

awards is negatively influenced by the use of corporate performance

vesting conditions as the probability of vesting reduces. This also

means that the perceived value of the grant is reduced for the

participants (personal communication, Brendan Olivier, 4 April 2009).

When the value of a long-term award is included in a total reward

statement, the amount included in the financial statements in respect

of the fair value of the grant is typically used (Thomson & Westcott,

2006b). Long- and short-term incentive schemes must be designed

carefully in relation to an organisation's reward philosophy and in

support of the organisational strategy. If they are effectively designed

and used in combination with other reward plans, they can be highly

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effective motivational tools (Kohn cited in Harvard Business Review,

2001).

e) Broad-based Black Empowerment Employee Schemes

Broad-based Black Empowerment Employee Schemes (BBBEE)

have become popular in South Africa since the introduction of the

Department of Trade and Industry's (DTI) code of good practice.

These schemes have mostly offered long-term benefits in the form of

share-based awards to participants (in order to increase shareholding

among mostly previously disadvantaged employees and other

individuals) and are therefore sometimes confused with long-term

incentives.

The South African Broad-Based Black Economic Empowerment

(BEE) Strategy was implemented by the government as an

intervention to redress the economic imbalances which were created

as a result of apartheid legislation. Some of the high-level objectives

of this strategy are:

a) to significantly increase the number of black people who have

ownership and control of existing and new enterprises;

b) to significantly increase the number of black enterprises, black­

empowered enterprises and black-engendered enterprises;

c) to significantly increase the number of black executive and

senior managers in enterprises and

d) to increase the income levels of black persons and reduce the

income inequalities between and within race groups (the DTI,

2004).

As BEE has become a business imperative in the South African

environment, most South African organisations have responded to

the DTI code, the BEE strategy and the Employment Equity Act

through broad-based BEE transactions in order to achieve the

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required points on the BBBEE scorecard. According to Ernst and

Young (2004), the value of BEE deals announced in South Africa in

2003 more than trebled what was concluded in 2002 and there was

no sign of slowing. High-profile BEE transactions reported since 2003

were across a number of different industries and included for

example Vodacom, Nedbank Group, Foodcorp and the highly

acclaimed Sasol Inzalo transaction with regard to which Cohen

(2008, p. 12) has stated "if only all BEE deals had been put together

like this one from Sasol". In 2008, the value of Black Economic

Empowerment transactions in South Africa amounted to R200bn

(Business Times, December 2008).

One of the aspects measured under the DTI code is direct black

empowerment determined by the percentage of shareholding in the

hands of black people. A large portion of the broad-based black

economic empowerment transactions therefore include a grant of

shares and/or options to eligible employees. These equity grants

typically have time-based vesting criteria and restrictions on trading

of these instruments for a period of time but are not dependent on the

individual performance of the beneficiaries. These equity grants are

intended to create wealth for the beneficiaries and greater black

share-ownership in the country, and are a cost to the organisation. It

is therefore appropriate to include their value (as per the

determination of long-term incentives) in the total reward statement,

as they do enhance retention efforts due to the design of most of the

schemes. They should, however, not be viewed as an incentive or

part of variable remuneration (personal communication, Brendan

Olivier, Director: Vasdex (Ply) Ltd, 01 August 2008).

In conclusion, as BEE is intended to be in support of broad-based

empowerment and is not an incentive per se, it is therefore

recommended that BEE grants not be included as a component in

the total rewards model.

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f} Allowances and special payments

There are a number of different event-driven allowances that

employers offer employees. Typically, allowances are linked to the

nature of a job. The following are examples of such allowances:

o Company car scheme allowance

o Uniform allowance

o Relocation allowance

o Subsistence allowance for meals and accommodation during

business travel

o Shift, standby and call-out allowance

o Overtime payment

o Cell phone allowance

o Hardship or location allowance

o Scarcity or market allowance

o Parking allowance

o Underground allowance

o Housing allowance

(Dr Mark Bussin, personal communication, 1 November 2008; Mrs

Yvonne Webb, personal communication, 10 April 2009)

In addition to the above list of allowances, other ad hoc types of

payments are in the form of what is generally referred to as sign-on

payments, retention bonuses, referral bonuses and hot-skills

premiums that should also be considered for inclusion in the total

rewards model, detailed as follows.

Sign-on payments: In the 2006-07 WoridatWork Salary Budget

Survey (2006), respondents revealed that the three most common

attraction and retention practices were in the form of sign-on

payments (69%), market adjustments (64%) and employee-referral

bonuses (65%) (Cohen, 2006).

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Sign-on bonuses (also referred to as a golden hello payment) are

typically paid at the time an employee joins the organisation and are

tied to a specific period of service. Therefore, if the employee leaves

the employer before a certain period of time, the money has to be

paid back to the employer. This payment is often offered in order to

release an employee from obligations with the current employer. This

type of payment is typically seen as an attraction mechanism and

could also be offered in the form of unvested on-appointment options

or shares as these in addition serve as strong retention vehicles

(Cappelli,2000).

Referral bonuses: An increasing number of organisations have

implemented referral programmes that pay an amount of money to

an employee who successfully refers a person for recruitment into

the organisation (usually after a few months of employment). This

amount is typically lower than, but in lieu of, what the organisation

would have spent on agency fees if the person was appointed via a

recruitment consultant (Herman & Gioia, 2000).

Hot-skills premiums: These premiums refer to an additional payment

on top of the guaranteed package offered for people with a specific

skill or qualification which is in short supply. The payments are an

effective way to retain employees for critical periods - for example,

during the late stages of implementing a large-scale project. The

premiums typically cease when the employer decides that the skills

are no longer important to the business or when the skills become

more readily available (Cappelli, 2000).

The question is whether these allowances and other types of awards

(for example, sign-on payments or hot-skills premiums) should be

included in the total rewards model and statement. They are financial

in nature, and a cost to the organisation. However, they could be ad

hoc and not considered a part of employees' normal remuneration.

These allowances, however, represent a benefit to the employees

and mostly have a retention benefit for employers. It is therefore

129

proposed that where allowances are paid regularly (for example, car

allowances), these be included in the total rewards model. However,

if they are ad hoc allowances (for example, subsistence allowance

and sign-on payments), it is proposed that they are kept outside the

total rewards model (therefore not as an option to choose from) but

still be included in the total reward statement, as they offer a value to

the employee.

2.7.5.2 Non-financial rewards

Non-financial rewards are also referred to as intangible or relational

rewards. These rewards enhance transactional or financial rewards

and the combination thereof results in a powerful employment

offering. Non-financial rewards often mean that employees have to

pay for these offerings, but having access to them on-site improves

the organisational EVP (Harris & Clements, 2007). Non-financial

rewards are also broadly referred to as benefits, and are considered

as hygiene factors (Herman & Gioia, 2000).

The components that form part of these types of rewards in the total

rewards model that have been identified in the literature review are

the following:

a) Wellness management programmes

Wellness management programmes mostly incorporate health

management programmes and are also referred to as employee

assistance programmes. These programmes are typically offered as

part of or in addition to a medical plan that enables employees to stay

healthy, prevent or manage chronic conditions or recover from

serious illness or injury (Half, 2006). In an era where annual

increases in healthcare costs have soared for a number of years

above the average rate of inflation, and where the increase in stress­

related diseases is alarmingly high, health management programmes

130

are rapidly becoming a popular benefit offered to employees

(Gobinca, 2008).

Health management is also referred to as wellness or employee

assistance programmes (EAPs). Pro-active health management

programmes in the form of, for example, free health testing has

reduced absenteeism by up to 14% in large South African

organisations and in the USA it has proven to reduce medical

expenses by 25% - 30% (Gobinca, 2008).

Robert Half International conducted a survey in 2006 and found that

34% of employers who participated in the survey offered wealth

management programmes on a voluntary basis; 15% of the

respondents offered a range of programmes which are designed to

address the needs of employees on all stages of the health

continuum; and 11% offered a comprehensive wealth management

programme. Twenty-one percent of large employers, which the

survey defined as employing 5000 or more employees, offer different

health management programmes and 19% offer a comprehensive

programme. Respondents in the survey indicated that the primary

reason for this benefit offered was to control spiralling healthcare

costs (88%), to promote greater employee responsibility for health

(76%) and to reduce incidental sick leave and hence improve

productivity (60%) (Half, 2006).

Examples of health management programmes are:

o corporate fitness centres on site or on a subsidised basis (with

or without the services of a personal fitness trainer);

o personal counselling in times of crisis or support groups - for

example, for new parents, relatives of people suffering from

Alzheimer's, cancer or HIV/AIDS;

o on-site wellness centre with some or all of the following: a

general practitioner, nurse, physiotherapist, psychologists,

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therapists performing back and neck massages; barber and

beauty services; meditation room, nutritionist and other medical

staff performing wellness screenings (Christofferson, 2006;

Cisco, 2008).

Xerox is actively offering a wellness programme to its employees.

Employees who participate in a health assessment receive a US$200

credit towards their benefit costs. The American Institute for Cancer

Research awards US$500 to each employee who stops smoking

(Goff,2007).

H.J. Heinz Co. offers counselling to all employees experiencing

emotional or personal trauma - for example, divorce, death as well

as pre-retirement preparation (Keuch et aI., 2006). Cisco offers legal

advice, emergency assistance and support and well-being seminars

to its staff either face to face or through telephonic support (Cisco,

2008). Hankin (2005a) suggests that employers should make legal

assistance available to assist employees with rental agreements,

leases and other contractual matters.

With the increased cost of health care, employers are increasingly

trying to manage their costs by integrating and coordinating health

care, sick leave, disability and mandated family leave as an

integrated health and productivity package. Organisations that invest

in effective leave-management and well-being programmes have

opportunities to positively influence the overall health status of the

workforce (Davis, 2006).

b) Wealth management

Wealth management programmes assist employees in managing

their financial affairs and include for example retirement counselling;

financial counselling and debt management programmes

(WoridatWork, 2007).

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c) Workplace quality

The terms work/home (life) balance, work/life quality and workplace

quality are sometimes used interchangeably. The Canadian National

Occupational Health and Safety Centre (2002) refers to work/life

balance in the context of holistic health management. Lawler, Nadler

and Cammann (1980) describe quality of work/life as a way of

thinking about people, work and organisations, with distinctive

elements being a concern for the impact of work on people's lives in

the context of ongoing organisational effectiveness. There are

essentially two ways of interpreting workplace quality: firstly as a set

of objective organisational conditions and practices such as job

enrichment, democratic supervision, employee involvement and safe

working conditions, and secondly as the degree to which employees'

perceptions confirm that their needs are met at the workplace - for

example, in opportunities to learn and satisfaction with their job

content (Cascio, 1991).

For purposes of this study, work/home integration refers to specific

programmes that aim to support the employee in managing a

balanced lifestyle with an appropriate balance between home and

work commitments, whereas workplace quality refers to the quality of

the work environment within which employees operate (CLC, 2008).

WorldatWork (2007) provides a number of examples of work/life

programmes. In the context of the different definitions provided for

workplace quality and work/home integration, the researcher

attempted to allocate these programmes under the two stated reward

categories, as indicated in Table 11.

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Table 11: Differentiating between workplace quality andwork/home integration programmes

Workplace quality Work/home integration

Company cafeteria or convenienceshop on site

Car maintenance or repair services

Dedicated phone line for after schoolphone calls

Corporate discounts

On-site child care facilities Educational scholarship or tuitionreimbursement for employees and/ortheir children

On-site nursing room Elder-care case management and otherelder care support services

Peer support groups meeting duringofficial working hours

Financial assistance to equip a homeoffice

Special reserved parking for pregnantemployees

Overnight travel child care expensesubsidies

Pagers for expectant fathers

Reserved spaces and preferredcustomer status at child care centres (ifnot offered by the company)

Summer camp or summer care forchildren (during school holidays)

The two categories included in Table 11 refers typically to facilities

that either enhance the quality of the work environment for an

employee as it for example eases the transition from maternity leave

back to the work environment (through the provision of on-site

nursing rooms) or provides convenience stores that saves time in

terms of daily acquisitions of essential supplies such as milk and

bread. The work-home integration category refers more to facilities

that are made available by employers to bring the responsibilities

from work closer to the responsibilities that are carried in terms of the

home environment. Holiday programs for children for example create

an environment where employees do not have to take leave during

school holidays as their children are cared for.

134----------------=-------- --~- -~--- ------- ----

Additional examples to what were included in Table 11 are ways to

enhance the quality of the workplace for example on-site dry cleaning

and shoe repair; access to concierge services, 'ready to eat'

nutritional meals to take home, equal opportunities, ethical labour

practices, zero tolerance harassment policies, a culture of integrity,

strategies and policies on the management of disabilities, the voice of

the employee (through for example annual staff surveys) and a safe

work environment with strict compliance to health and safety

regulations to prevent occupational injuries (Cisco, 2008).

FBL Financial Group considers their suburban campus environment,

with manicured lawns, trees and an astounding atrium, as part of

their total rewards model that enhances the quality of their workplace

(Christofferson & King, 2006). Western Asset Management Co.

considers their world-class office space, the modern office furniture,

the subsidised cafe and rooftop garden as part of their total rewards

offering (Keuch et aI., 2006).

Nedbank Group introduced prayer room facilities for staff of all

denominations during 2007. The prayer rooms are visited by

approximately 300 staff members per month. Not only do they

enhance the quality of the workplace but they also increase the

productivity levels of staff that do not have to leave the premises for

purposes of attending mosque or other church proceedings (personal

communication, Cheryl de Beer, Employee Assistance Programme

Manager, Nedbank Group Ltd, 08 April 2008).

Some examples of practices that enhance the workplace quality

could also be viewed as being integrated in the culture building or

organisational development of an organisation, which for purposes of

this study, is viewed as forming part of the EVP of an organisation, as

opposed to being part of the total rewards framework.

135

d) Work/life effectiveness

The term work/life effectiveness refers to the reciprocal links between

an individual's work and personal life and is therefore also referred to

as work/home integration. This means that there should be a healthy

balance between life at work and life outside work. When this

balance is distorted for employees, they experience fatigue and tend

to be absent from work more often, don't focus as well and are less

efficient (Canadian National Occupational Health and Safety Centre,

2002). Work/life integration means different things to different

individuals and depends on where people are in their lives and career

cycles (Lingle, 2004).

Work/life effectiveness does not just contribute to greater

effectiveness at work; it also enriches the employees' lives outside of

the work environment. Moen (2000) measured the effectiveness of

work/life programmes for the improvement of people's psychological

and personal well-being (what he refers to as life quality). He found

that, provided that people have high levels of personal mastery to

manage the distinct divide between work and home lives, work/life

programmes generally lead to reduced levels of conflict between

work and personal life, stress and overload.

Ensuring work/life quality is not only a serious responsibility for any

organisation, but also a key factor in attracting and retaining a highly

qualified workforce. In terms of latest generational theory research, it

is reported that more than 47% of employees falling in the

Generations X and Y categories cite work/life imbalance as the

primary reason for leaving their previous job (Sharp, 2008).

In support of work/life balance, flexible work programmes have

become more popular internationally. Flexible work practices were

introduced in the mid-1990s in the USA due to the high costs of

workplace stress, the changing nature of work, short-term and part­

time contracts implemented due to downsizing and the influx of

working women. The introduction to flexible work arrangements and

their customisation to individuals' needs and lifestyle demonstrate to

employees that the employer is committed to helping them achieve a

more harmonious and healthy balance between personal and work

lives (Gottlieb, Kelloway & Barham, 1998). Flexible work

arrangements have well-documented positive impacts on

productivity, retention, recruitment, job satisfaction, employee

engagement and stress reduction (Berger & Berger, 2004;

Christofferson & King, 2006).

Progressive employers no longer view "being productive" as working

from an office, but rather as the results of what has been delivered,

and a definite blurring of boundaries between work and non-work life

is taking place (Johnson, 2007). Flexibility in the workplace is no

longer optional; it has become a key to survival - mostly around the

management of time and deliverables. The workforce requires

workplaces that provide for opportunities to make maximum use of

their work-home hours (Stein, 2007). Permitting employees to work

office hours that suit them, or from home, opens up the possibilities

for organisations to employ high-calibre staff from a wider pool of

applicants (Manning, 2008).

Paid time off in different formats is another popular way of assisting

employees to manage their work/home responsibilities.

Sabbatical leave periods originated in the academia to foster

professional, personal and creative growth and to offer free time to

write books and articles, to update skills and conduct research. Non­

academic sabbaticals in organisations include leave for different

reasons, including personal growth. IBM and Xerox offer a fully paid

sabbatical period of up to one year and Deloitte & Touche offers a

sabbatical period of up to five years of unpaid leave mostly to

137

recuperate from stressful working conditions and burnout (with no

guarantee of a job upon return to the workplace). McDonald's offers a

three-month sabbatical leave period after 10 years of service to learn,

grow, travel and/or try a different career for a short term (Hill &

Tande, 2006). In 2005, twenty-five of Fortune's 100 Best Companies

to Work For offered paid sabbaticals mainly to prevent burnout

(Giancola,2006a).

In the USA, 45% of organisations offer adoption leave. Wendy's

Restaurants, in addition to 6 weeks' paid leave, also offers financial

assistance of US$5000 per adopted child and an additional US$2000

allowance for children with special needs (Boerio, 2007;

WorldatWork, 2007). Caring for dependants, scholarships and

bursaries and tutors helping children with schoolwork in the

afternoons are all creative ways to enhance work/home integration

(Hankin, 2005a). Work/home integration programmes are important

to consider, as the balance between work and home life affects the

quality of life generally, in family and communities, as well as the

economic vitality of a nation (Campbell, 1981; Nordenfelt, 1993).

Non-financial reward components such as wellness management,

wealth management, workplace quality and work/life effectiveness

are also collectively referred to as a conducive working environment.

e) Internet access, cell phones and laptops

Internet access, cell phones and laptops are issued to employees

who typically engage in flexible work practices. According to Half

(2006), at least 34% of USA companies offer e-mail and internet

facilities to their employees that could also be used privately and

hence be perceived as a benefit. In addition, laptops and mobile

phones are often offered to employees as part of an employment

offering and could be seen to enhance the quality of the workplace or

as a way to facilitate work/life balance. This could however be

138

questionable, as the line between work and private life gets blurred

when work-related phone calls and emails are responded to from

home. It is ultimately a matter of personal preference and up to the

individual's personal perspective on what work/life balance means.

Flexible work practices, where employees have the ability to work

from another work station away from the office, have also contributed

to retention and productivity (Berger & Berger, 2004; Christoffersen &

King, 2006). Technology has played an enormous role in enabling

employees in choosing where and when they work.

Items such as internet access, cell phones and laptops are typically

granted in order for the employee to be able to continue working

outside of the formal office environment, and/or to be contactable at

all times and are therefore rather considered as a means to conduct

business (tool of trade) as opposed to a benefit. It is therefore the

researcher's view that these items should not be considered as part

of the total rewards model.

f) Recognition

Recognition refers to acknowledgement of employee actions,

performance and behaviour that meets intrinsic psychological needs.

It is therefore a strong motivator for continued performance (DuBrin,

2005) and builds on Skinner's reinforcement theory (Steers & Porter,

1991). Recognition appears in most total rewards models and can be

done informally or formally, in the form of cash or non-cash - for

example, through trophies, certificates, company picnics, additional

leave days or a paid dinner for the family (Gentry, 2007). Given the

power of recognition, and the importance thereof in terms of

motivation theories, choosing the right recognition process is an

important part of designing a total rewards model. A successful

recognition programme should match the culture of the organisation,

139

be specific, timely and match the achievement to the type of reward

offered (Herman & Gioia, 2000).

Recognition has a positive influence on the engagement and

retention of employees. When outstanding performance or effort is

praised, employees feel more connected to their work and their

productivity improves (Gentry, 2007; McAdams, 1996). Employees

generally have a need to celebrate success, and to be recognised in

front of their peers. Such celebrations contribute to the building of an

appreciative organisational culture, a sense of belonging, team spirit

and loyalty (Ivancevich & Matteson, 1990; Marcus, 2007).

g) Growth and learning opportunities

According to Rehm (2006), more than ten years of international

research validated that learning and growth is one of six core

dimensions that all employees seek, regardless of what generation

they belong to. These core dimensions also positively influence the

retention of employees. Employees want to remain as marketable as

possible, and therefore need to ensure that their skills remain

relevant. Development opportunities that grow potential and nurture

talent are therefore critical.

The inclusion of learning opportunities within the total rewards model

stems from the concept that motivating and engaging a workforce

also includes planning for the advancement of skills and the building

of careers within organisations. In this way, the employer and the

employee benefit from the symbiotic relationship (WorldatWork,

2007). Boundaryless careers encourage working environments

where employees can have multiple employment situations

throughout their careers and often move horizontally as opposed to

only vertically in the more traditional career models (Bimrose, 2007).

140

Growth and learning opportunities include a challenging work

environment, relational learning, informal interaction with colleagues,

formal learning programmes offered in different forms, mentoring and

coaching practices, apprenticeships, professional development,

effective performance management and support for ongoing studies

outside the organisation (Cooper & Burke, 2002; Herman & Gioia,

2000).

The need for continuous learning as well as different personal or

work circumstances often lead to employees choosing second or

third careers. Research on individual differences suggests that

personality traits and personal styles impact how successfully people

make the transition from one career to another. Of the Big Five

personality traits frequently studied in organisational sciences,

extraversion and openness to new experiences are most critical in

employees' abilities to move to second or third careers (Cooper &

Burke, 2002).

h) Performance management

Performance management is considered the application of

scientifically derived behavioural principles in order to address certain

individual and organisational objectives (Gray & Starke, 1988).

Performance management finds its origins in motivational theories

and behavioural sciences such as Maslow (1943), Herzberg et al.

(2004), McClelland (1961), Locke and Latham (2002) and Vroom

(Vroom & MacCrimmon, 1968). Performance management systems

require an alignment of organisational, team and individual goals (in

relation to specific problems that need to be solved or targets that

need to be achieved) and include establishing expectations, skill

demonstration, assessment, feedback and continuous improvement

processes. The behaviour required must be specified in observable,

measurable terms and constant reinforcement must be aligned to the

individual need for reinforcement. Employee participation in the goal-

141

setting process is critical and goals must be within the abilities of the

employee (Gray & Starke, 1988).

Grobler, Warnich, Carrell, Elbert and Hatfield (2006) describe the

performance appraisal process as the ongoing process of assessing

and managing behaviours in the workplace as well as outcomes

against predetermined performance objectives. Different terms are

used to describe this process, namely performance evaluation,

performance review, annual appraisal, employee evaluation and

merit evaluation (Armstrong & Murlis, 2007). Because of the potential

deficiencies of performance appraisals, including the subjectivity of

the evaluators (perceived or real), participation in the process by the

employee often enhances the perceived fairness. Through

participation, mutually acceptable goals are set and the achievement

of these goals is measured in a more objective manner. Subjectivity

or biased behaviour can also be addressed through training

programmes on the human and technical sides of the rating process

(Cascio, 1991; Grobler et aI., 2006).

Performance management, essentially a management process, is

often viewed as part of the total rewards process, as it is frequently

used as a way of determining remuneration increases or incentive

allocations (Armstrong & Murlis, 2007)

i) Job security and seniority

Job security is important for some employees, and yet fewer and

fewer organisations are willing to offer employment stability or job

security. This follows a similar trend of loyalty and seniority no longer

being rewarded, but rather only skills and performance (Lawler,

2000).

Employees who feel that their jobs are guaranteed are often willing to

receive a reduced remuneration package knowing that incentives will

142

make up for the difference if their performance is satisfactory

(Henderson, 2003). Some organisations still also offer anniversary

awards and vacation awards (Keuch et aI., 2006). According to

Zehnder (2001), seniority was a proxy for experience and therefore

strongly linked to compensation in the 1960s. The practice of paying

for seniority has mostly been replaced by linking remuneration to

performance as opposed to years of service.

j) Supporting the local community

A component which is sometimes seen as part of the total rewards

model, and that deserves some attention, is an effort by employers to

be involved in the local community. Herman and Gioia (2000) state

that a shift in social values is infiltrating corporate culture, with some

people focusing on the local community, while others look at making

the world a better place to live in. An increasing number of

employees realise that they have a responsibility towards the

community and the society at large. Giving something of themselves

raises their self-esteem. Corporate funding, time off for community

projects, supporting community theatre, cultural activities and sport

events through sponsorships, supporting fund raising events, disaster

relief contributions; clean-up projects and special education

programmes are all covered under community service projects where

employers and employees can make a difference. Examples of

organisations who build their overall EVP through involvement and

support of the community are the Levi-Strauss Foundation, which

donates US$500 to community organisations in which an employee

actively participates for a year and companies (for example, Ben &

Jerry's) that donate 1% of profits to programmes which support

worldwide peace programmes (Hewlett, Sherbin & Sumberg, 2009;

Hill & Tande, 2006).

Although there is literature that suggests that this component forms

part of total rewards, it is the view of the researcher that it falls

143

outside of the total rewards framework, but forms a significant part of

the overall EVP.

2.7.6 Proposed theoretical total rewards framework

In structuring the total rewards model or framework, the rewards

philosophy should first be agreed upon (Kelley, 2006). In considering

the reward philosophy, the culture of an organisation should be taken

into account, as organisational culture also has a direct bearing on

the motivation of employees (Gray & Starke, 1988; Hill & Tande,

2006). Hierarchical organisations would typically link remuneration

and benefits to levels in the organisational structure. The alternative

to a hierarchical system is an egalitarian stance where benefits are

not linked to job level and where some benefits may well have been

either eliminated or aligned regardless of level. Organisations such

as Alcoa and Hewlett-Packard have eliminated hierarchical benefits

such as reserved parking bays, executive offices, executive dining

rooms and special building entrances, in an attempt to build a more

informal and less structural culture (Lawler, 2000).

In the late 1990s, a study on employee motivation was undertaken at

the Ohio State University (OSU), Columbus. The purpose of the

study was to establish the importance of factors that motivate

employees. Participants in the study were requested to rank the

following motivational factors:

a) Job security

b) Sympathetic help with personal problems

c) Loyalty towards employees

d) Interesting work

e) Tactful discipline

f) Good working conditions

g) Market-related salary

h) Promotions and growth opportunities

144

i) Participation in drafting job descriptions

j) Appreciation

The highest-ranked motivator was "interesting work" followed by

"market-related salary", "appreciation", and "job security". This study

was repeated in 2006, and the outcome was slightly different. "Job

security" was the most important motivator, followed by "market­

related remuneration", "appreciation" and "interesting work" (Marcus,

2007).

According to a survey conducted by the CLC, South African

employees attach the highest value to the following attributes in the

employment offer (also referred to as reward components):

a) Base pay

b) Bonus

c) Internal equity

d) Manager/Senior team quality

e) Recognition

f) Health benefits

g) Diversity

h) Hours worked

i) Organisational brand

j) Job fit

k) Retirement benefits

I) Empowerment

m) External equity

n) Promotional opportunities

0) Location(CLC,2002a;CLC,2002b)

High-level results reported by the CLC on employee preferences for

reward components are the following:

145

a) remuneration and benefits as a category was considered most

important in affecting high-value employee career decisions.

Particularly important was base salary, external equity and

health and retirement benefits. However, the most important

component of a job offer to employees is base pay and least

likely to be traded away for any other attribute;

b) the single most important decision in managing a career is the

quality of the direct manager. Employees were prepared to trade

remuneration in order to work for the best managers in an

organisation;

c) among work/life balance attributes, the highest importance was

placed on factors creating balance, namely hours worked,

location and business travel, and there are clear penalties for

inconvenience such as excessive hours, business travel and

relocation;

d) a high-risk, high-reward environment was considered less

attractive; and

e) in the category organisational environment, the organisational

brand and senior team quality ranked the most important

aspects for employees (CLC, 1999a; CLC, 2002b).

Through the conjoint analysis done on employment offer preferences,

the CLC reported that through an improved employment offer, both

the intention to leave and the actual resignations reduce as

competitors have to significantly increase reward packages to lure

high-value employees away.

Saratoga Institute (Saratoga PricewaterhouseCoopers, 2006)

conducted research to identify employment practices which would aid

retention. The five most important drivers of retention, in order of

priority, were identified as:

a) culture and work environment (including communication,

confidence in management, organisational stability);

146

b) training and development (including mentoring);

c) supervisor role, including the relationship with the supervisor;

d) career growth; and

e) earnings potential

Similar findings were also reported by Morgan (2004) and Linkow,

(2006).

Once the reward philosophy and strategy are determined, individual

reward preferences can be assessed. The research conducted on

employee preferences can be used to:

a) identify the optimal mix of various employment offer attributes;

b) design specific retention interventions; and

c) build and market an employer brand on valuable elements of the

employment offer (CLC, 1999a).

Thomson and Westcott (2006a) report that some progressive

employers have already started to offer personally tailored packages

to executives, measured at cost to company. This simple concept

works well for these employers in terms of their ability to attract and

retain executive skills.

In conclusion, there is no magic formula for employee motivation.

However, the components of the total rewards model or framework

playa critical role in human motivation and retention of employees.

Salary is considered a major determinant of work motivation and

appropriate work behaviours. But if an organisation focuses solely on

remuneration, there will be no sustainable influence on motivation.

Therefore, the emotional aspects at the workplace as well as the

non-financial rewards all have to be incorporated in the total rewards

framework that organisations design - the organisations who are

successful in this process will compete successfully in the global

147

workplace and will earn maximum return on their employment

inve stment (Gerhart & Rynes, 2003; Marcus, 2007; Stein , 2007 ).

Having cons idering the information collated in terms of the content

motivational theories as well as the total rewards models used by

other organisations, a theoretical total rewards framework is

proposed as set out in Figure 14.

TOTAL REWARD S----------------------- --------FINAN CIAL REWARD S

(ALSO REFERREDTOA~

TOTAL PACKA GE)

NON-FINAN CIAL RE WARD S(A so R f F R R ~ >Tn A<.;

A 0 D T Jt '\ I{ VA ~ ) I

ContingencyPay

Perfonnanceand Career

management

ualrtyworl<environment

Worl< / homeIntegration

Figure14: Categories of the the oretica l total rewardsframework

The theoretical total rewards framework shown in Figure 14 attempts

to integrate the reward categories of most of the prominent total

rewards models (Armstrong & Thompson, 2002 ; CLC, 2007a ; Lawler,

1990 ; Milkovich & Newman, 1999; WoridatWork , 2007; Zingheim &

Schuster, 2007). It combines financial and non-financial rewards that

address intrin sic and extrinsic rewards (Gray & Starke, 1988). A

reward category that was excluded from this framework yet included

in some of the models covered in the chapter refers to organisational

culture and reputation (Armstrong & Brown, 2006; CLC , 2007a ;

Gross & Friedman, 2007 ; WoridatWork , 2007).

148

It has been reported that the terms total rewards and EVP are often

used interchangeably but also that EVP covers a broader range of

components than total rewards and therefore that total rewards is a

critical component of an organisation's EVP (Christofferson & King,

2006; CLC, 2007a; Towers Perrin, 2007). As organisational culture is

considered mostly part of the EVP and as reward structures are often

a result of organisational culture (Armstrong & Brown, 2006;

Ivancevich & Matteson, 1990; Lawler, 2000) organisational culture

was not included as part of the integrated total rewards framework

but seen rather as a contributory factor to the design thereof. In

addition, organisational reputation is often linked to the employer

brand that is built upon the organisational EVP (Backhaus & Tiko,

2004; Balmer & Greyser, 2006) and was therefore excluded from the

theoretical total rewards framework.

The manifestation of a total rewards framework in the workplace is

through remuneration policies and processes (Armstrong, 2006) and

motivational needs as defined by the plethora of motivational theories

are partly addressed in these policies and processes. An example is

the need for equitable remuneration (Adams, 1965), where the

remuneration policy will specify the extent that internal equity takes

precedence over external equity and how individual performance

should relate to the granting of incentives and increases

(WoridatWork, 2007). The need for goal-setting (Locke & Latham,

2002) is addressed through the performance management policy that

guides line managers in terms of the methodology and processes to

agree on objectives to be achieved (Grobler et aI., 2006). An

example of an intrinsic reward is where the need for a feeling of

accomplishment when a challenging task is completed is provided

through a challenging work environment and career opportunities

(Gray & Starke, 1988). Therefore, for the successful implementation­

of a total rewards framework, mature processes, policies and

systems are developed and implemented to ensure that the matters

149

addressed in the process motivational theories are also covered for

optimal effectiveness (Bergmann & Scarpello, 2001).

From the literature review, the reward components that resort under

the reward categories have also been identified. The total rewards

framework consisting of reward categories and components that will

be used for the empirical research part of this study is indicated in

Table 12.

Table 12: Proposed categories and components of thetheoretical total rewards framework

Base Pay

• Monthly salary

• Merit increases linked to personal

performance

• Merit increases linked to inflation

not personal performance

• The ability to structure

remuneration according to

personal needs

150

Performance and Career

Management

• Monthly communication sessions

with management on business

progress

• Constructive and honest feedback

on performance

• Opportunities to rotate and

experience different types of jobs

• Growth opportunities, learning and

development

• Bursaries for tertiary qualifications

• Coaching and mentoring

• Formal and informal recognition

• Control over own work methods

• Career path planning aligned with

personal goals and interests

• Challenging job that tests abilities

• Accountable for job outputs

• International secondments

Contingency pay Quality work environment

• Annual performance bonus • Good relationship with colleagues

• Shares/share options • Comfortable working environment

• Bonus allocations linked to • On-site fitness centre, restaurant,

personal performance medical centre and convenience

• Bonus allocations linked to the store

team's performance • Personal safety and security in the

workplace

• Quality of co-workers in the team

• Management encourage team

performance

Benefits Work/home integration

• Medical aid • Flexible working hours

• Retirement & disability • Employer provides holiday

• Study leave programmes for children

• Sabbatical leave • Subsidy for financially dependent

• Dedicated parking bay parents

• Subsidised tuition for children • Ability to log into the employer's

• Financial assistance to buy a network from home

house • Laptop and 3G card are required

to perform optimally

• Phased in return to work after

maternity/paternity leave

Table 12 provides a comprehensive framework of different reward

components that employers may consider offering their employees.

The success of the total rewards framework, namely to optimally

motivate effective behaviour, lies not only in the content of what is

offered, but also in the supporting processes and communication

thereof within an organisation.

2.7.7 Total Rewards Statements

Total rewards statements are personalised documents that set out

the total value of pay and benefits offered to employees. An effective

151

and comprehensive total rewards statement is a critical tool to attract,

motivate and retain talent. Total rewards statements communicate

the complete remuneration package and provide an understanding of

the cost of all reward components.

The value of all benefits offered is monetised and the statements are

used to communicate the full value of the reward package. As the

value is communicated openly, the perceived value of the total

reward package offered is enhanced. The value of the benefits

offered and employee share schemes can be calculated in one of two

ways:

o The actual cost of the benefit to the organisation or

o The market value to the employee - therefore how much it

would cost the employee to purchase the benefits directly from

the market (Thompson, 2008).

Employees need to understand the value of benefits offered to them.

By combining the value of remuneration and all benefits offered on

one statement, employees see the bigger picture and have greater

appreciate for the rewards offered by the employer (CLC, 2005).

In response to employees' needs to understand all components of

total rewards, Yahoo launched web-based total rewards statements

termed "My Life: My Rewards". Yahoo monetised benefits and

included these amounts in the total rewards statement - for example,

the monetary value of paid time off. Yahoo reports that the

implementation of My Life: My Rewards has had a positive and far­

reaching impact on retention, improving employees' understanding of

the total reward offering, adoption of benefits, management

effectiveness and improved communication. The implementation of

the total rewards model and total rewards statements significantly

enhanced the EVP (Levin, 2006).

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2.8 Employee Value Proposition (EVP)

The EVP is the total employment experience and therefore the

differentiated total compelling employment offer (CLC, 2007c).

Organisations clearly differentiate themselves in terms of their EVPs,

for example at Starbucks the EVP is referred to as "your special

blend", at Google the EVP includes pool tables and bringing your dog

to work and at Nedbank the EVP is expressed as "great things begin

with great people". At Nordstrom, the EVP includes low-cost health

insurance and on-site day care. The EVP is therefore the unique and

proprietary way in which organisations attract, retain and motivate

employees (Christofferson & King, 2006).

The CLC (2007a) reports that building and managing an effective

EVP offers three key benefits:

a) access to a larger pool of candidates. It is found that the size of

the available talent pool increased by more than 50%;

b) improve employee engagement levels and commitment levels of

new hires by up to 29% (varying from 9% to 38%) and

c) reduce remuneration premiums demanded by new employees by

up to 50% (from 21% to 11 %).

Towers Perrin (2007) states the EVP complements total rewards by

adding components such as market benchmarking, leadership

research and organisational performance. Black (2008) identifies four

components that form the foundation of an organisation's EVP:

a) strong leadership;

b) organisational reputation, which includes reputation, culture,

contribution to the community and the world, stability and core,

values;

c) interesting and compelling job and career opportunities; and

d) tangible and intangible rewards.

153

As different views appear to exist with regard to the meanings of the

terms EVP and total rewards, they are often used interchangeably.

From the more recent literature specifically, it is deduced that total

rewards form a critical component of the overall organisational EVP

but are not a substitute for it. The EVP responds to an employee's

question "what's in it for me?" The differentiating factor between total

rewards and EVP therefore lies in the intangible experience and

perception of the organisation and includes inter alia culture,

organisational reputation, brand and success, transformation

initiatives, environmental concern and job security (Armstrong &

Brown, 2006).

Therefore, the integration of total rewards and the EVP is ultimately

the key to obtaining optimal effectiveness of both systems. By using

an EVP effectively, organisations distinguish themselves in the

marketplace to both attract and retain critically skilled employees. In

order to do this, organisations should communicate to both potential

and current employees a compelling and unique EVP, of which total

rewards is a critical part.

The employer brand is built upon the organisational EVP and refers

to the package of functional, economic and psychological benefits

provided through the employment contract and identified with the

employing organisation. The employer brand is the process of

placing an image of how the organisation wants to be perceived in

the minds of current and prospective employees - typically to be a

desirable and distinct employer (Backhaus & Tikoo, 2004; Balmer &

Greyser, 2006).

There is paucity of research on employer branding and the very'

specific impact thereof on organisations' ability to attract and retain

talented employees. Employer branding has emerged from applying

marketing principles to the field of employee recruitment, where------------ ---------~------------~- -- --- -- -

154

recruitment practices are typically used to market an organisation's

employer brand. Employer branding has beneficial effects in terms of

increasing applicant quantity and quality and organisational

performance (Cable & Turban, 2003). A strong employer brand,

according to Morton, Newall and Sparkes (2003), lies in providing an

environment where key talent can be continuously challenged, where

there are learning and development opportunities and where there is

flexibility in terms of the style and the content of the work performed.

An employer brand also refers to the organisational culture, the

respect for employees, and the extent of communication to and

recognition of employees.

There are different categorisations of brand concepts in brand

management literature that refer to product branding specifically.

Park, Jaworski and Macinnis (1986) divide product brands into three

categories on the basis of the consumer needs they fulfil, namely

functional needs, symbolic needs, and experiential needs. Functional

needs refer to the product's objective, physical and tangible attributes

that emphasise optimal benefits for minimal cost. Symbolic needs are

addressed in terms of the product's subjective, abstract and

intangible attributes that accrue from people's perceptions about a

product (through user imagery) and their inferences from what they

perceive (as opposed to what they experienced). Symbolic attributes

are linked to people's need to maintain their self-identity, enhance

their self-image or to express themselves through their values, beliefs

and personality types. Finally, experiential brand concepts

emphasise the brand's effect on sensory satisfaction or cognitive

stimulation (Lievens, Van Hoye & Anseel, 2007). Product brand

concepts are related to organisational brand concepts, as unique

individual needs can be addressed through employer brand

programmes.

Building a strong employer brand begins with an understanding of

where the organisation is going and why it exists, its purpose and

155

strategy. The business strategy forms the foundation of the human

resources strategy that informs the rewards strategy. The purpose of

the rewards strategy is typically stated as attracting, retaining and

motivating employees and the rewards strategy is therefore a part of

the EVP (Morton et aI., 2003). The EVP and the employer brand are

therefore dependent on each other, with the brand promise being

delivered through the EVP.

Engagement, rewards and retention are closely related constructs

that positively contribute to the EVP (Butler & Waldroop, 2004). The

drivers of engagement include remuneration, work/life benefits,

performance and recognition and development and career

opportunities - all components of the total rewards model (Giancola,

2007).

This view is supported by Sung and Todd (2004), who illustrate in

Figure 15 how line-of-sight (created through different reward

schemes) and manager effectiveness (addressed through process

motivational theories and supporting the total rewards model) drive

employee engagement, which in turn, improves organisational

performance and the EVP.

While pay and incentives can drive engagement, it's the combination of pay, line­

of-sight and empowerment that makes the difference

Pay Pay and Line-of-Sight Pay, Line-of-Sight and

----.. Empowerment

o Base pay increases

tied to individual

performance

o Bonuses tied to

individual

performance

o Bonuses tied to

company

performance

o Competitive base pay

o Manager helps employee

understand their impact on

company success

o Manager provides clear

goals and direction

o Base pay increases tied to

individual performance

o Challenging and

achievable

bonus/performance goals

o Bonuses tied to individual

performance

o Bonuses tied to company

performance

o Competitive base pay

o Appropriate decision­

making authority

o Resources needed to

perform high-quality work

o Manager helps employee

understand impact on

company success

o Manager provides clear

goals/direction

o Base pay increases tied to

individual performance

o Challenging and

achievable

bonus/performance goals

o Bonuses tied to individual

performance

o Bonuses tied to company

performance

') Competitive base pay

25% 35% 50%

The percentages indicate the extent to which the listed elements can affect

employee engagement. It is clear that the aggregate of the three components

delivers the biggest impact on employee engagement.

Figure15: Driving employee engagement(Sung & Todd, 2004, p. 66)

As indicated in Figure 15, financial remuneration, both in terms of

content and process, is a critical component of the construct

engagement. The linkage between pay, line-of-sight and.

empowerment is directly indicated. The net effect of personalised

reward structures therefore directly influences engagement that not

only fuels discretionary effort, involvement in the organisation and

157

commitment to success, but also prompts employees to identify with

the organisation and to promote the organisation as a good place to

work. Engagement positively contributes to the employer brand and

is built on the foundation laid by the employee value proposition. It is

believed that the results of this study, if taken on-board and

implemented by organisations, could positively influence the

engagement levels of employees, support organisational retention

efforts and ultimately improve organisational performance.

2.9 Conclusion

Aiken (1999) states that a major psychological problem experienced

in organisations is the capacity to understand and value human

differences. Most managers must motivate a diverse, often

unpredictable group of people. This diversity results in different

behaviour patterns that are related to abilities, personality, age,

preferences, needs, motivators, background and personal objectives.

Non-valuing and lack of understanding of human differences often

result in conflict, even war, and at the extreme there are people who

believe that as a result of differences people have no rights.

People show substantial individual differences in how they react to

certain circumstances based on personal characteristics. In addition

to the role that heredity plays in impacting individual behaviour, the

environment also plays an important role in influencing job behaviour.

The manager must therefore strive to create a positive environment

in which workers can perform at their best (DuBrin, 2005).

Finding out what makes people work to the best of their ability, is the

domain of motivation theories. The influence of motivation theories

on the design of reward schemes and the resultant levels of,

satisfaction experienced is summarised by Lawler (1983) as follows:

a) satisfaction with the rewards received is a function of how much

was offered compared to how much the employee thought he or

she earned and should have received;

b) employees' level of satisfaction with rewards is influenced by what

is offered to other employees;

c) employees often misperceive the rewards other employees

receive, which influences their own levels of satisfaction and

d) overall satisfaction with rewards is influenced by a combination of

the intrinsic and extrinsic rewards received.

In addition, employees' levels of motivation are positively influenced if

they are offered the opportunity to build the necessary knowledge

and skills, understand their role, what is expected of them and what

they have to do to obtain the rewards. Perceptions of fairness are of

vital importance. A range of financial and non-financial, tangible and

intangible factors not only positively influences motivation, but also

engagement levels. At the heart of this range of factors lies the

employer-employee relationship, where the needs and preferences

of both are understood and appropriately responded to (Chian, 2005;

Wintzel,2008).

Differences in reward preferences can be measured in a number of

different ways. In this study, reward preferences will be measured

with regard to the respondents' personality type, which has been

indicated in the literature review to correlate with motivation of

employees, retention of employees, levels of engagement and

improved organisational performance. Reward preferences

measured for different demographic groups will provide answers to

the secondary research questions and also provide novel information

on this matter within the South African context. In order to identify the

reward preferences, a qualitative theoretical total rewards framework'

was developed, which will be used in the quantitative part of this

study (covered in detail in the next chapter).

159

CHAPTER 3: RESEARCH DESIGN

3.1 Introduction

In the previous chapter, the literature relevant to the research

questions was studied to find support for the research constructs as

well as the research variables, and to develop a total rewards

framework that forms the basis for the quantitative part of this study.

This chapter focuses on the research methodology followed in terms

of the design and the implementation thereof, in order to reach

empirically based conclusions on the research questions.

3.2 Research objectives

As determined in the literature review, the research constructs are

supported by the findings that personality types and human

motivations influence the design of an organisation's total rewards

model or framework. It is therefore preferable to determine individual

reward preferences before an organisational rewards model is

designed. The total rewards framework influences engagement

levels, enhances the organisation's EVP and strengthens the

employer brand, aiding efforts to attract, retain and motivate talented

employees.

Important aspects that appear to impact on an organisation's reward

strategy include the business and human resources strategies

(Armstrong & Brown, 2006), employee preferences, personality,

motivational theories, and an appropriate total rewards model or

framework (Furnham, 2003; Gunkel, 2006). Total rewards positively'

contribute to employee engagement, organisations' employee value

propositions and organisational performance (CLC, 2004).

160

3.2.1 Research questions

This study aims to find empirical responses to the following research

questions:

The primary research question is:

What is the relationship between personality types and personality

preferences as defined by the MBTI® instrument and reward

preferences?

The secondary research questions are:

a) What are the relationship between the reward categories and the

underlying components of the total rewards framework?

b) What influence do the demographical variables have on reward

preferences?

c) What categories of the theoretical total rewards framework

contribute to the attraction, retention and motivation of

employees?

3.3 Research approach

3.3.1 Research design and variables

The research design is quantitative and exploratory relational. The

research variables are defined as follows:

a) The independent variables are the employees' personality type as

defined by the MBTI® instrument.

b) The dependent variables are the components that form part of the

theoretical total rewards framework, which have been identified'

through the literature review - for example, base salary,

161

incentives, career opportunities, and relationships with

colleagues, peers and managers.

c) The influence of demographic variables such as age, gender, job

family, and job level on reward preferences will also be measured

through the Rewards Preferences Questionnaire.

Terre Blanche, Durrheim and Painter (2007) define research design

as a strategic framework that guides the researcher into

operationalising the research questions. The framework consists of

three phases (indicated in Figure 16):

I Planninq staqes Execution staces

ResearchQuestion

--+ Data analysis &+-- collection

Data analysis &interpretation

Figure16: Research design framework(Terre Blanche et aI., 2007, p. 34)

The above research design framework was used in the execution of

this study. The planning stages include the collection of data through

the literature review followed by the development of a theoretical total

rewards framework and the design of the quantitative questionnaire,

referred to as the Rewards Preferences Questionnaire (Annexure 2).

The Rewards Preferences Questionnaire was distributed, together

with the MBTI® Form GRV (both web-based), to identified

respondents who, as far as could be established, had internet

access. The responses to the questionnaire were captured

electronically by respondents. Responses to the Rewards"

Preferences Questionnaire were saved on a server hosted by

-

162

STATKON. Responses to Form GRV were saved on a server hosted

by CPP Ltd.

Denscombe (2007) states that internet surveys and questionnaires

may be a disadvantage for respondents who are uncomfortable with

the use of computers, who do not have internet-connectivity and who

have a bias for impersonal contact. However, he also states that the

quality of responses obtained through internet methods are of the

same level as produced through traditional methods. Internet

research was deemed suitable for this study, as the targeted

respondents had access to computers and were in fact required to do

their work on computers. It was therefore assumed that participants

were computer-literate.

3.3.2 Measurement instruments

Questionnaires are popular ways of collecting data. They are cost­

effective, easy to analyse, familiar to most people and less intrusive

than personal interviews. The major disadvantage is the potential low

response rate and the researcher's inability to probe responses

(Thomas, 2003; Walonick, 2004).

Questionnaires are typically used to collect two types of information ­

namely, facts and opinions. They therefore tend to include questions

that deal with both these types of issues (Denscombe, 2007). A

questionnaire should include only those questions that are crucial to

the subject matter being researched. The researcher consulted a

number of resources when the Rewards Preferences Questionnaire

was developed, namely Alreck and Settle, 1995; Arsham, 2008;

Babbie and Mouton, 2004; Baker, 1999; Sapsford, 1999 and Taylor­

Powell, 1998.

163

3.3.3 The Rewards Preferences Questionnaire

The Rewards Preferences Questionnaire was designed from

information gathered through the literature review and specifically

from the categories and components identified to form part of the

theoretical total rewards framework (Appendix 1). To ensure

anonymity, participants were requested to choose an identification

code which they also had to use in Form GRV in order to match the

responses from respondents in respect of both questionnaires.

3.3.3.1 Questionnaire structure

The questionnaire comprises four main sections.

Section one contains demographic questions that are the stated

demographic variables in the study. People are motivated by different

motivators and the needs and preferences of diverse groups of

employees will be different. One of the secondary questions in the

study was to investigate the differences in reward preferences

between different employee segments - for example, women versus

men, older versus younger employees and different race groups.

Although some demographic information was also collected through

Form GRV, the demographic data collected through the rewards

preference questionnaire was used as it covered all the demographic

variables identified.

• Gender: participants had to select male or female. Although

discrimination in remuneration between men and women has

been addressed from a statutory perspective, strong evidence

exists that the reward preferences of women and men are not

yet taken into consideration in the design of remuneration

models (Menefee & Murphy, 2004). It is suggested by Robbins

et al. (2003) that women show greater emotional expression

164

than men and also experience emotion more intensely. The

results of this study will indicate whether the preferences for

reward categories are different between men and women.

• Racial group: the four primary race groups in South Africa

were included - namely, African, Coloured, White and Indian

(Census, 2001). Although significant research has been done

on reward preferences for different cultures (Chiang, 2005;

Hofstede, 1980 and MacGrain Herkenhoff, 2000) limited

research to date has been completed on the reward

preferences of people from different race groups within the

South African environment. One of the more obvious

implications of racial differences for managers is the

interaction of different racial groups in organisations.

Managers need to be sensitive to the different preferences of

employees from different racial groups to work towards

building more racially homogeneous teams with optimal

capacity to perform (Gray & Starke, 1988).

• Age group: Gray and Starke (1988) posit that as the workforce

ages, the social attitudes towards aging changes. It is

important from a managerial perspective to understand the

differences in motivators between 'younger' and 'older'

employees. Guidance on the age groups was taken from the

research on South African generational theory (Codrington &

Grant-Marshall, 2004). Internationally, there is no agreement

on the number of and birth periods for the different

generations. As Codrington and Grant-Marshall (2004) have

done their generational research on the South African

population, it was considered to be most appropriate to use

their cut-off points on birth dates for the respective age'

groups.

165

The current working population falls into one of three

generations or age categories - namely, those born between

1940 and 1960, people born between 1960 and 1980 and

lastly people born between 1980 and 2000. The four age

categories used in the questionnaire relate as follows to these

age groupings:

o 18yrs - 27yrs

o 28yrs - 38yrs

o 39yrs - 48yrs

o 49+yrs

The grouping 28 years - 48 years was, for purposes of the

questionnaire, split into two age categories, as it was felt that

there could potentially be differences in reward preferences

between people from their late twenties to late thirties and the

grouping late thirties to late forties. However, when the results

were received categories 18yrs - 27yrs and 28yrs - 38yrs

were combined to provide a bigger sample.

Although there are a number of studies that refute the claims

that there are direct relationships between the different

generations and their personal needs and preferences

(Giancola, 2008), the cut-off dates for the generations did

provide an informed way in which the data could be split and

analysed.

• Marital status: A number of reward components may only be

attractive to certain employee segments and the following

categories depicting marital status were included in order to '

test whether there is a difference in the reward preferences of

these cohorts:

166

o Married or living together

o Single

o Divorced

o Widowed

o Separated

o Other

When the data was analysed, categories Divorced, Widowed,

Separated and Other were merged to provide bigger samples.

• How many children are living at home (indicating a form of

dependence):

o Zero

o One

o Two

o Three

o Four or more

• Respondents were requested to indicate whether they are

financially responsible for parents by selecting yes or no.

• Educational qualification: Increased levels of education serve

to increase an individual's expectations regarding positive

outcomes. These outcomes generally surface in greater

demands for learning and development opportunities, more

satisfying positions, higher salaries and greater alternative

sources for occupational choice (Gray & Starke, 1988). The

following basic educational categories were included from

which a selection had to be made:

167

o Matric

o Degree or diploma

o Postgraduate

o Other

• Job level: In order to determine whether reward preferences

differ according to job levels, the following categories (adapted

from the Employment Equity Act No. 55 of 1998) were

included:

o Administrative/clerical

o Specialist/professional

o Junior management

o Senior management

o General management/Executive

o Other

• Job family: A job family groups comparable jobs, requiring

skills valued similarly in the market. The job families used

were implemented in the Nedbank Group and are also the

foundation of a number of other organisations. The following

job families were included in the questionnaire:

o Human resources

o Administrative

o Sales and service

o Information technology

o Process and project management

o Investment banking

o Marketing and communication

o Credit, Finance and Risk

o Consulting

o Other

168

• Years of service: the following categories were included:

o 0-2 years

o 3-6 years

o 7-9 years

o 10 years and more

The statements and questions in section two were informed through

the reward components identified in the literature review. Section two

consists of sections 2(a) and (b), which collect responses in respect

of different reward components. Section 2(a) requires the

respondents to indicate the level of preference for the reward

components listed. Section 2(b) requires the respondents to indicate

the extent to which they agree with the reward-related statements.

Section three aims to collect responses in respect of the relative

importance of the reward categories included in the theoretical total

rewards framework, namely:

o Monthly salary or guaranteed remuneration

o Variable pay

o Benefits

o Performance and career management

o Quality work environment

o Work/home integration

In section four respondents are requested to indicate which of the

six reward categories listed above plays the biggest role in their

decision to be attracted, retained and motivated. The aim of this

question was to understand how the total rewards framework should

be structured to meet the strategic intent of attracting, retaining and

motivating key employees and what reward components are

considered the most important for the respondents.

169

3.3.3.2 Measurement scales

Three different measurement scales were used in the respective

sections of the questionnaire. Structured closed questions and

statements were used in all four sections.

In section one a combination of nominal and ordinal scales were

used to collect data on demographic variables. In section two of the

questionnaire, a seven-point Likert scale was used, with responses to

items judged on a single numeric dimension of one to seven with

equal intervals and with two end points that have extreme adjectives

namely:

o Not at all important (1) - Extremely important (7)

o Totally disagree (1) - Fully agree (7) (Becker, 1999).

In section three of the questionnaire, respondents were requested to

rank the six reward components included in the theoretical total

rewards framework in order of preference by means of a forced

ranking scale. Ranking number one represented most important and

ranking number six the least important. The forced ranking scale

ranks items relative to each other. According to Alreck and Settle

(1995) a disadvantage of a forced ranking scale is the failure to

measure the absolute standing of, and the interval between, the

items measured. Forced ranking is also limited to a few items to

prevent it from being a time-consuming exercise. The researcher

considered the risks and mitigated these within the context of the

questionnaire by including only a few items that had to be ranked. In

addition, the intervals between the items ranked did not have to be

determined for purposes of the research.

Section four of the questionnaire required respondents to indicate

which one out of the six initial reward categories had the greatest

110

impact on an organisation's ability to attract, retain and motivate

them respectively.

3.3.3.3 Response bias

Different types of bias must be prevented in any type of research.

Instrumentation bias can be caused by the questionnaire instructions,

scales and response options and the questions. In order to reduce

instrumentation bias, proper vocabulary and grammar must be used,

although it does not guarantee that the survey will be free from any

bias (Mason & Bramble, 1989).

A response bias is caused by the predisposition of the respondent.

Sources of response bias include social desirability, prestige,

hostility, perceptions based on previous items, and a feeling of threat

or anxiety (Alreck & Settle, 1995). The risk of instrumentation bias

was mitigated through the pilot study, but response bias could not be

entirely controlled.

3.3.3.4 Pilot study

A pilot study refers to a trial run of the planned research on a small

scale to assess whether the research design and methodology are

effective and relative (Fox & Bayat, 2007; Weiman & Kruger, 2004).

Once the first draft Rewards Preferences Questionnaire was

designed, it was distributed electronically to a pilot group for

feedback. The pilot group consisted of 25 people, selected for

purposes of convenience, to provide feedback both on the reward

constructs included in the reward preferences questionnaire as well

as on their understanding of the participant instructions. Included in

this group were members of the People Practices Division, Group

Human Resources Nedbank Group Ltd, who are employed in

specialist and administrative support positions in the Remuneration,

171

Employer Branding, Recruitment, Performance Management,

Recognition and Talent Management departments. In addition,

employees from STATKON, Jopie van Rooyen and Partners as well

as the two study leaders provided input and comments. Following the

feedback received the phrasing of some questions was amended to

reduce possible ambiguity.

The second draft questionnaire was tabled at the University of

Johannesburg assessment panel that considered and approved the

research proposal. Comments received from panel members on the

phrasing of questions and statements as well as the measurement

scales were incorporated and the Rewards Preferences

Questionnaire was thereafter finalised.

3.3.4 MBTI® assessments

The second measurement instrument used in this study was the

MBTI® Form GRV, provided electronically via a web-link by CPP, Ltd

(with the assistance of Jopie van Rooyen and Partners). This

instrument was made available for research purposes as additional

data on the South African population was welcomed. Extensive

validity studies have previously been performed on the MBTI®

instrument and therefore this questionnaire was not included in the

pilot study conducted (CPP, 2008; Taylor & Yiannakis, 2007; Taylor

& Yiannakis, 2009).

The MBTI® instrument has become an important tool to assist in

understanding individual behavioural differences, which is useful

because:

a) the workplace is becoming more complex and diverse;

b) there is a tendency to reduce staff costs yet deal with higher

stakeholder expectations; and

172~~~~~~~~~~~~~- ._--_._-----_._.. __ ...•_---- .---_.__.__ ..

c) organisations operate in a continually more complex

environment, which highlights the need for organisations to

understand more about individuals who have to deliver results

within this complex world (Sieff, 2005).

Different assessment forms are available under the MBTI®

instrument, providing different reports and levels of information. The

Form M (Step I) assessment only identifies a person's type made up

of the four preferences. Form Q (Step II) provides a more detailed

picture of the personality type and behaviour, using 20 additional

facets (Jopie van Rooyen & Partners, 2007). The results from the

Form Q assessment show how people express their type uniquely

and differently and are seen as the next step in personality type

assessments (CPP, 2008). CPP Ltd. recently made Form GRV

available, which contains all the response items of Forms Q and M

combined. There are 230 response items in the questionnaire

collecting a wide variety of information relevant to MBTI® instrument

(CPP, 2008). Although Form GRV takes longer to complete than

Forms Q and M, it is web-based and automatically produces an

electronic career report to the respondent sent via e-mail, which

alleviates the need to provide feedback to the respondents unless

respondents request specific individual feedback on their personality

type. Given the extent of information collected on personality type

and preferences, previous validity studies, as well as the

automatically generated career report, Form GRV was the preferred

option for this study.

Abbreviations are used in describing the personality types,

preferences and temperaments. The underlying detail explaining the

differences between the abbreviated types, preferences and

temperaments have been included in the literature review. The

common abbreviations for the personality preferences are as follows:

173

E - Extraversion

I - Introversion

S - Sensing

N - Intuitive

T - Thinking

F - Feeling

J - Judging

P - Perceiving

In addition, the dominant functions are annotated by a subscript letter

indicating the preference for introversion or extraversion - for

example SE, FE and SI.

3.4.1 Sampling methodologies

A sample is considered a representative subset of a population. An

accurately determined sample should be reflective of the results

obtained from the broader population. The alternative to sampling is

referred to as enumeration, where the entire population is included in

a study (Sapsford, 1999). For purposes of this study, enumeration is

not possible due to the size of the total population and hence a

representative sample had to be defined.

There are in essence two kinds of sampling techniques: probability

and non-probability sampling. Non-probability sampling is typically

used when the researcher has insufficient information about the

population to undertake probability sampling or when it is too difficult

to obtain information through probability sampling methods

(Denscombe, 2007; Trochim, 2006; Walonick, 2004).

For purposes of this study, respondents were drawn from three

databases that emulate the convenience sampling technique.

Although Sapsford (1999) refers to convenience sampling as a

174

haphazard sample or a sample of opportunity, Terre Blanche et al.

(2007) state that due to the expensive nature of probability samples,

the vast majority of research in the social sciences relies on non­

probability samples that are more than adequate for research

purposes.

The sample for this study consists of the following groupings of

people:

a) Permanent employees working for Nedbank Group Ltd, with a

personalised e-mail address and based in three of the head office

buildings in Sandton (135 Rivonia Rd, 115 West Street and 105

West Street);

b) Corporate members of the South African Reward Association, the

only professional reward association in South Africa and the

South African affiliate of WorldatWork, the largest global not-for­

profit professional association dedicated to knowledge leadership

in total rewards; and

c) Corporate clients of 21st Century Business and Pay Solutions, one

of the largest reward consulting houses in the southern

hemisphere.

Although the sampling technique is convenience sampling, the

database is representative of a wide range of respondents from

different age and gender groups, in different job families and across

different industries, and the technique was therefore considered

appropriate for the study undertaken.

3.4.2 Sample size

Appropriate sampling methods and sample sizes reduce sampling

error from occurring. Sampling error refers to a situation where two

different samples that are chosen from the same population and by

using the same basic method produce different results. This,

175

according to Fox and Bayat (2007), represents a situation where

there is misalignment between the sample and the population. The

sample size often depends on the budget of the researcher and the

degree of confidence in the data collected and analysed, but needs

to be large enough to reduce sample errors. The absolute size of the

sample depends on the complexity of the population and the

research questions that are investigated (Bryman & Cramer, 1997).

Alreck and Settle (1995) regard a sample of 100 as the minimum

sample size for large populations (although there are exceptions) and

the maximum practical size for a study is 750 respondents. Beyond

1,000 respondents, there is little advantage to be gained from an

increase in the sample size, as a point of diminishing returns is

reached. According to Terre Blanche et al. (2007) a researcher would

draw a sample of 300 from a population of 10,000 and 1 500 from a

population of 150 000 where the larger the population, the smaller

the sampling ratio required to achieve the same degree of accuracy.

But, for a sample to be statistically relevant, it has to be

representative of the population (Denscombe, 2007).

3.4.3 Data-gathering methods

After permission was obtained from the respective authorities at

Nedbank, 21st Century Business and Pay Solutions and SARA, the

two questionnaires along with a covering letter and participant

instructions, a copy of the glossary of terms and more information on

the MBTI® Form GRV were distributed electronically via e-mail to

approximately 5,000 potential respondents of whom 2,500 potential

respondents were employed by Nedbank and the balance were from

the distribution lists previously indicated. It needs to be taken into

consideration that the results could potentially be skewed to be

industry-specific, as approximately 50% of the sample consisted of

employees who work within the financial services industry.

176

Due to the volume, e-mails were distributed over a period of three

weeks and the field work was done in the period 20 August 2008 ­

28 September 2008. On average, respondents were granted three

weeks to complete the questionnaires. No reminders were sent to the

respondents due to the strain on the internal networks in sending out

5,000 e-mails.

3.4.4 Response rate

From the 5,000 e-mails distributed, 894 completed Rewards

Preferences Questionnaires and 787 Form GRV questionnaires were

captured on the STATKON and CPP servers respectively. This

represents a 17.88% and 15.74% response rate respectively for the

two questionnaires. It is noted that 107 more Rewards Preferences

Questionnaires were received than MBTI® questionnaires.

Factors that potentially could have contributed to the relatively lower

response rate on the MBTI® questionnaire is the fact that people

could have been either reluctant to complete a personality type

assessment due to being previously subjected to indiscriminate use

of psychological assessments or their perceptions of the limited use

of assessments in understanding human behaviour, language

barriers or misunderstanding of instructions (Eisman et aI., 2000). In

addition, the Form GRV questionnaire took approximately 25-35

minutes to complete (in comparison with the Rewards Preferences

Questionnaire, which would have taken about 5-10 minutes) and if a

respondent was either disturbed during the completion thereof or did

not complete the assessment, they were locked out of the system

and could not regain access. Incomplete MBTI® questionnaires were

discarded, as the personality type could not be accurately

determined.

One of the limiting factors in this study was the ability to match the

responses from the Rewards Preferences Questionnaire with the

177

personality type, determined by the MBTI® instrument. Respondents

were requested to use passwords and not their names and

surnames, to offer the opportunity to protect their anonymity if they

wished to do so. In 198 cases, the passwords were dissimilar and

therefore the results could not be compared, resulting in 589 matches

between the two questionnaires.

3.5 Validity and reliability of the measurement instruments

Validity refers to accuracy, in other words whether the test is

measuring what it purports to measure. Reliability is a prerequisite for

validity, but it does not guarantee validity. A research instrument can

therefore be reliable but invalid but cannot be unreliable and valid.

The validity of a measure can be tested through criterion-related

validity, content validity and construct validity. The three types of

validity complement each other in practice and, therefore, if a

measure has content validity, it is likely to have criterion validity

(Terre Blanche et aI., 2007).

Reliability refers to the dependability of the measurement instrument,

namely the extent to which the results are repeated through a

number of different surveys over a relatively short period of time.

Reliability is essential to ensure the validity of a study. Question

reliability can be obtained through the following measures:

a) the stability coefficient, by giving the same questionnaire to a

group of respondents to complete for the second time;

b) the equivalence of responses requires the drafting of two versions

of the questionnaire that will yield similar responses if they are

given to the same or comparable group of respondents for

completion; and

c) the internal consistency or homogeneity technique that

determines the reliability of a set of responses to a questionnaire

(Fox & Bayat, 2007).

178

3.5.1 Validity and reliability of the Rewards Preferences

Questionnaire

The face validity and internal consistency of the Rewards

Preferences Questionnaire was confirmed through detailed literature

review, the design and execution of the research approach, the pilot

study and the relatively large sample obtained for data analysis.

The internal consistency reliability coefficient for the Rewards

Preferences Questionnaire was calculated using Cronbach's alpha

(0) coefficient (Reynaldo & Santos, 1999).

3.5.2 Validity and reliability of the MBTI® instrument

The MBTI® Form M was introduced to the South African market 14

years ago. The instrument has been well researched and the

psychometric properties thereof have been well established.

According to Taylor and Yiannakis (2007), who assessed type

distributions within the South African market, the internal consistency

reliability was considered acceptable, with the Cronbach alpha

coefficients being above 0.85.

A good indication of the validity of the MBTI® instrument is the extent

to which the assessed personality type matches the person's best fit

personality type. In the study conducted by Taylor and Yiannakis

(2007), 74.1% of the respondents agreed with all four letters of their

personality type, 22.5% agreed with three letters and 3.4% agreed

with two letters of their assessed personality type. These results are

very similar to previous studies undertaken in France, Germany and

the United Kingdom, where 93.1%, 88.6% and 93% of delegates

respectively agreed with 3 or 4 letters of their assessed personality

types (Taylor & Yiannakis, 2007). In the data supplement published

on MBTI® Form Q on the South African sample, the internal

179

consistency reliability was considered acceptable. Cronbach alpha

coefficients of above 0.85 were reported for all four of the type

dimensions (Taylor & Yiannakis, 2009).

Due to the similarities and overlap between the items in Forms M, Q

and GRV and the fact that the scoring remains the same when the

personality type and facet scores are calculated, it is believed that

the reliability and validity evidence on Forms M and Q should apply to

Form GRV as well (personal communication, Nicola Taylor, Jopie

van Rooyen and Partners, 12 January 2009).

3.6 Data-capturing and preparation

The completed Form GRV questionnaires were captured and saved

on the CPP Inc. Server. The electronic link to Form GRV was

included in the mail sent to the potential respondents. The link was

uniquely encoded to ensure that the responses could be identified for

purposes of this study. Therefore, all electronically submitted Form

GRVs from respondents in the sample frame could be separated on

the server. Fourteen days after the closing date, CPP Inc provided,

through Jopie van Rooyen and Partners, an excel spreadsheet with

the following information relating to the sample:

o Password and username

o Date and time captured on the server

o Gender

o Age

o Job category

o Year of work experience

o Personality preferences

o Personality type

o Personality temperaments

180

The demographic information required for this study was obtained

from the responses captured on the Rewards Preferences

Questionnaire and thus the demographic data provided by CPP Ltd

was discarded. The raw scores in response to the statements on

Form GRV were provided but could not be interpreted, as the scoring

mask was not made available due to the copyright protection on the

questionnaire. This did not influence this study, as the final

personality types and preferences were provided and no other

information was of concern or use to the researcher for the purposes

of this study.

The reward preferences questionnaire was designed in electronic,

web-based format by STATKON and responses were hosted on the

STATKON server. Fourteen days after the closing date for

responses, STATKON downloaded a file of raw data onto an excel

spreadsheet for data analysis purposes.

The researcher manually matched the unique passwords used on the

rewards preference questionnaire and the Form GRV and merged

the data from the two files. Therefore, the personality types and

preferences recorded on Form GRV could be matched with the

responses in terms of the demographic profile questions as well as

the reward preferences statements. Once the matching was done,

the matched files were sent to STATKON for statistical analysis of

the raw data. The responses that could not be matched due to

passwords that did not correlate on the two questionnaires were

discarded.

181

3.7 Statistical analysis

Data was transferred from the two excel spreadsheets to the

software program SPSS Version 15 for Windows. The relationships

between the variables were assessed through the use of the

following statistical methods.

3.7.1 Descriptive statistics

Descriptive statistics were used to analyse the demographic data and

to understand the characteristics of the sample group.

3.7.2 Factor analysis

As the Reward Preferences Questionnaire was used for the first time

in this study, it was considered exploratory and used to conduct

factor analysis. Two preliminary tests were conducted to assess

whether the data was suitable for factor analysis. The two tests used

were the Kaiser-Meyer-Olkin and Bartlett's test of sphericity (Pallant,

2007).

• Kaiser-Meyer-Olkin measure of sampling adequacy

indicated whether the items used in the questionnaire could be

grouped into categories for purposes of populating the reward

model. The KMO index ranges from 0 to 1, with 0.6 suggesting

a minimum value for a good factor analysis. High values close

to 1.0 generally indicate that a factor analysis can be performed

on the data and would be useful (Pallant, 2007).

• Bartlett's test of sphericity assesses the assumption of

sphericity of the data. This test tends to be sensitive in detecting

the correlations among the dependent variables (Morgan,

182

Reichert & Harrison, 2002) and compares the correlation matrix

to an identity matrix (Coughlin & Knight, 2009). Results on

Bartlett's test of sphericity should be significant (p<0.05) to be

considered appropriate (Pallant, 2007).

A factor analysis was done on the 46 items included in Section two

(a) and (b) of the Reward Preferences Questionnaire. Factor analysis

is a data-reduction technique that takes large sets of variables and

finds ways to summarise these into smaller sets of factors or

components. The factor analysis allowed for the clustering of the 46

items used in the questionnaire into different factors (Pallant, 2007).

The items that supported the six reward categories used in the

Reward Preferences Questionnaire (derived from the literature

review), were sorted into initially eight factors in the first-order factor

analysis. The principal axis technique with an orthogonal rotation

(Varimax method) and Kaiser normalisation were applied. The

Varimax technique aims to minimise the number of variables that

have high loadings on each factor (Pallant, 2007). In applying the

item reduction technique, items with a loading of < 0.3, were

excluded. The eigenvalues were calculated and represented the

amount of the total variance explained by the identified factors

retained, using the Kaiser criterion of eigenvalues> 1 (Pallant, 2007).

Due to the high number of items with cross-loadings in the first-order

factor analysis, a second-order factor analysis was conducted using

the principal axis factoring extraction method. The second-order

factor structure was rotated using an oblique (correlated) method,

namely Direct Oblimin, to enhance the opportunity for interpretation

of the factors (Pallant, 2007). Items with a loading of <0.3 were

excluded and the final factor analysis identified two factors that

explained 60.6% of the difference between the variables.

183

3.7.3 Tests of homogeneity of variances

Levene's statistical method for homogeneity of variances was used to

assess whether the assumption of homogeneity of variances was

violated. Where the results of the test indicate a significance level of

greater than 0.05 (p>0.05), the test is not significant and the

assumption of homogeneity of variance was not violated. Results

with a significance value of less than 0.05 (p<0.05) suggest that

variances for the two groups are not equal and that the assumption of

homogeneity of variance has been violated (Pallant, 2007).

3.7.4 Analysis of variance (ANOVA)

One-way and two-way analysis of variance tests (ANOVA) were

conducted to understand whether there were meaningful differences

between the reward categories, the personality types, personality

preferences and the different demographic variables, respectively.

Where the p-value was <0.05, a statistical significant result was

present. Where statistically significant differences were present, the

Scheffe post hoc test was done and results were analysed (Morgan

et aI., 2002; Pallant, 2007).

3.7.5 T-Tests

T-tests were used to compare values on a continuous variable for

two groups (Pallant, 2007). Examples of where t-tests were used

include assessing the differences in the mean scores of female and

male respondents; people with a preference for Thinking or Feeling,

relative to the different reward factors.

184

3.7.6 Cronbach alpha (a) coefficient

The Cronbach alpha, a measure of internal consistency (inter-item

reliability, according to Morgan et al. (2002)) was used on the items

in the Rewards Preferences Questionnaire in order to assess the

reliability thereof.

3.7.7 Pearson correlation coefficient

Correlation analysis using the Pearson Correlation Coefficient was

conducted to describe the strength and direction of the linear

relationship between the reward preferences and personality

preferences.

3.8 Ethical issues and considerations

The researcher agrees to the declaration of intent on ethical research

practices as included in Appendix 4. Participation in the survey was

voluntary. Permission was requested and granted by the Human

Resources Director: Nedbank Group Ltd, the President and

Executive committee members of the South African Reward

Association and the Executive Chairman: 21st Century Business and

Pay Solutions for lists of members, clients and employees of these

organisations (as identified in the sample), with their respective e­

mail addresses.

Anonymity of respondents was respected in terms of allowing

respondents to use passwords instead of their own names on both

questionnaires. There were no requests for the use of names and

surnames unless specific feedback was requested. The researcher

undertook to keep all data collected for purposes of the study

confidential and to make available as far as is possible the individual

185

MBTI® types where respondents elected to receive these, as well as

the results of the study.

3.9 Conclusion

To understand the relationship between personality types,

personality preferences and reward preferences, a quantitative study

and exploratory relational study was undertaken. The literature

review supported the research constructs and provided sufficient

input into the design of a theoretical total rewards framework. The

theoretical total rewards framework is made up of six reward

categories and 46 underlying reward components that were included

in the Rewards Preferences Questionnaire to assess individual

preferences. Personality types and preferences were determined

through the use of Form GRV.

A total of 589 Form GRVs were matched with the corresponding

reward preferences indicated in the Rewards Preferences

Questionnaire. A detailed analysis of the data and results is provided

in the next chapter.

186

CHAPTER 4: RESEARCH RESULTS

4.1 Introduction

In this chapter, the results of the data collected are analysed in terms

of the research design described in Chapter Three. The chapter

covers the research techniques applied and the results extracted

from the raw data.

4.2 Analysis of data in response to primary research questions

The primary research question was to determine the relationship

between personality types and personality preferences as defined by

the MBTI® instrument and reward preferences.

The dataset used for the analysis of responses in terms of the

primary research question was collected from responses on both the

Rewards Preferences Questionnaire and the MBTI® instrument. The

personality type and personality preferences of the respondents were

linked to the respective individual reward preferences by matching

the passwords used on both questionnaires. Table 13 sets out the

final number of responses received, matched and then used in the

data analysis.

Table 13: Analysis of responses received and used

Form GRV Rewards Preferences Merged data files,

Questionnaire (RPQ) where passwords

Responses Responses received could be matched,

received that were used

787 894 589

187

In analysing the results of the different demographic data categories,

it was decided to combine the following demographic categories to

make more meaningful comparisons:

Age groups 18 years - 27 years were combined with age groups 28

years - 38 years to form a category 18 years - 38 years. The marital

status groups Single, Widowed, Divorced and Other were combined

to form one new grouping. In the ANOVA calculations, the race

groups African, Indian and Coloured were combined to form one

group, namely "Black".

The demographic profile of the data sample where responses from

Form GRV and the Rewards Preferences Questionnaire were

merged (N = 589) is depicted in Table 14.

Table 14: Demographic profile of respondents

Gender distribution

Male

Female

Total

Age distribution

18 -38

39-48

49+

Total

Marital status

Frequency Percentage

238 40.4%

351 59.6%

589 100.0%

Frequency Percentage

290 49.2%

187 31.7%

112 19.0%

589 100.0%

Frequency Percentage

Married/living together

Single

Divorced/widowed/separated/other

Total

188

411

121

57

589

69.8%

20.5%

9.7%

100.0%

Racial distribution Frequency Percentage

African 49 8.3%

Indian 47 8.0%

Coloured 51 8.7%

White 439 74.5%

Not captured 3 0.5%

Total 589 100.0%

Children Frequency Percentage

no children 232 39.4%

1 child 142 24.1%

2 children + 214 36.3%

Not captured 1 0.2%

Total 589 100.0%

Financially dependent parents Frequency Percentage

Yes 174 29.5%

No 407 69.1%

Not captured 8 1.4%

Total 589 100.0%

Educational level Frequency Percentage

Matric 99 16.8%

Degree/Diploma 238 40.4%

Postgraduate 232 39.4%

Other 19 3.2%

Not captured 1 0.2%

Total 589 100.0%

189

Job level Frequency Percentage

Administrative/clerical 64 10.9%

Specialist/Professional 216 36.7%

Junior management 76 12.9%

Senior management 149 25.3%

General management/Executive 81 13.8%

Not captured 3 0.5%

Total 589 100.0%

Completed years working for currentemployer Frequency Percentage

0-2 years 147 25.0%

3 - 6 years 127 21.6%

7 - 9 years 96 16.3%

10 + years 210 35.7%

Not captured 9 1.5%

Total 589 100.0%

Job Family Frequency Percentage

Human Resources 170 28.9%

Administrativelfacilities 46 7.8%

Sales & Service 31 5.3%

IT 86 14.6%

Product, project and process 53 9.0%

Investment banking 34 5.8%

Marketing/communication 15 2.5%

Not captured 154 26.1%

Total 589 100.0%

As reported in Table 14, the majority of respondents were women

(59.6%) and reported their race as white (74.5%). Most of the

respondents (49.2%) fell into the age grouping 18-38 years, reported

190

being married or living together (69.8%) with either no children

(39.4%) or more than two children (36.3%). In addition, 40.4% of the

respondents have a degree or diploma and 39.4% have a

postgraduate qualification. A large portion of the respondents

(36.7%) are employed in specialist or professional positions and the

second-largest grouping (25.3%) are employed in senior

management positions.

In terms of completed years of service, 35.7% of the sample reported

to have ten years or longer working experience with their current

employer and 25% reported to have 0-2 years' experience with their

current employer. Of the sample, 28.9% categorised their current

positions in the Human Resources job family and 26.1% of the

respondents did not categorise their positions in any job family.

4.3 Preferences for reward components as indicated in the

Rewards Preferences Questionnaire

Section 2 in the Rewards Preferences Questionnaire requests

respondents to indicate the extent to which different components of

the reward model are important to them. Sections 2(a) and (b)

covered 46 reward components but the nuances were different in that

Section 2(a) aimed to collect responses on the extent to which

respondents thought the reward component was important, whereas

Section 2(b) assessed the level of agreement that respondents

indicated in respect of the reward-related statements. In order to

identify those statements that respondents were most likely to agree

or disagree with, the frequencies in respect of the responses in

Sections 2(a) and (b) were extracted.

191

The questions in Section 2(a) were phrased as follows:

"The following questions are aimed at determining how important

different benefits and types of reward structures are to you. Please

indicate your choice on the scale of 1-7 provided, where 1 =not at all

important and 7 being extremely important by clicking on the

appropriate box".

The raw frequencies of responses in respect of Section 2(a) are

reported in Table 15.

--192

Table 15: Frequencies for responses in terms of Section 2(a)-

tlot at all ExtremelySecti o n 2(0) Important (1) 2 3 4 5 6 Important (7) Total

n % n % n ..' n % n % n ... n % rl t ',. ,.,~

My salary/guaranteed remunera tion is 0 .0% 2 .3% 4 .7% 24 4.1% 81 13.8% 136 23.1% 342 58.1% 589 100.0%My annual performance bonuslln centlve Is 3 .5% 2 .3% 9 1.5% 42 7.1% 92 15.6% 166 28.2% 274 46.6% 588 100.0%Annual allocation s of shares or share options are 52 8.9% 57 9.8% 67 11.5% 106 18.2% 137 23.5% 91 15.6% 74 12.7% 584 100.0%',ledical aid benefits through a medi cal aid scheme are 19 3.2% 21 3.6% 28 4.8% 74 12.6% 112 19.1% 132 22.6% 199 34.0% 585 100.0%

Retiremen t and disability benefits are 9 1.5% 9 1.5% 35 6.0% 57 9.7% 104 17.8% 135 23.1% 236 40.3% 585 100.0%The opportunity to take study leave for further studies is 35 6.0% 41 7.0% 49 8.3% 111 18.9% 130 22.1% 107 18.2% 114 19.4% 587 100.0%

The opportunity to take sabbatical leave is 84 14.4% 70 12.0% 90 15.4% 140 24.0% 92 15.8% 69 11.8% 38 6.5% 583 100.0%

A dedi cated parking bay In the buil ding where I work Is 148 25.3% 58 9.9% 71 12.2% 98 16.8% 77 13.2% 63 10.8% 69 11.8% 584 100.0%

Monthly communication sessions about business 10 1.7% 33 5.6% 46 7.8% 88 15.0% 172 29.3% 134 22.8% 105 17.9% 588 100.0%oroc ress with mv manaoer areConstructive and honest feedback on my performance Is 0 .0% 3 .5% 10 1.7% 31 5.3% 104 17.7% 158 26.8% 283 48.0% 589 100.0%

The opportunity to rotate and experien ce dlITerenttypes of 16 2.7% 42 7.1% 58 9.8% 98 16.6% 160 27.2% 137 23.3% 78 13.2% 589 100.0%jobs IsGro.".,1h opportunities. learning and development are 2 .3% 4 .7% 11 1.9% 30 5.1% 112 19.0% 197 33.4% 233 39.6% 589 100.0%

I think coaching and mentoring are 1 .2% 7 1.2% 24 4.1% 69 11.8% 142 24.2% 170 29.0% 173 29.5% 586 100.0%Informal recognition for a job well done is 9 1.5% 20 3.4% 33 5.6% 55 94% 124 21.1% 177 30.2~i 169 28.8% 587 100.0%Formal recognition for a job well done is 15 2.6% 12 2.0% 40 6.8% 81 13.8% 136 23.2% 170 29.0% 132 22.5% 586 100.0%Having a balanced scorecard or performa nce 9 1.5% 24 4.1% 40 6.8% 64 10.9% 121 20.6% 163 27.8% 166 28.3% 587 100.0%aoreementlcontract with agreed ob/ectlves Is8ursarlesJfunding for tertiary qualifi cations Is 33 5.6% 45 7.7% 47 8.0% 123 21.0% 126 21.5% 111 18.9% 101 17.2% 586 100.0%Having a good working relations hip with colleag ues is 0 .0% 1 .2% 8 1,.$% 35 6.0% 104 17.7% 212 36.1% 228 3 B.8~i 588 100.0%

A, comfortable work environm ent IS 7 1.2% 13 2.2% 25 4.3% 83 14 2% 167 28.6% 181 31.m. 108 18.5% 584 100.0%An on site fitness centre is 71 12.1% 83 14.1% 91 15.5% 110 18.7% 103 17.5% 76 12.9% 53 9.0% 587 100.0%A.n on site med ical centre Is 76 12.9% 79 13.4% 88 15.0% 109 18.5% 118 20. 1 ~i 69 11.7% 49 8.3% 588 100.0%On site or subs idized childcare faciliti es is 154 26.4% 90 15.4% 64 11.0% 86 14.7% 77 13.2% 62 10.6% 51 8.7% 584 100.0%An on site stan restaurant is 55 9.4% 57 9.7% 88 15.0% 116 19.7% 137 23.3% 100 17.0% 35 6.0% 588 100.0%A.n on site convenience store Is 92 15.8% 69 11.9% 84 14,.$% 122 21.00/. 111 19.1% 73 12.5% 31 5.3% 582 100.0%Personal safety and secun ty In the workpl ace IS 3 .5% 2 .3% 13 2.2% 35 6.0% 81 13.8% 158 27.0% 294 50.2~i 586 100.0%The quality' of co workers in m y team is 2 .3% 0 .0% 2 .3% 21 3.6% 98 16.7% 238 40.5~i 226 38.5% 587 100.0%SUbsidis ed tuition for my children is 125 21.3% 58 9.9% 60 10.2% 108 18.4'l't 81 13.8% 80 13.6% 75 12.8% 587 100.0%The ability to work neJ\ible working hours is 7 1.2% 6 1.0% 7 1.2% 30 5.1% 65 11.1% 171 29.1% 302 51.4% 588 100.0%

193-- -- ---- --- -----

The frequencies in respect of the statements that respondents felt

were extremely important or not at all important were highlighted in

yellow. As can be seen from Table 15, more than 40% of

respondents rated the following reward components as 'extremely

importanf (i.e. rating of 7), listed as follows:

a) Salary/guaranteed remuneration (58.1%)

b) Annual performance incentive (46.6%)

c) Retirement and disability benefits (40.3%)

d) Constructive and honest feedback on performance (48%)

e) Personal safety and security in the workplace (50.2%)

f) Ability to work flexible work hours (51.4%)

These reward components can be considered as the most important

to employees in the reward offering made to them by their employers.

For the following reward components, more than 25% of the

respondents indicated 'not at all importanf (namely a rating of 1):

a) A dedicated parking bay in the building where I work (25.3%)

b) Subsidised childcare facilities (26.4%)

The responses are important considerations for employers when

they design reward frameworks.

To identify the statements in Section 2(b) with which respondents

fully agreed or totally disagreed, the frequencies in respect of these

responses were extracted. The raw frequencies on the responses to

Section 2(b) are indicated in Table 16. The questions in Section 2(b)

were phrased as follows:

"The following questions are aimed at determining the extent to which

you agree (or not) with the following statements. Please indicate your

choice on the scale of 1-7 provided, where 1 = totally disagree and 7

=fully agree by clicking on the appropriate box".

194

Table 16: Frequencies for responses in terms of Section 2(b)

TotallySection 2(b) disagree (1) 2 3 4 5 6 Fully agree (7) Total

n ~ n ~f n % n t! n % n % n % tJ ~'i, Q

I.lerltIncreases should be linked to personal performance 1 .2% 4 .7% 0 .0% 14 2.4% 55 9.4% 137 23.3% 377 64.m 588 100.0%

Mysalarymust be market related 1 .2% 1 .2% 2 .3% 10 1.7% 21 3.6% 100 17.0% 453 77.0% 588 100.0%I would like to structure myremuneration according to my 2 .3% 3 .5% 6 1.0% 41 7.0% 112 19.1% 164 27.9% 259 44.1% 587 100.0%own needsIncreases should be linked to Innatlon and not to personal 114 19.4% 84 14.3% 89 15.1% 98 1 6 .7~l 85 14.5% 59 10.0% 59 10.0% 588 100.0%performanceBonus allocations should be linked to mypersonal 2 .3% 2 .3% 01 .7% 9 1.5% 43 7.3% 160 273% 367 62.5% 587 100.0%performanceBonus allocations should be linked to myteam's 35 6.0% 41 7.0% 45 7.7% 114 19.6% 141 24.2% 135 23.2% 72 12.3% 583 100.0%performanceIllyemployer should assist me with finand al assistance to 125 21.3% 103 17.5% 79 13.5% 117 19.9% 68 11.6% 49 83% 46 7.8% 587 100.0%buya houseI enjoyhaving total control over mywork methods without 3 .5% 8 1.4% 25 4.3% 65 11.1% 113 19.3% 191 32.5% 182 31.0% 587 100.0%mymanager s InterferenceI,ll' career pathplanning should align witl1 mypersonal 3 5% 1 .2% 11 1.9% 30 5.1% 83 14.1% 233 39.6% 227 38.6% 588 100.0%interests and goalsI.h·job should be challenging andtest myabilities 0 .0% 0 .0% 0 .0% 13 2.2% 49 8.3% 192 32.7% 334 56.8% 588 100.0%

I should be held accountable for mypersonal job outputs 0 .0% 0 .0% 0 0% 8 1.4% 39 6.7% 182 31.1% 357 60.9% 586 100.0%

I would like to go on an International secondment 44 7.5% 27 4.6% 47 8.0% 91 15.5% 107 18.2% 105 17.9% 166 28.3% 587 100.0%

uanacern ent should encourageteam performance 2 .3% 2 .3% 6 1.0% 50 8.6% 102 17.6% 195 33.6% 224 38.6% 581 100.0%

I,ll' employershould orovice holidayprograms for rnv 228 38.9% 105 17.9% 72 12.3% 76 13.0% 42 7.2% 30 5.1% 33 5.6% 586 100.0%childrenI,ll' employer should provide me with an allowance or 265 45.1% 112 19.1% 69 11.8% 73 12.4% 30 5.1% 18 3.1% 20 3.4% 587 100.0%suosrovto care for my financial dependantparentsI need to log into the employers network from home 37 6.3% 21 3.6% 24 4.1% 54 9.2% 71 12.1% 112 19.1% 267 45.6% 586 100.0%

I need a laptop and 3G card to perform optimally 43 7.3% 21 3.6% 25 4.3% 61 10.4% 65 11.1% 96 16.4% 276 47.0% 587 100.0%

I think employers should provice phased in retum to work 83 101 .1% 58 9.9% 59 10.1% 113 19.3% 107 18.2% 81 13.8% 86 14.7% 587 100.0%

aner rnaterrutwpatemityleave

195------ -- - - ------

As can be seen from Table 16, more than 40% of respondents fully agreed with

the following statements (namely a rating of 7):

(a) Merit increases should be linked to personal performance (64.1 %)

(b) Market-related salaries (77.0%)

(c) Structuring of remuneration according to own needs (44.1%)

(d) Bonus allocations linked to personal performance (62.5%)

(e) Challenging job that tests abilities (56.8%)

(f) Accountability for personal job outputs (60.9%)

(9) Log into the employer's network from home (45.6%)

(h) Laptop and 3 G card (47%)

For the following statements, more than 25% of respondents indicated

disagreement (namely a rating of 1):

(a) Employers should provide holiday programmes for children (38.9%)

(b) Financial assistance for financially dependent parents (45.1%)

Therefore although components such as flexible work practices, 3G cards and

laptops and the ability to work from home were excluded from the empirical total

rewards framework designed through the factor analysis, they carry

considerable importance for the respondents and should not be ignored.

4.4 Factor Analysis

In order to reduce the dimensionality of the 46 items in the Reward Preferences

Questionnaire, factor analysed was used. The Kaiser-Meyer-Olkin measures of

sampling adequacy indicated that a factor analysis on the data would be useful

(0.86), as it exceeded the recommended value of 0.6. Bartlett's Test of

Sphericity reached statistical significance (p < 0.05), supporting the factorability

of the correlation matrix pertaining to the items in the questionnaire. A first-order

factor analysis was done on the 46 items included in Section 2 of the Rewards

Preferences Questionnaire. The principal axis factor extraction method was

used with a Varimax rotation to improve interpretability and Kaiser normalisation.

196

The data reduction technique was applied by excluding items where the

loadings on the initial and the extracted communalities were <0.3 (Pallant,

2007). Eight factors were then extracted using the Kaiser criterion of

eigenvalues >1. The eigenvalues are indicated in Table 17.

Table 17: Initial eigenvalues on First-Order Factor Analysis

Initial eigenvalues

Factor Total % of Variance Cumulative %

1 7.743 25.809 25.809

2 2.903 9.675 35.484

3 2.185 7.284 42.768

4 1.772 5.908 48.676

5 1.419 4.731 53.407

6 1.248 4.159 57.566

7 1.185 3.948 61.514

8 1.145 3.818 65.332

Table 17 shows that eight factors, with eigenvalues >1, explained 65.33% of the

variances. The component loadings on the original eight factors are shown in

Table 18.

197

Table 18: First-order factor analysis: Factor matrix

Factor

1 2 3 4 5 6 7 8

Holiday programs for children .801 .129 .115

Subsidized tuition for children .655 .191 .204 .103

On site or subsidized .599 .176 .436 .157childcare facilities

An allowance or subsidy to .593 .174 .140 .118 .152care for financial dependantparents

Phased in retum to work after .544 .131 .110 .106 .281matemity/paternity leave

Financial assistance to buy a .476 .195 .274 .118 .152house

A good working relationship .635 .112 .132 .104with colleagues

The quality of co wo rker in the .118 .612 .104 .257teamPersonal safety and security .496 .199 .222 .145in the workplace

Constructive and honest .492 .347 .179 .189feedback on perfonnance

198

Factor

1 2 3 4 5 6 7 8

Monthly comm unication .454 .385 .160 .138sessions about businessprogress with my manager

Informal recognition for a job .449 .113 .355well done

A comfortable work .169 .445 .347 .194 .107environmentA balan ced scorecard or .157 .380 .138 .267 .342performanceagreement/contract withagreed objectives

An on site medical centre .242 .170 .730 .279 .223 .167

An on site fitness centre .170 .680 .190 .131

An on site convenience store .353 .257 .675

An on site staff restaurant .322 .289 .605 .109

Retirement and disability .260 .774 .183benefits

Medical aid benefits through a .225 .671 .172 -.128medical aid scheme

199

Factor

1 2 3 4 5 6 7 8

Salary/guaranteed .110 .512 .151 .167remunerationAnnual perrormance .109 .433 .177 .223bonus/incentiveThe opportunity to take study .204 .156 .161 .134 .742 .128leave for further studies

Bursaries/funding for tertiary .307 .170 .146 .199 .641qualifications

Growth opportunities, learning .315 .101 .532 .272 .157and development

A laptop and 3G card .125 .894 .144

Logging into the employer's .156 .868network from home

A challenging job that tests .193 .200 .131 .784my abilities

I should be held accountable .186 .132 .107 .739for my personal job outputs

Formal recognition for a job .207 .148 .190 .158 .106 .644well doneExtraction Method: Principal Axis Factonng.Rotation Method: Varimax wth Kaiser Normalization.

a. Rotation converged in 10 iterations.

200

Although the original eight factors would have been a closer

resemblance to the reward categories identified in the theoretical

total rewards framework, the large number of cross-loadings on the

items (namely where large numbers of items loaded with a high

loading on more than one factor) and the small number of items

loading on some of the first-order factors (for example factors 7 and

8, see Table 18), necessitated a second-order factor analysis. The

principal axis factoring method with an oblique (correlated) rotation,

namely Direct Oblimin, was used in the second-order factor analysis.

From the original eight factors identified, two factors were extracted

for the final total rewards framework by using the Kaiser criterion of

eigenvalues> 1 which explained 60.6% of the variances in the eight

first-order factors (see Table 19).

Table 19: Eigenvalues on second-order factor analysis

Eigenvalues

Factor Total % of Variance :umulative %

1 3.790 47.369 47.369

2 1.059 13.232 60.601

3 .785 9.816 70.417

4 .740 9.252 79.669

5 .650 8.119 87.788

6 .439 5.482 93.270

7 .364 4.552 97.823

8 .174 2.177 100.000

The pattern matrix (cf Table 20) shows that four of the first-order

factors have high loadings on one of the second-order factors and

the other four loaded high on the second, second-order factor.

201

".

Table 20: Pattern matrix for second-order factor analysis

Items Pattern Matrixa

1 2

Items 12.16 & 12.17 .871

Items 12.6, 12.12 & 12.17) .835

Items 12.18, 12.26, 1225, .596 .22712.10,12.9,12.14,12.19 &12.16

Items 12.21, 12.20, 1224 & .57812.23

Items 13.4, 12.27, 12.22, .83713.7,13.15 & 13.18)

Items 12.10 & 12.11 .720

Item12.15 .128 .407

Item 12.1,122,12.4 & .193 .30712.5

Extraction Method: Prncrpal Axis Factoring.Rotation rv1ethod: Oblimin with Kaiser Normalisation.

Two factors were extracted from the second-order factor analysis.

These two factors were named in terms of the type of reward the

items presented. This is indicated in Table 21.

202

Table 21: Factors extracted on the second-order factor analysis

Second­orderfactors

2.1

2.2

Items and factorsextracted in thefirst-order factoranalysis

Items: 12.6; 12.9;12.10; 12.12; 12.14;12.16; 12.17; 12.18;12.19; 12.20; 12.21;12.23; 12.24; 12.25;12.26Factors: 2,5,6 & 7

Items: 12.1; 12.2; 12.4;12.5; 12.10; 12.11;12.15; 12.22; 12.27;13.4; 13.7; 13.15; 13.18Factors: 1,3,4 & 8

Reward category (name)

Importance of: a conduciveworking environment

Importance of: remuneration andbenefits

For ease of reference, the two reward categories are referred to as a

conducive working environment and remuneration and benefits. The

words "the importance of' reflect the context of having requested

respondents to indicate their preferences in terms of different reward

components. The two factors extracted on the second-order factor

analysis correlated highly with each other (r = 0.652).

In order to determine the reliability or internal consistency of each of

the second-order factors, Cronbach Alpha (Pallant, 2007) was

subsequently calculated. The Cronbach Alpha on factor 1 was 0.878

which exceeds the minimum requirement of 0.7 indicating that the

factor is reliable.

The descriptive statistics for the items included in factor one are

shown in Table 22.

203

Til

Table 22: Item statistics: Factor 1 - A conducive workingenvironment

Item Statistics: Factor 1

fv'Iean Std. Deviation

Personal safety and security 6.15 1.112in the workplace

Constructive and honest 6.13 1.044feedback on my performance

The quality of co workers in 6.12 .893my team

Having a good working 6.06 .974relationship with colleagues

Growth opportunities, leaming 6.01 1.080and development

Informal recognition for ajob 5.50 1.433well done

Having a balanced scoreca rd 5.42 1.494or performanceagreement/contract withagreed objectives

A comfortable work 5.35 1.272environment

Monthly communication 5.05 1.491sessions about businessprogress with my manager

The opportunity to rotate and 4.81 1.545experience different types of~obs

The opportunity to take study 4.77 1.735leave for further studies

Bursaries/funding for tertiary 4.71 1.715qua lifications

Table 22 shows that the mean scores for all the items were relatively

high, indicating that respondents feel strongly about all the items, but

that items such as personal safety and security in the workplace and

constructive and honest feedback on performance received a higher

204

TJ

rating in comparison to items such as the opportunity to take study

leave and bursaries for tertiary qualifications.

The descriptive statistics for the items included in factor two are

indicated in Table 23.

Table 23: Item statistics: Factor 2 -Remuneration and benefitsItem Statistics

Mean Std. Deviation

Salary/ guaranteed 6.31 .964remuneration

Annualpertorrnance 6.07 1.110bonus/incentive

Retirement and disability 5.69 1.451benefits

Medical aid benefits through a 5.42 1.600medical aid scheme

Phased in return to work after 4.17 1.951maternity/paternity leave

An on-site staff restaurant 4.14 1.692

An on-site fitness centre 3.88 1.828

An on-site medical centre 3.87 1.820

Subsidised tuition for my 3.83 2.062children

An on-site convenience store 3.75 1.779

Increases should be linked to 3.61 1.932inflation and not to personalpertormance

Assistance with financial 3.36 1.880assistance to buy a house

On-site or subsidised 3.36 2.012childcare facilities

An allowance or subsidy to 2.33 1.635care for financial dependentparents

Table 23 shows that the highest mean scores were received for

salary or guaranteed remuneration, an annual bonus and benefits

205

flr

such as medical aid and retirement fund. Childcare facilities and care

for financially dependent parents received the lowest mean scores.

The Cronbach Alpha value for factor 2 was 0.862, exceeding the

minimum requirement and indicating that the factor is reliable.

Descriptive statistics were calculated on the composite results for the

two factors. The results are reported in Table 24.

Table 24: Descriptive statistics for reward categories

Reward Std SkewCategories Mean Median Deviation Min Max Range ness KurtosisFactor 1:

Conduciveworking

environment 5.4710 5.5333 .83329 2.53 7.00 4.47 -.409 -.212Factor 2:

Remunerationbenefits 4.3681 4.4000 .98873 1.73 7.00 5.27 -.056 -.310

From Table 24 it can be seen that the reward category a conducive

working environment had the highest combined mean score,

indicating the highest preference for the items that make up this

reward category compared to the remuneration and benefits

category.

In Figure 17, the correlation between the two factors is illustrated

using a scatterplot.

206

'Ttl

... 7.00&:GIE&:0 0 0...":; 6.00 •&:GIC) 0&::ii: •... 5.000 •==GI> •~

:::lI 4.00 • •~r::::: O· • •0 •~

'" •~

0 3.00GI~

r:::::

'"1::0a. .,oo.E •.

1.oo.........-r---"""T"""----,------r-- ---r----r----~1.00 2.00 3 00 4 00 500 600 7 00

Importance of remuneration and benefits

Figure 17: Distrib ut ion of item responses for two facto rs

The responses plotted in Figure 17 are mostly high on the seven­

point scale, indicating . that respondents felt strongly about both

reward categories . It can be seen, however, that factor one ("a

conducive working environment') generally attracted higher scores

than factor two ("remuneration and benefits" ). The two factors are

pos itively correlated.

The two reward factors informed the empirical total rewards

framework, and replaced the six reward categories originally included

in the theoretical total rewards framework (developed from the

literature review and which formed the basis of the Rewards

Preferences Questionnaire) with two new reward categories. The

new total rewards framework with the two reward categories is

supported from an empirical point of view. The factors extracted

207

through the factor analysis indicate that respondents differentiate by

and large between two types of reward-related categories and not

between six different categories as indicated by the literature review

and by most well-known reward models.

The empirical total rewards framework therefore consists of the

following two reward categories:

• Reward Category 1: A Conducive working environment

• Reward Category 2: Remuneration and benefits

4.5 Reward preferences in the empirical total rewards

framework

After the completion of the factor analysis, the reward components

were accordingly clustered into the new reward categories. Table 25

sets out the reward categories and components in the empirical total

rewards framework.

208

Table 25: Categories and components in the empirical totalrewards framework

NON-FINANCIAL FINANCIAL REWARDSREWARDS

A conducive working Remuneration and benefitsenvironment

A good working relationship with Salary or guaranteed

colleagues remuneration

Quality co-workers in the team Annua l performance bonus

Personal safety in the workplace Medical aid benefits

Constructive and honest Retirement and disability benefits

feedback on performance

Month ly commun ication Increases linked to inflation , not

sess ions about business personal performance

progress

A balanced scorecard or agreed Phased in return from maternity

performance objectives or paternity leave

A comfortable working On-site medical centre

environment

Informal recognition On-site fitness centre

Study leave On-site convenience store

Growth opportunities, learning On-site staff restaurant

and development

Bursaries for tertiary education On-s ite or subsided childcare

facilities

Rotation to differen t jobs Subsidised tuition for children

Subsidy for financia lly dependent

parents

Financial assistance to buy a

house

Table 25 indicates the groupings of reward compon ents into two

reward categories . The reward components contribute to the creation

of two types of rewards (as viewed by the respondents), namely a

209

a

b

conducive working environment and remuneration and benefits. The

arrows indicate the interdependence of the financial and non­

financial reward categories and that the reward components are not

finite and can be added too.

Twenty items (reward components) were not included in the two

reward categories, as they were excluded during the first and

second-order factor analysis processes, given their item loadings of

less than 0.3. These items are categorised in two groups namely

group (a) and group (b).

(a) Annual allocations of shares or share options

(b) Sabbatical leave

(c) A dedicated parking bay

(d) Coaching and mentoring programmes

(e) Formal recognition programmes, for example an overseas trip

(f) International secondments

(g) Flexible working hours

(h) Off-site log in to network

(i) Laptop and 3G card

U) Employer-provided holiday programmes for children

(k) Merit increases linked to personal performance

(I) Market-related salary

(m)Personal remuneration structure

(n) Bonus allocations linked to personal performance

(0) Bonus allocations linked to the team's performance

(p) Control over own work methods

(q) Career path planning aligned with personal goals

(r) A challenging job that tests my abilities

(s) Accountability for job outputs

(t) Management should encourage team performance

210

The reward components excluded are subsequently not reflected in

the empirical total rewards framework. The two broad categories,

reflect:

(a) Reward components that would not interest all employees or

that which employees may not yet be eligible; and

(b) Reward components that are typically reflected in

remuneration management practices, policies and processes

- in other words, the implementation of the reward strategy.

Reward components that not all employees would be eligible for or

be interested in would include shares, share options (as these are

typically offered to senior and executive employees), off-site access

to the employer's network through facilities such as a laptop and a

3G card (for example for positions in a retail outlet or call centre), a

dedicated parking bay (where employees use lift clubs), sabbatical

leave (employees cannot afford extended unpaid leave), international

secondments (due to family commitments), coaching and mentoring

programmes (for lower-level employees) and formal recognition

programmes (where employers do not have programmes where

employees can influence the decisions to award recognition awards).

Reasons for not being eligible or interested therefore include job

level within the organisational hierarchy, personal career objectives

or job type - for example, positions that require employees to be at

the office. By not being eligible, employees could therefore anti­

select and focus on reward components where they would have

more control over receiving, be more interested in or be eligible for.

Reward components that are related to the organisation's

remuneration management policies and processes (including

performance and career management processes) are not part of the

process to structure a remuneration package. Instead, the

211

remuneration policies provide guidelines on managing rewards such

as offering flexible reward structures and benchmarking

remuneration to the external market (Armstrong & Murlis, 2007).

Remuneration practices provide for the methods that organisations

use to determine employee reward outcomes (for example, linking

bonus amounts or increases to personal performance (Armstrong,

2006). Remuneration processes are concerned with different

processes that collectively are used to implement reward policies (for

example, coaching and mentoring processes and learning and

development processes). Most remuneration processes, policies and

practices, management style and the extent to which employees are

held accountable for job-related outcomes, influence but are also as

a result of organisational culture (Armstrong & Murlis, 2007;

Ivancevich & Matteson, 1990; Lawler, 2000). Employees could

potentially think that they have little control over these items as they

are externally determined and thus could influence the lower

preference reported.

The literature review however revealed that these reward

components are regularly included in total rewards models and

frameworks and they should therefore not be excluded from the

reward offerings that employers design. The frequencies also

indicated that some of these items still received very high ratings and

therefore should continue to be included in rewards designs.

The next section addresses the matter of identifying personality type

to enable the analysis of reward preferences by personality type.

4.6 Personality type distribution

The distribution of the different personality types according to the

MBTI® instrument, is indicated in the Type table in Table 26.

212

Table 26: Distribution of personality type (N =589)

TYPE N %

ISTJ ISFJ INFJ INTJ E 278 47%

n =11 5 n =32 n =35- -

19.50% 5.40% 2.00% 5.90% 311 53%

ISTP ISFP INFP INTP S 334 57%

n =26 n =19 n =31 n =41

4.40% 3.20% 5.30% 7.00% N 255 43%

ESTP ESFP ENFP ENTP T 385 65%

n =28 n = 25 n =37 n =47

4.80% 4.20% 6.30% 8.00% F 204 35%

ESTJ ESFJ ENFJ ENTJ J 335 57%

n =58 n =31 n =35

9.80% 5.30% 2.90% 5.90% P 254 43%

The Type table as depicted in Table 26 arranges types in such a

manner that those in specific areas of the table have certain

preferences in common and hence share whatever qual ities arise,

from those preferences (Myers & Myers, 1995). From the Type table ,

it can be seen that 1STJ was the most prevalent personality type

(19.5%) and ESTJ the second most prevalent type (9.8%) . The

personality types where the sample was smaller than 20 are

indicated in orange, and the personality types with a sample smaller

than 30 are indicated in yellow. It was agreed that the types for which

fewer than 20 responses were rece ived would be excluded from the

analysis as the sample sizes were considered to be too sma ll to

represent the specific type (Hair, Anderson , Tatham and Black,

1998). Thus , three types were excluded from the analyses, namely

ENFJ, ISFP and INFJ.

213

The distribution of the different personality types in the sample was

slightly different from the distribution in the study done by Taylor and

Yiannakis (2009), when the South African MBTI® Form Q data

supplement was compiled. In that sample the largest part of the

sample indicated a preference for ESTJ (22.8%) and the second

largest grouping had a preference for the type 1STJ (17.9%), which is

the opposite trend from the data received for this study. The sample

used for the Form Q data supplement was much larger (N =6212),

which could have contributed to the differences in the respective

distribution patterns. The data used in the data supplement originates

from the Jopie van Rooyen database, which consists of data for

people who complete the MBTI® for purposes of personal

development, or as part of attending the MBTI® training programme.

In this study, 47% of the sample indicated a preference for

Extraversion as opposed to Introversion (53%). Similar findings were

reported by Myers et al. (1998) where 49% of the respondents in

their sample indicated a preference for Extraversion and 51% for

Introversion. In Taylor and Yiannakis's South African study (2009),

however the majority of respondents (58%) indicated a preference for

Extraversion.

When the mean scores for the preferences on the two different

reward categories in relation to the 13 personality types are

graphically depicted, optical differences in the preferences between

different personality types are apparent. This is illustrated in Figure

18.

214

7.0000 ...---------------

5.0 000 +-----...,--- ---=--t:--- - - - - - - -

5.0000 +----I------I--------""~----

4.0000 +=~_~_~j!t~~....IIL---=~~3.0000 +--------------

2.0000 +----------- ---

1.0 000 +------- - - - - - --

~Rewa rd Ca.egoro,r 1

~Rewar d Categ orv Z

Figure 18: Mean plot on personality types ' preferences forreward categories

Figure 18 shows that there are differences in the mean scores for the

respective reward categories between the personality types. The

significant levels of the variances are reported on later in this chapter.

Levene's test for equality of variances was performed and the results

are indicated in Table 27.

Table 27: Test of hom ogeneity of variances

The Leveneim portance of: Stat ist ic df1 df2 Sig.A conducive 1.822 15 573 .029workingenvironment

Remunerat ion .986 15 573 .469and benefits

*p>O.OS

The results from Levene's test indicate that the test results are not

significant, as the significance level is greater than 0.05, confirming

215

that the assumption of homogeneity of variance was not violated. The

variability of scores for each of the groups is therefore similar.

4.6.1 Personality types and reward preferences

In order to investigate whether there are differences or similarities

between the mean scores on each of the reward categories in terms

of the 13 personality types, a two-way between-groups analysis of

variance was conducted. The two-way ANOVA calculated on the

group of 13 types and two reward categories showed statistically

significant differences between mean scores of personality types and

reward preferences. Table 28 presents the two-way ANOVA

statistics.

Table 28: Two-way ANOVA statistics

Sum of MeanReward categories squares df Square F p

Importance of:A conducive workingenvironment Between groups 28.395 15 1.893 2.851 0.000*

Within groups 380.491 573 0.664

Total 408.886 588Remuneration &Benefits Between groups 43.201 15 2.88 3.105 0.000*

Within groups 531.536 573 0.928

Total 574.768 588

*p<O.05

Table 28 indicates that statistically significant differences were

present between the personality types in respect of both reward

categories. To identify which personality types differ significantly from

one another, the Scheffe post hoc test was performed. A summary of

the post hoc comparison test results that indicated statistically

216

significant differences between the reward preferences of different

personality types is indicated in Table 29.

Table 29: Summary Results of Multiple Comparisons using Posthoc tests

Whole 4 MeanReward letter type Whole 4 letter Difference

Category" (I) type (J) (I-J) Sig.

ESTJ 0.708 0.000

INFP 0.860 0.000

INTP 0.794 0.000ESFP

1 ISTJ 0.701 0.000

ISFJ 0.660 0.031

INTJ 0.728 0.032

ESFJ INFP 0733 0.027

INTP 1.045 0.001

ESFJ ISTJ 0.783 0013

ItJFJ 0956 0012

2 Ir··JTP 1131 0000

ESFP ENTP 0853 0029

ISTJ 0868 0006

1t·IFJ 1.042 0.006

*Reward Category 1: A conducive working environment

Reward Category 2: Remuneration and Benefits

Table 29 indicates that on the post-hoc test comparisons (Scheffe), a

number of statistically significant differences are present in the

reward preferences of different personality types at the p<O.05 level.

Post hoc comparisons indicated that in respect of the reward

category conducive working environment (reward category 1), the

mean preference score for personality type ESFP (M = 6.03, SO =0.46) was significantly different for personality types ESTJ (M =5.33,

217

so =0.76), INFP (M =5.17, SO =0.71), INTP (M =5.24, SO =0.78),

1STJ (M =5.33, SO =0.89), ISFJ (M =5.38, SO =0.80) and INTJ (M

=5.31, SO =0.96). The mean preference score for personality type

ESFJ (M = 5.91, SO = 0.77) was significantly different from the mean

preference score for personality type INFP (M =5.17, SO =0.71).

In respect of reward category two, remuneration and benefits, the

mean preference score for personality type ESFJ (M = 4.98, SO =

0.90) was significantly different for personality type INTP (M= 3.93,

SO =0.88), 1STJ (M =4.20, SO =1.02) and INFJ (M =4.02, SO =

0.51). In addition, the mean preference score for personality type

ESFP (M =5.06, SO =0.84) was significantly different from the mean

preference scores reported for personality types INTP (M =3.93, SO

=0.88), ENTP (M =4.21, SO =0.95), 1STJ (M =4.20, SO =1.02) and

INFJ (M =4.02, SO = 0.51).

From this summary can be seen that there are more statistically

significant mean differences between the preferences of personality

types for the reward category a conducive working environment than

what were observed in terms of the reward category remuneration

and benefits.

4.6.2 Personality preferences and reward preferences

Statistically significant mean differences were observed in respect of

preferences for reward categories and some of the personality

preferences. The personality preferences are indicated on eight

dimensions, namely Sensing vs Intuition, Thinking vs Feeling,

Extraversion vs Introversion and Judging vs Perceiving. As reported

in Chapter Two, each personality preference identified by the MBTI®

instrument is a multifaceted aspect of personality and enhances

understanding of people's behaviour (Myers, 1998). Although the

combination of the eight personality preferences through the

personality type provides the most comprehensive picture of

218

psychological types, the personality preferences describe dynamic

energy systems with interacting processes. Paired-samples t-tests

were conducted to evaluate whether respondents with different

personality preferences have statistically significant different mean

preferences for the reward categories.

The group statistics on personality preferences E (Extraversion) and I

(Introversion) in respect of the two reward categories are shown in

Table 30.

Table 30: Reward preferences for personality preferencesE and I

Rewardcategories Extraversion IntroversionImportance

of: Mean SO Mean SO t Of p*

1.A conduciveworkenvironment 5.627 0.785 5.328 0.852 4.406 587 0.000*

2.Remunerationand benefits 4.521 0.973 4.225 0.983 3.674 587 0.000**p<0.05Note: equal variances assumed

The results in Table 30 indicate that respondents with a preference

for Extraversion reported statistically significant (p<0.05) higher

scores on a conducive environment and remuneration and benefits

(p<0.05). Statistically significant mean differences were observed

between the personality preference Extraversion (E) (M = 5.63, SO =

0.79) and Introversion (I) (M = 5.33, SO =0.85), t(587) =4.41, in

respect of a conducive work environment. The mean difference

between Extraversion and Introversion preference scores was 0.30,

with a 95% confidence interval ranging from 0.17 to 0.43. Statistically

significant mean differences were also observed between the

personality preference Extraversion (E) (M = 4.52, SO =0.97) and

Introversion (I) (M =4.23, SO =0.98), t(587) =3.67, in respect of

219

remuneration and benefits. The mean difference between

Extraversion and Introversion preference scores was 0.30, with a

95% confidence interval ranging from 0.14 to 0.46.

The group statistics in respect of the analysis on personality

preferences S (Sensing) and N (Intuition) are included in Table 31.

Table 31: Reward preferences for personality preferencesSandN

Rewardcategories Sensing IntuitionImportanceof: Mean SO Mean SO t Of P1.A conduciveworkingenvironment 5.489 0.832 5.444 0.837 0.629 587 0.530

2.Remunerationand benefits 4.449 1.000 4.254 0.964 2.387 587 0.017*

P<0.05Note: Equal variances assumed

Table 31 shows that statistically significant (p<0.05) mean

differences were observed between personality preferences S

(Sensing) (M =4.45, SD = 1.00) and N (Intuition) (M =4.25, SD =0.96), t(587) = 2.39 in relation to the reward category remuneration

and benefits. The mean difference between Sensing and Intuition

preference scores was 0.20, with a 95% confidence interval ranging

from 0.03 to 0.36.

The group statistics for the analysis on personality preferences T

(Thinking) and F (Feeling) are shown in Table 32.

220------~~~~---~---~-----------------------

Table 32: Reward preferences for personality preferencesT and F

RewardCategories Thinking FeelingThe

importanceof: Mean SO Mean SO t Of P1.A conduciveworkingenvironment 5.414 0.838 5.572 0.819 -2.195 587 0.029*

2.Remunerationand benefits 4.256 0.995 4.570 0.946 -3.713 587 0.000**p<0.05Note: Equal variances assumed

Table 32 indicates statistically significant mean differences (p<0.05)

between personality preferences T (Thinking) (M = 5.41, SO = 0.84

and F (Feeling) (M =5.57, SO =0.82), t(587) =-2.20, for a conducive

working environment . The mean difference between Thinking and

Feeling preference scores was -0.16, with a 95% confidence interval

ranging from -0.3 to -0.02. Statistically significant mean differences

were also observed between personality preferences T (Thinking) (M

=4.26, SO =1.00 and F (Feeling) (M =4.57, SO =0.95), t(587) =­3.71 in respect of remuneration and benefits. The mean difference

between Thinking and Feeling preference scores was -0.31, with a

95% confidence interval ranging from -0.48 to -0.15.

The group statistics for the analysis on personality preferences J

(Judging) and P (Perceiving) are shown in Table 33.

221

Table 33: Reward preferences for personality preferencesJ and P

RewardCategories JUdging PerceivingTheimportanceof: Mean SO Mean SO T Of P1.A conduciveworkingenvironment 5.451 0.848 5.493 0.815 -.614 587 0.539

2.Remunerationand benefits 4.392 1.004 4.329 0.970 0.765 587 0.444

Note: Equal variances assumed

As indicated in Table 33, no statistically significant mean differences

were observed in the reward preferences for people with a

personality preference of Judging (J) versus Perceiving (P).

In summary, statistically significant mean differences were observed

in respect of personality preferences Extraversion, Introversion,

Thinking and Feeling on both reward categories, and on personality

preferences Sensing and Intuition on the reward category

remuneration and benefits. No statistically significant mean

differences were observed in respect of respondents with a

personality preference Judging and Perceiving.

4.6.3 Correlation between personality preferences and reward

preferences

Although each respondent is indicated as having a preference for, for

example either Introversion or Extraversion, each respondent has a

score on the personality preference dimensions namely E-I, S-N, T-F

and J-P dimensions respectively. A correlation analysis was done

using the Pearson product-moment correlation coefficients to

determine the relationship between personality preferences scores

222

and preferences for reward categories. Preliminary analyses were

performed to ensure no violation of the assumptions of normality,

linearity and homoscedasticity.

Table 34 provides the data of this analysis.

Table 34: Correlation between reward categories andpersonality preferences

EI SN TFContinuous Continuous Continuous JP Continuous

Score Score Score Score

Conducive working Pearson Correlation..

-.002..

-.004-.158 .110environment

Sig. (2-lailed) .000 .959 .007 .921

N 589 589 589 589

Remuneration and Pearson Correlation -.137..

-.094 .224..

-.037benefits

Sig. (2-lailed) .001 .023 .000 .364

N 589 589 589 589

**. Correlaton IS sl9n1ficant at the 0.01 level (2-talled).

*. Correlation is significant at the 0.05 level (2-tailed).

The data in Table 34 indicates statistically significant relationships

between personality preferences and reward categories. A weak

negative correlation is observed between conducive working

environment and personality preferences Extraversion - Introversion

(E-I), r = -.16, n = 589, p<0.01. There is a weak positive correlation

between a conducive working environment and personality

preference Thinking - Feeling (T-F), r =.11, n =589, p<0.01. A weak

negative correlation is observed between remuneration and benefits

and personality preferences Extraversion - Introversion (E-I), r = ­.137, n = 589, p<0.01 and Sensing - Intuition (S-N), r = .-0.9, n =589, p<0.05. A moderate positive correlation is observed between

remuneration and benefits and personality preference Thinking ­

Feeling (T-F), r =0.224, n =589, p<0.01. There is not a statistically

223

significant correlation between the Judging - Perceiving (J-P)

dimension and any of the reward categories.

4.7 Rewards preferences for different demographic variables

One of the secondary research questions was to determine the

relationships between reward categories and different demographic

factors such as age, gender and job level. T-tests were used for

dichotomous items and analysis of variance techniques was used

when there were continuous variables.

The next section provides the data extracted in respect of these

relationships.

4.7.1 Differences in reward preferences and gender types

The results of the paired-samples t-test conducted for reward

preferences of men and women are presented in Table 35.

Table 35: Differences in reward preferences between gendergroups

RewardCategories Male Female

The inportanceof: Mean SO Mean SO t P

1.A conduciveworkingenvironment 5.224 0.878 5.637 0.767 -6.085 0.000*

2.Remunerationand benefits 4.228 1.045 4.463 0.939 -2.851 0.005*

p<O.05Note: equal variances assumed

The data in Table 35 indicates that statistically significant mean

differences (p<O.05) exist in the preferences between men and

224

women, in respect of both reward categories. Men (M ::: 5.22, SO :::

0.88) indicated a statistically significant lower mean preference than

women (M ::: 5.64, SO = 0.77), t(589) = -6.09 in terms of a conducive

working environment. The mean difference in terms of a conducive

working environment between men and women preferences was ­

0.41, with a 95% confidence interval ranging from -0.55 to -0.28. The

same trend was present in terms of remuneration and benefits,

where men (M = 4.23, SO = 1.05) reported lower mean preferences

than women (M = 4.46, SO = 0.94), t(589) = -2.85. The mean

difference between men and women preferences for remuneration

and benefits was -0.24, with a 95% confidence interval ranging from ­

0.40 to -0.07.

4.7.2 Differences in reward preferences and race group

The results of the paired-samples t-test conducted on the mean

differences in reward preferences between the re-categorised (cf 4.2)

race groups Black and White are shown in Table 36.

Table 36: Differences in reward preferences and race groups

Reward Black (African,Categories Coloured & Indian) WhiteThe importanceof: Mean SO Mean SO t P1.A conduciveworkingenvironment 5.916 0.653 5.319 0.833 7.923 0.000*

2.Remunerationand benefits 4.734 0.915 4.240 0.979 5.388 0.000*

p<0.05

Note: equal variances assumed

Table 36 indicates that statistically significant mean differences

(p<0.05) were observed in the preferences of Black respondents (M

225

= 5.92, SO = 0.65) and White respondents (M = 5.32, SO = 0.83),

t(587) = 7.92 for a conducive working environment. The mean

difference in respect of a conducive working environment between

Black and White preferences was 0.60, with a 95% confidence

interval ranging from 0.45 to 0.75. Also, statistically significant

differences were observed in the preference for remuneration and

benefits between Black (M =4.73, SO = 0.92) and White respondents

(M = 4.24, SO = 0.98), t(587) = 5.39. The mean difference between

Black and White reward preferences in respect of remuneration and

benefits was 0.49, with a 95% confidence interval ranging from 0.31

to 0.67. In terms of both reward categories, the mean scores for

Black respondents were significantly higher than the mean scores for

the White respondents.

4.7.3 Differences in reward preferences and age groups

The results of the two-way ANOVA calculated on the mean

differences in reward preferences between re-categorised (cf 4.2)

age groups are shown in Table 37.

Table 37: Differences in reward preferences between agegroups

RewardCategories 18yrs - 38yrs 39yrs - 48yrs 49+yrs

The importanceof: Mean SO Mean SO Mean SO df 1 df 2 P

1.A conduciveworkingenvironm ent 5.643 0.783 5.405 0.847 5.132 0.826 2 418.32 0.000*

2.Remunerationand benefits 4.558 1.004 4.293 0.962 3.999 0.873 2 478.14 0.000*

p<O.05

Note: equal variances assumed

Statistically significant mean preference differences were observed in

respect of the three age groups in terms of both reward categories.

226

To understand between which age groups there are statistically

significant differences, post hoc tests (Scheffe) were conducted.

The results of the post hoc tests are indicated in Table 38.

Table 38: Post hoc (Scheffe) test results on significant meandifferences in reward preferences between age groups

Multiple Comparisons

Dependent Variable (I) Age Cat (J) Age Cat(new) (new) Mean

Difference Std.(I.J) Error p

A conducive working 18-38 39-48 .23839 .07601 .008environment 49+ .51183" .09020 .000

39-48 18-38 -.23839 .07601 .008

49+ .27344 .09697 .019

49+ 18-38 -.51183" .09020 .000

39-48 -.27344" .09697 .019

Remuneration and benefits 18-38 39-48 .26507" .09058 .014

49+ .55836 .10749 .000

39-48 18-38 -.26507 .09058 .014

49+ .29329" .11556 .041

49+ 18-38 -.55836" .10749 .000

39-48 -.29329" .11556 .041

*p<0.05

The results in Table 38 indicate that statistically significant mean

differences were observed in the preferences scores for both reward

categories, between all age groups included in the analysis. In terms

of a conducive working environment, respondents in the age group

18-38 years (M = 5.64, SO = 0.78) consistently reported higher

mean scores than the age group 39-48 years (M = 5.41, SO = 0.85)

and the age group 49 years and older (M = 5.13, SO = 0.83). Also, in

terms of remuneration and benefits, respondents in the age group

18-38 years (M = 4.56, SO = 1.00) consistently indicated higher

227

mean scores in comparison to age group 39-48 years (M =4.29, SD

=0.96) and the age group 49 years and older (M =4.00, SD =0.87).

4.7.4 Differences in reward preferences for respondents with or

without children

The differences in reward preferences between respondents who

have or don't have children are included in Table 39.

Table 39: Differences in reward preferences for respondentswith or without children

RewardCategories ochildren 1 children 2+ children

The importanceof: Mean 50 Mean 50 Mean 50 p1.A conduciveworkingenvironment 5.515 0.817 5.448 0.856 5.439 0.838 0.5852.Remunerationand benefits 4.274 0.978 4.485 1.027 4.392 0.97 0.121

Note: equal variances assumed

The results from the two-way ANOVA test (cf Table 39) indicate that

there were no statistically significant mean differences observed in

the preferences for the different reward categories between

respondents with no children, one child or more than two children.

4.7.5 Differences in reward preferences and highest educational

qualification

The differences in the reward preferences for respondents with

different levels of educational qualifications are shown in Table 40.

228

Table 40: Differences in reward preferences for respondentswith different levels of educational qualifications

Reward DegreeCategories Matric /Diploma Post graduate Other

Theimportance of: Mean SO Mean SO Mean SO Mean SO df 1 df 2 P

1.A conduciveworkingenvironment 5.451 0.915 5.523 0.773 5.392 0.838 5.690 0.959 3 587 0.161

2.Remunerationand benefits 4.628 1.031 4.432 0.963 4.153 0.951 4.611 1.046 3 587 *0.000

p<O.05

Note: equal variances assumed

The results of the two-way ANOVA test (cf Table 40) indicated that

there was a statistically significant difference in the mean preference

for the reward category remuneration and benefits between

respondents with different levels of educational qualifications.

The results of the Scheffe post hoc tests conducted are indicated in

Table 41.

229

Table 41: Post hoc (Scheffe) test results on significantdifferences in reward preferences between respondents withdifferent levels of educational qualifications

Multiple Comparisons

Dependent Variable (I) Highest (J) High est levellevel of of education Meaneducation Difference

(I-J) Sig.

Matric DegreeiDipoma .19569 .429

Post-graduate .47441.

.001

Other .01703 1.000

Degree/ Matric -.19569 .429Diploma Post-graduate .27873 .024

Other -.17866 .820Remuneration and benefits

Post-graduate Matric -.47441 .001

Deqree/Diplorna -.27873 .024

Other -.45739 .113

Other Matric -.01703 1.000

DegreeiDipoma .17866 .820

Post-graduate .45739 .113

*p<0.05

The results from the Scheffe post hoc test (cf Table 41) indicated

statistically significant mean preference differences in respect of

remuneration and benefits in respect of the following groups of

respondents:

• Respondents with a matric qualification (M =4.63, SO =1.03)

had a higher mean score on preference than the respondents

with a postgraduate qualification (M = 4.15, SO = 0.95).

• Respondents with a degree/diploma (M = 4.43, SO = 0.96)

had a higher mean score on preference than the respondents

with a postgraduate qualification (M = 4.15, SO = 0.95).

230

4.7.6 Differences in reward preferences and completed years of

service with current employer

The results of the two-way ANOVA calculated on the reward

preferences for respondents who have varied years of service with

their current employer are shown in Table 42.

Table 42: Reward preferences for respondents with varied yearsof service with their current employer

RewardCategories 0-2yrs 3-6yrs 7-9yrs 10+ yrs

Theimportance of: Mean SO Mean SO Mean SO Mean SO df1 df2 P1.A conduciveworkingenvironment 5.639 .828 5.371 .812 5.426 .812 5.435 .847 3 587 *0.032.Remune-ration andbenefits 4.476 .925 4.224 1.010 4.307 1.009 4.408 1.004 3 587 0.15

p<O.05

Note: equal variances assumed

Table 42 shows that a statistically significant difference in mean

scores was observed in the reward preference for a conducive

working environment between the different groups compared but not

for remuneration and benefits.

The results of the Scheffe post hoc test conducted are shown in

Table 43.

231

Table 43: Post hoc (Scheffe) test results on significantreward preference mean differences by respondents withvaried tenure with their current employer

Multiple Comparisons

p>0.05

DependentVariable (I) Tenure- (J) Tenure -cirrent current empl oyer Meanemployer Difference (I

J) Sig.

0-2 yrs 3-6 yrs 26831 .066

7-9 yrs .21352 .271

10+ yrs 20464 .149

3-6 yrs 0-2 yrs -26831 .066

7-9 yrs -.05479 .970

10+ yrs -.06367 .924

7-9 yrs 0-2 yrs -21352 .271

3-6 yrs .05479 .970

10+ yrs -.00888 1.000

10+ yrs 0-2 yrs -20464 .149

3-6 yrs .06367 .924

A conducive working 7-9 yrs .00888 1.000

environment 0-2 yrs 3-6 yrs .26831 .041

7-9 yrs 21352 .246

10+ yrs 20464 .126

3-6 yrs 0-2 yrs -.26831.

.041

7-9 yrs -.05479 .997

10+ yrs -.06367 .982

7-9 yrs 0-2 yrs -21352 .246

3-6 yrs .05479 .997

10+ yrs -.00888 1.000

10+ yrs 0-2 yrs -.20464 .126

3-6 yrs .06367 .982

7-9 yrs .00888 1.000

*

As indicated in Table 43, the Scheffe post hoc tests highlighted a

statistically significant difference in the mean scores on preferences

of respondents with 0-2 years' service (M =5.64, SO =0.83) and 3­

6 years' service (M =5.37, SO =0.81) where the respondents with

232

0-2 years' service indicated a higher mean score on preference for

this reward category.

4.7.7 Differences in reward preferences and marital status

The differences in reward preferences between respondents of

different marital status are shown in Table 44.

Table 44: Differences in reward preferences for respondentswith different marital status

Divorced,Reward Married I living widowed orCategories together Single separatedThe importanceof: Mean 50 Mean 50 Mean 50 p1.A conduciveworkingenvironment 5.442 .843 5.535 .851 5.549 .712 .4252.Remunerationand benefits 4.388 .983 4.252 1.032 4.469 .928 .300

Note: equal variances assumed

Table 44 indicates that there were no statistically significant

differences in the mean preference scores of respondents who have

reported a different marital status.

4.7.8 Differences in reward preferences and job level

The results of the two-way ANOVA calculated on the differences in

reward preferences of respondents at different job levels are

indicated in Table 45.

Table 45: Differences in reward preferences and job level

RewardCategories

Adminl Specialist IClerical Professional Jnr Mgt Snr Mgt Executive

Theimportanceof:

1.A conduciveworkingenvironment

Mean SO Mean SO Mean SO Mean SO Mean SO

5.764 .827 5.535 .783 5.659 .793 5.291 .850 5.226 .034

df1

4

df2 P

584 ·0.000

2.Remune­ration andbenefrts

·p<O.054.819 .891 4.439 .950 4.849 .981 4.214 .926 3.671 .825 4 584 ·0.000

Note: equal variances assumed

Table 45 indicates that there were statistically significant differences

reported in the mean preference scores for both reward categories.

The results of the Scheffe post hoc tests are shown in Table 46.

234

Table 46: Post hoc (Scheffe) results on significant differentpreferences for reward categories by respondents in differentjob levels

MUltiple Comparisons

Dependent Variable (I) Current (J) Current positionposition Mean

Difference(~J) p

Admin istrative/ SpecialisUProfessional .22899 .423Clerical Junior management .10477 .966

Senior management .47271" .005

General .53803 .004managemenUExecutive

SpecialisV Administrative/Clerical -.22899 .423Professional Junior management -.12422 .861

Senior management .24372 .098

General .30904 .078managemenUExecutive

Junior Administrative/Clerical -.10477 .966

A conducive workingmanagement Spec ialisUProfes sional .12422 .861

environment Senior management .36794 .039

General .43326' .028managemenUExecutive

Senior Ad ministrative/Clerical -.47271 .005management Spec ialisUProfes sional -.24372 .098

Junior management -.36794" .039

General .06531 .987managemenUExecutive

General Administrative/Clerical -.53803' .004managemenU Spec ialisUProfes sional -.30904 .078Executive

Junior management -.43326" .028

Senior rnanagement -.06531 .987

235

p<O.05

(J) Current position Mean p

Dependent variable(I) Current

Differenceposition (I-J)

Adm inistrativel Spec ialist/Profes sional .38009 .081Clerical Junior management -.03037 1.000

Senior management .60443" .001

General 1.14797 .000management/Executive

Specialist! Admi nistra~ve/Clerical -.38009 .081Professional Junior management -.41046" .026

Senior management .22434 268

General .76788" .000management/Executive ..

Junior Ad ministratve/C lerical .03037 1.000management Spec ialist/Profes sional .41046" .026

Remuneration and benefitsSenior management .000.63481

General 1.17834' .000man agement/Executive

Senior Administrative/Clerical -.60443' .001management Spec ialist/Profes sional -.22434 268

Junior management -.63481 .000

General .54354" .001management/Executive

General AdministrativeiClerical -1.14797 .000management! Spec ialist/Profes sional -.76788 .000Executive

Junior management -1.17834' .000

Senior management -.54354" .001

*

Table 46 indicates that statistically significant differences are

observed in the mean preference scores for both reward categories

in most of the job levels included in the questionnaire. In respect of a

conducive working environment, respondents in the

Administrative/Clerical levels (M = 5.76, SO = 0.83) indicated a

significantly higher mean preference score than respondents in

Senior Management (M = 5.29, SO = 0.85) and respondents in

executive positions (M = 5.23, SO = 0.034). Respondents in the

Junior management level (M = 5.66, SO = 0.79) indicated a

significantly higher mean preference score than respondents in

Senior Management (M = 5.29, SO = 0.85) and Executive

management (M =5.23, SO =0.034).

236

In respect of remuneration and benefits, respondents in the

Administrative/Clerical levels (M = 4.82, SO = 0.89) indicated a

significantly higher mean preference score than respondents in

Senior Management (M = 4.21, SO = 0.93) and respondents in

Executive positions (M = 3.67, SO =0.83). Respondents in the Junior

Management level (M = 4.85, SO = 0.98) indicated a significantly

higher mean preference score than respondents in

Specialist/Professional levels (M = 4.40, SO = 0.95), Senior

Management (M = 4.21, SO =0.93) and Executive Management (M =

3.67, SO =0.825). Respondents in Specialist/Professional levels (M

=4.40, SO = 0.95) indicated a significantly higher mean preference

score than respondents in Executive levels (M =3.67, SO =0.83).

A general trend is therefore that the lower the job level in terms of the

organisation's hierarchy, the higher the preference for the reward

categories and vice versa.

4.8 Preferences for theoretical reward categories

Section three of the Rewards Preferences Questionnaire aimed to

determine the respondents' preferences for the six different

theoretical reward categories as included in the theoretical total

rewards framework (namely the original foundation for the research

questionnaire). Respondents were asked to rank their preferences

for the reward categories from one (being most important) to six

(being least important).

Table 47 shows the frequencies of the responses in terms of Section

three of the Rewards Preferences Questionnaire.

~~~~~~~--~--~---------------------~------~-------------------237

Table 47: Rankings for Theoretical Reward Categories

Ralking (1=most il1]?Ortart, 6 =least important)1 2 3 4 5 6 TotD% % % % % % %

a

b

MJnthlysalary or 74.5"10 11.0% 4.1% 2.7% 2.0% 5.6% 100.0%guaranteedrerrunerat ion

Varialie pay ~ 7.fflo 31.9% 26.1% 15.8% 11.4% 7.1% 100.0%

Benefits 1.7% 28.9% 25.3% 21 .1% 14.8% 8.3% 100.0%

Performance and 2.5% 9.0% 20.7% 25.0% 29.2% 13.ff/o 100.0%careermanagerrentQ.rality'MJlk .... 3.9% 32 % 5.9% 12.7% 23.1% 51.1% 100.0%envirorment

clAbrk/hoole Integration 9.7% 15.1 % 19.0% 22.9% 19.0% 14.3% 100.0%

The raw data in Table 47 shows that most respondents (74.5%)

indicated that of the six theoretical reward categories presented , the

reward category that is most important is monthly salary. Variable

pay (31.9%) and benefits (28.9%) were most often ranked second

and third as most important catego ries. Work/home integration

(22.9%) was most often ranked fourth most important, whereafter

performance and career management (29.3%) and a quality work

environment (22.9%) followed , being most often ranked least

important out of the six reward factors .

In support of the literature review, the Monthly basic salary is on a

relative scale the most important reward category for respondents.

Quality work environment attracted the most widely distributed

ranking, with 22.9% of respondents indicating that on a ranking scale

of six, it is fourth most important. The six theoretical reward

categories included in the questionnaire, were replaced by two

reward catego ries in the empirical total rewards framework, namely

conducive work environment and remuneration and benefits. If the

original theoretical reward categories are grouped together in terms

23 8-----

.....

of the underlying components that naturally fit together, the original

six theoretical categories. can be combined into three theoretical

reward categories, namely:

(a) Remuneration and benefits (consisting of monthly salary or

guaranteed remuneration, variable pay and benefits);

(b) Quality work environment (consisting of performance and

career management and quality work environment); and

(c) Work/home integration.

There is therefore good overlap between the three combined reward

categories as indicated in Table 47 and the categories in the

empirical total rewards framework, with the exception that the items

that collectively formed the category work/home integration were

excluded from the final total rewards model as the item loadings

were too low. It has been confirmed that respondents still rated these

reward components as important and that they should not be left out

of the reward offering. The results in terms of the reward categories

that make up the theoretical and the empirical total rewards

frameworks can however not be compared, as the results in Table 47

are extracted from the theoretical reward categories included in the

Rewards Preferences Questionnaire, whereas the two reward

categories included in the final total rewards framework are the result

of the factor analysis. Although the theoretical reward category

quality work environment could be confused with the new reward

category a conducive work environment, the underlying reward

components that make up the categories are different, although the

labels for the categories could be very similar. Suffice it to state that

on the second-order factor analysis, the reward category a conducive

work environment received higher mean scores on preferences'

compared to the reward category remuneration and benefits.

239

However , in Section three of the questionnaire, where respondents

were asked to rank the original six reward categories in order of

importance on a scale of one to six, remuneration and benefits

received the highest relative scores in terms of being the most

important reward component.

4.9 Attract ion, rete nt ion and motivation of emp loyees

One of the secondary research questions was to identify the reward

categories that mostly contr ibute to the attract ion , retention and

motivation of employees.

The aim of Section four of the Rewards Preferences Questionnaire

was to assess which one of the six reward categories has the

greatest impact on an organisation's ability to attract, retain and

motivate employees .

Figure 19: Impact of rewards on attraction, retention andmotivation

Reward related de cisions_ Month ly ~Iary/Remuneralion _ var iab te pay

_ ~nef it~

• 9uality work environment

_ Per lo rrnanc e ,

Recognition & Career managemen• Work/hom~ in egr a ion

Motivate

At ract

24 0

Figure 19 shows that monthly salary (75.2%) plays the biggest role in

attracting employees, and performance management, recognition

and career management plays the biggest role in motivating

employees to perform better (35%) and to be retained by the

organisation (25.6%).

4.10 Conclusion

In this chapter, the results of the data analysis observed in respect of

the research questions were reported. Through the factor analysis

process, two factors were extracted that populated the reward

categories used in the empirical total rewards framework. The

preferences for reward categories between personality types and

personality preferences were analysed and reported. The

preferences for different reward categories of respondents in different

demographic groups were investigated and results were reported. In

the next chapter, the interpretation of the results and the conclusions

drawn from the research are discussed.

241

CHAPTER 5: DISCUSSION AND INTERPRETATION

5.1 Introduction

The primary purpose of this study was to establish the relationship

between personality types, preferences (as defined by the MBTI®

instrument) and reward preferences. The secondary research

questions included an investigation into the relationship between the

reward categories and the underlying components of the total

rewards framework, as well the impact of the different demographic

variables on reward preferences. Finally, there was a need to

understand the reward categories that mostly contribute to the

attraction, retention and motivation of employees.

This chapter presents the interpretation of findings from both the

literature review and the empirical research and attempts to integrate

these findings into a meaningful conclusion.

5.2 Key literature and empirical findings

This study began by identifying four main research constructs,

namely (1) personality types and preferences, (2) motivational

theories, (3) total rewards framework and (4) total rewards strategy

and EVP. Figure 20 shows the linkages between these research

constructs as they were perceived at the outset of the study.

242

Constructs 1 and 2 Construct 3 Construct 4

Personalitytypes and • •

preferences(1)

Influence Total rewards Enhances Total rewardsframework (3) strategy and

Motivational EVP (4)

theories (2)A

+Figure 20: Research constructs redefined

The linkages between the research constructs were endorsed

through some strategic themes that were identified in the literature

review. Personality influences how people can be motivated (Fortin ,

2008 ; Murphy, 2008), and for many years line managers have been

trying to understand how employees can be motivated to deliver

more effective and higher-quality results that will contribute to

enhanced organisational performance (Furnham, 2003 ). People with

different personality traits are motivated by different types of rewards

(Cable & Judge, 1993; Gray, 1973; Gray & Starke , 1988 ; Stewart &

Barrick, 2004; Vandenberghe et aI., 2008) and therefore these

reward preferences should be considered by employers when the

total rewards framework is designed to enhance its effectiveness and

to encourage continuously higher levels of motivat ion and resultant

levels of performance (Kaliprasad, 2006 ; Lawler, 2000 ).

Motivation refers holistically to an internal desire to satisfy the need

that energises, directs and sustains behaviour for a certain amount of

time (Steers & Porter, 1991). Although some broad generic themes

are addressed by motivat ional theorists , motivation is mostly a

personal matter , and can be a combination of intrinsic and extrinsic

243

motivational factors (Thomson, 2002). Most resources compare one

motivational theory with another, but they are actually mostly

complementary and enhance our understanding of how people can

be motivated in the workplace. Managers can influence the

motivation levels of employees through creating a supportive and

positive work environment, setting goals with employees,

understanding primary motivators and offer challenging and

developmental opportunities (DuBrin, 2005; Martin, 2005; Miner,

2005; Steyn, 2007).

The total rewards framework begins with a traditional approach of

basic salary and elementary benefits and culminates in a

comprehensive, business-aligned approach to reward management

that includes all financial, non-financial, direct and indirect

components of rewards (Armstrong, 2006). A number of different

total rewards models and frameworks are available in popular

literature and as indicated in the theoretical total rewards framework,

these models mostly categorise total rewards into the following

rewards components: base salary, contingency pay, benefits,

performance and career management, quality work environment and

work/home integration (Armstrong & Brown, 2006; Armstrong &

Thompson, 2002; Crawford & Gioia, 2008; CLC, 2007a; Gross &

Friedman, 2007; WorldatWork, 2007; Zingheim & Schuster, 2007).

Different employees may have different needs and preferences,

which can change over time. As particular needs are met new needs

may emerge. In terms of Maslow (1954) and Alderfer (1972), an

employee whose basic physiological needs are met through a good

salary, may now move to a different level where a need for self­

actualisation now becomes important (for example opportunities for

further development). Once needs are met, and the employee links

his or her levels of effort with the consequential reward, levels of

motivation remain high (Steers & Porter, 1991). As the process

where needs and preferences continuously change is iterative in

244

nature, and depends on specific personal circumstances, an

additional arrow was included in Figure 19 (red arrow at the bottom)

that demonstrates the circular loop back from the total rewards

framework to the motivational theories. Line managers therefore

have to continuously ensure that they understand the changing

preferences and needs of employees (Burchman et aI., 2007;

Murphy, 2008).

For a total rewards framework to be true to its purpose of attracting,

retaining and motivating employees (Bergmann & Scarpello, 2001), it

should be desirable to employees, be in strategic alignment with the

organisational culture and the business, human resources and

remuneration strategies and enhance the employee value

proposition (WAW, 2007). Vroom (Vroom & MacCrimmon, 1968)

postulates that employees will consider the reward offered in relation

to the personal importance thereof, their level of confidence that the

required targets will be achieved and their level of trust in

management in terms of whether they will actually receive the

rewards promised - all factors that need to be considered in the

policy- design processes.

Total rewards are a key component of an organisation's employee

value proposition (EVP) (Black, 2008; Towers Perrin, 2007). By using

an EVP effectively, organisations distinguish themselves in the

marketplace from other employers to attract and retain critically

skilled employees (Armstrong & Brown, 2006). Although employee

preferences for the components of the total rewards framework

should feed into the rewards strategy (as depicted in Figure 19), the

total rewards strategy ultimately provides the strategic direction for

the design of a total rewards framework (Armstrong & Murlis, 2007).

For this reason, the second red arrow was included in Figure 19.

indicating that the total reward strategy (that plays an integral role in

the design of the EVP), (Towers Perrin, 2007) influences the total

rewards framework. The total rewards strategy is operationalised

245

through the total rewards framework, policies and processes

(Armstrong & Brown, 2006) - all of which should be taken into

consideration to ensure a highly effective remuneration practice that

enhances the organisation's EVP (Hankin, 2005; Milkovich &

Newman, 1999). As rewards are a critical component of an

organisation's EVP, any change in the rewards framework directly

impacts on the EVP (CLC, 2007a; Towers Perrin, 2007), which in

turn has an influence on the organisational brand and reputation

(Balmer & Greyser, 2006). The remuneration processes that govern

the implementation of the total rewards framework contribute to

levels of engagement, organisational performance and thus the EVP

(Sung &Todd, 2004).

5.2.1 The impact of personality and motivation on reward

preferences

The literature review highlighted that people with different personality

types, traits and preferences are motivated differently. Different types

of motivation through rewards include intrinsic and extrinsic, financial

and non-financial types of rewards. The golden thread through all the

motivational theories is that there should not be too much reliance on

financial rewards only as a source of employee motivation. In

addition, the processes followed in remuneration management are

also very important, and not only the remuneration as a quantum,

that is awarded. Motivation is a function of a diverse range of factors

that includes the desirability of the outcome of behaviour.

Organisational behaviour theorists have over time completed

extensive research concerning the motivational aspects of

remuneration on employees.

A perpetual exchange process takes place in the workplace between

employers and employees. Employers employ individuals on the

basis of what they will receive from employees and, in return, skilled

246

employees choose to work for organisations that will meet their

needs - a tension that clearly depicts the complexity of remuneration

in the current labour market.

When respondents were requested to choose between six reward

categories (included in the theoretical total rewards framework), in

terms of the reward category that plays the most important role in

attracting, retaining and motivating them, interesting results are

found:

• Basic salary - 73.5% of respondents indicated that this reward

category plays the most important role in their being attracted

to organisations.

• Variable pay - 29.7% of respondents indicated that variable

pay motivates them to perform better.

• Benefits - play an almost meaningless role in terms of

attraction, retention and motivation.

• Performance and career management - 27% of respondents

indicated that this reward category plays the most important

role in retaining them and 34.3% indicated that this reward

category plays the most important role in motivating them.

• Quality work environment - plays an almost meaningless role

in terms of attraction, retention and motivation.

• Work/home integration - 20.9% of respondents indicate that

this type of reward plays the most important part in retaining

them, and 18.1% stated that it plays the most important role in

motivating them.

The respondents selected Basic salary as the reward category that

plays the most important role in attracting them to organisations ­

one can only assume that basic salary enables the respondents to

meet their physiological needs in terms of Maslow's hierarchy of

needs (1943).

Performance and career management was selected as the most

important reward category that influences the respondents' intention

to stay with an organisation; this aligns with social and esteem needs

in Maslow's hierarchy. Although Herzberg and Maslow both

questioned the efficacy of remuneration as a motivator, basic salary

does enable people to move up the hierarchy (according to Maslow's

theory) or change focus from hygiene to growth motivational factors

(according to Herzberg's theory). When choosing out of six reward

categories, the respondents chose monthly salary as the most

important remuneration category, indicating that remuneration (basic

salary specifically) should never be underestimated in terms of its

importance in organisations. However, it does not stand in isolation,

but works with the other reward categories to offer a comprehensive

and attractive reward offering (Buckingham & Coffman, 2005).

The preference for equitable rewards is described by Porter and

Lawler (Steers and Porter, 1991) and addressed in Adam's Equity

Theory (1965); all indicate that employees expect to see rewards that

are in relation to their efforts and inputs in arriving at certain

outcomes. If this balance is disturbed, it can have a negative impact

on levels of motivation and continued levels of effort. The literature

review furthermore confirmed that performance and career

management (Giancola, 2007) as well as management effectiveness

(Blanchard, 2007; Butler & Waldroop, 2004; Sung & Todd, 2004)

positively influence employee retention and engagement. This

research supports these findings and re-emphasises the critical role

of the line manager in the motivation and retention of employees.

The research results support the need for a holistic total rewards

framework that includes both intrinsic and extrinsic reward categories

but that is simple in its design and speaks to the preferences of

employees. It is quite clear that employee motivation and retention

are influenced by a complex collective system of financial and non-

248

financial, intrinsic and extrinsic factors that are influenced by peers,

management and organisational factors.

To manage this tension in the most cost-effective manner requires

employers to understand the preferences of their employees before

they embark on the design of a total rewards framework. The limited

research to date that has been done on determining remuneration

preferences was mostly done from a North American and European

context: little research has been done on the remuneration

preferences of employees in the South African labour market.

5.2.2 Designing a total rewards framework

In designing the total rewards framework (which flows from the

rewards strategy and philosophy), financial and non-financial,

extrinsic and intrinsic types of rewards have to be incorporated in

order to offer a holistic rewards offering. A number of different reward

models and frameworks were consulted during the literature review

and a theoretical total rewards framework with reward categories and

underlying reward components was constructed for the purposes of

the empirical research. The theoretical rewards framework was

based on the most common reward components found in the various

existing models. The academic literature provided substance for the

initial formation of six reward categories, namely:

a) Base pay

b) Variable pay

c) Benefits

d) Performance and career management

e) Quality work environment

f) Work/home integration

249

The empirical research, however, did not support the six categories

proposed in the theoretical total rewards framework, and, following

the factor analysis, two reward categories, namely a conducive

working environment and remuneration and benefits, were included

in the empirical total rewards framework.

5.3 The influence of personality type on reward preferences

In terms of reward category one, a conducive working environment,

respondents with a preference for personality type ESFP indicated a

statistically significant higher mean score than respondents in

personality types ESTJ, INFP, INTP, 1STJ, ISFJ and INTJ. In

addition, respondents with a preference for personality type ESFJ

scored a significantly higher mean score than respondents with a

preference for personality type INFP.

In terms of reward category two, remuneration and benefits,

respondents with a preference for personality type ESFP reported a

statistically significant higher mean score than respondents with a

preference for personality type INTP, ENTP, 1STJ and INFJ. In

addition, respondents with a preference for personality type ESFJ

reported a significantly higher mean score than respondents with a

personality preference INTP, 1STJ and INFJ.

Respondents with a preference for personality type ESFP reported

the highest mean scores on both reward categories, respondents

with a preference for personality type ESFJ reported the second

highest mean score on both reward categories and respondents with

a preference for personality type ENFJ reported the third highest

mean score for both reward categories. Personality types INFP and

INTP reported some of the lowest mean scores on both categories.

The highest mean preference scores were reported on both reward

categories by individuals with a personality preference for Sensing

(S) and for Extraversion (E) and the lowest mean preference scores

250------------------------------------------- ---------------- ---

by individuals who appear to have a preference for Intuition (N) and

Introversion (I).

Personality types ESFP, ESFJ and ENFJ all have in common a high

need for others, for harmony and a preference for being in a position

to help develop others. People with these preferences are excellent

team players and keen observers of human behaviour (Myers, 1998).

The preference for Extraversion (E) indicates that they receive their

energy from other people and enjoy being among people,

communicate through talking, are sociable and expressive and

readily take the initiative (Myers & Myers, 1995). The Feeling (F)

aspect in all three identified types is often described as being

accepting, trusting of emotions, fair-minded and seeking of

consensus (Pearman & Albritton, 1997). People with this personality

preference are often seen as personal, being more interested in

people than in things. Extraverted Feeling types value harmonious

human contact above all other things, are conscientious, persevering

and anxious to perform (Myers & Myers, 1995). The common

descriptors of these personality preferences are in support of the

highest mean preference scores observed for personality types

ESFP, ESFJ and ENFJ in the reward category a conducive working

environment, compared to the other personality types.

More specifically, the personality type ESFP indicated the highest

mean preference score for a conducive working environment, which

is indicative of people who enjoy satisfying careers, where their

natural warmth, attention to detail, emphasis on interpersonal values

and adaptability are valued. They are excited by continuous

involvement in new activities and new relationships (Martin, 2009).

Included in this reward category is a good working relationship,

monthly communication sessions, performance management, goal­

setting and regular feedback that would all be important

considerations for people with a preference for ESFP. However, too

much structure can be stifling and therefore the way in which

251

performance is being managed should be discussed with these

individuals to ensure that they are managed in the most optimal and

effective manner without leading to levels of frustration (Myers et aI.,

1998). The survey result indicating that personality type ESFP has

the highest preference for a conducive working environment can

therefore be substantiated by the common descriptors available for

this personality type.

On the other side of the dichotomy, people with a preference for

personality type INTJ, INFP and INTP indicated the lowest mean

preference scores for reward category one, a conducive working

environment. One of the common personality preferences in these

personality types, is Introversion (I). The preference for

Introversion (I) is described as the process whereby people charge

their batteries (away from others) and for the Introvert this is through

a process of reflection. People with this personality preference are

therefore less likely to feel the need to externalise their thoughts until

they have to communicate with others (Pearman & Albritton, 1997).

Employees with a tendency towards Introversion (I), are thus likely

to be content working on their own. The personal interaction that may

be implicit in a conducive working environment (such as team work

and quality interaction with colleagues) may thus be of lesser

importance to individuals with a preference for Introversion (I)

(Myers & Myers, 1995).

A significant mean difference in the preference for a conducive

working environment was observed between the personality types

ESFP (M = 6.03) and INFP (M = 5.17). The descriptors for the

preference INFP include that these people are best at individual work

involving personal values (for example art, social sciences, writing,

psychology and counselling) (Myers et aI., 1998). They have a strong

sense of duty and faithfulness, but no desire to influence other

people (Myers & Myers, 1995). Given the fact that a conducive

working environment involves interaction with others through various

252

processes, it is understandable that employees with a preference for

INFP will have a lesser preference for this reward category to those

with a preference for ESFP.

A significant mean preference difference was observed between

personality types ESFJ (M = 5.91) and INFP (M = 5.17) for reward

category one being a conducive working environment. The

descriptors for the INFP personality type have already been

discussed. The descriptors for personality type ESFJ are very similar

to those for ESFP (who indicated the highest mean preference

score). According to Myers, McCauley, Quenk and Hammer (1998),

ESFJs often find themselves in careers that are characterised by a

great deal of communication, nurturance and people-orientated work.

They find themselves less often in positions where there is low

contact with people. These characteristics explain the relatively

higher preference for this reward category.

One of the potential drawbacks for people with a preference for this

personality type is their tendency to make decisions too quickly,

ignoring objective considerations in career planning and overlooking

unusual options and job opportunities (Myers, 1995). These potential

drawbacks should be considered by line managers of these people to

ensure that their delivery and decisions are coached accordingly and

that the opportunities for careers are not overlooked. Once again, as

for the significant mean differences reported above, the typical

descriptors that are available for these personality types suggest

possible reasons why respondents could have a greater or lesser

preference for the respective reward categories.

It is important to note though, that the mean preference scores for the

reward categories were high for personality preferences

Extraversion (E) and Introversion (I). This suggests that a

conducive working environment and remuneration and benefits are

not unimportant for those with a preference for Introversion (I), but

253

at the most of lesser importance than for those with a preference for

Extraversion (E).

The two personality types that indicated the highest and lowest mean

preference scores for the reward category remuneration and benefits

are the same as for category one, namely ESFJ and ESFP (highest)

and INFP and INTP (lowest), respectively. Remuneration and

benefits include remuneration components such as salary, benefits,

on-site convenience facilities, subsidised tuition for children and care

for dependent parents and inflation-linked increases - financial,

extrinsic types of rewards (Armstrong, 2006).

Some of these preferences differences could be described through

the temperaments of the personality types. As stated by Myers and

Myers (1995), combinations of personality preferences in the form of

personality temperaments produce a different kind of personality with

qualities of its own. Personality types ESFJ and ESFP belong to the

temperament SF, whereas personality type INFP has a NF

temperament and INTP a NT temperament. Bayne (2004) provides

detail about the approaches to money for some of the temperaments

and states that people with a NT temperament will spend money in a

perfect manner, as competence is their core motive. According to this

descriptor the manner in which remuneration is allocated needs to be

aligned with the thinking of the NT temperament to ensure

acceptance and confidence in the process. People with a preference

for NF may well be perceived to ignore money, as they are less

materialistically inclined and consider it as a means to an end

describing the lower preference. People with a SF temperament

enjoy being successful in their work, where personal warmth can be

applied effectively (Myers, 1998). Money is not a driving force for

people with a SF temperament and it can only then be assumed that

the preference for Extraversion (E) (namely by being more

expressive than people with a preference for Introversion (I)) played

a role in selecting the higher preference for this reward category.

254

In addition, the common preferences in the personality types

identified are Sensing (ESFJ and ESFP) and Intuition (INFP and

INTP). Sensing and Intuition refers to the manner in which people

prefer to gather data. Kroeger and Thuesen (1988) describe people

with a preference for Sensing (S) enjoying concentrating on the 'here

and now', working with facts and figures, and preferring clear

instructions and tangible results. In comparison, people with a

preference for Intuition (N) can often be absent-minded, don't spend

a lot of time on details and would rather spend time fantasising about

spending the next pay cheque than balancing their bank accounts.

Understanding the differences in the reward preferences could be

explained, where people with a preference for Sensing (S) generally

prefer to know what they would earn, wanting to understand the

tangible benefits and are thus more specific about the reward

components, compared to people with a preference for Intuition (N),

who will work it out as they go along. It is therefore possible that

money is not unimportant for the latter group, but that they spend

less time thinking about the details thereof which translates into a

lower reported preference.

The significant differences in the mean preference scores observed

between the two reward categories should also be noted. The

highest composite mean score for reward category one, a conducive

working environment, was M = 6.03 (ESFP) compared to the highest

composite mean score for reward category two remuneration and

benefits, being M = 5.06 (ESFP). The second-highest scores were M

= 5.91 (ESFJ) and M = 4.98 (ESFJ) for the two reward categories.

This means that the same personality types indicated the highest and

second highest mean preference scores for both reward categories.

The trend continues with the lowest composite mean scores being M

= 5.17 (INFP) in respect of reward category one and M = 3.93 (INTP)

for reward category two. These composite mean scores indicate

firstly that the mean scores for both reward categories were relatively

255

high and thus that the two reward categories are both important to

respondents. However, for reward category one, a conducive working

environment, a much higher mean preference score was observed

than for reward category two. The lowest mean preference scores

were also much higher for reward category one (M = 5.17) in

comparison to reward category two (M = 3.93). Results thus indicate

that although both reward categories are considered important for all

respondents regardless of their personality types, a conducive

working environment attracted in general, far higher mean preference

scores than the reward category remuneration and benefits.

The reward components that make up a conducive working

environment are broadly considered non-financial rewards

(Armstrong & Brown, 2006; CLC, 2002a; CLC, 2007a), and these

research results confirm previous research that indicated that non­

financial rewards are starting to playa more significant role in the

retention and motivation of employees in an organisation (Saratoga

PricewaterhouseCoopers, 2006). It also aligns with the findings of

Marcus (2007), who reported that employees selected interesting

work over a market-related salary when they were asked to rank the

importance of factors that motivate them. This also supports the

findings from section 4 of the Rewards Preferences Questionnaire.

The results in section 4 of the Reward Preference Questionnaire,

confirm that remuneration plays the most important role in attracting

respondents to an organisation, but that performance and career

management (now forming part of a conducive working environment),

is the most important reward category in terms of retention and

motivation of employees. Similar findings were reported by CLC

(1999a; 2002b), namely that the most important component of a job

offer is salary, but that the line manager, quality work environment

and organisational brand were the most important factors in retaining

employees.

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5.3.1 The influence of personality preferences on reward

preferences

The eight personality preferences (Extraversion - Introversion,

Sensing - Intuition, Thinking - Feeling and Judging - Perceiving) of

which a combination of four personality preferences make up a

personality type, can individually also provide interesting insights into

reward preferences. The characteristics typically ascribed to the eight

personality preferences have been included in the literature review.

In respect of both reward categories, respondents with a personality

preference for Extraversion (E) indicated higher mean preference

scores than respondents with a personality preference for

Introversion (I). The question is whether these respondents truly

have a higher preference for the reward categories compared to

respondents with a preference for Introversion (I), or whether they

are just more expressive and thus bound to indicate relatively higher

preferences. According to Myers and Myers (1995), the present

Western civilisation is dominated by people with a preference for

Extraversion (E). Extraverted (E) people are more vocal and

typically make themselves known to a wide circle of people, multiply

relationships and broaden their sphere of work. Extraverts (E) need

people around them to function optimally (Pearman, & Albritton,

1997). Gray (1973) postulates that Extraverts (E) are more inclined

to be motivated by money, and generally prefer incentive schemes,

as they have a higher propensity for risk-taking. Given the previous

research and the descriptions, it is more likely that Extraverts (E) in

fact do have a higher preference for the two reward categories, in

comparison to the Introverts (I), and that the higher preference

results were not as a result of a potential response bias towards

choosing higher response categories.

257

Statistically significant mean preference differences were observed in

respect of respondents with a personality preference for Sensing (S)

and Intuition (N) in respect of the reward category remuneration and

benefits, where respondents with a personality preference for

Sensing (S) reported the highest mean preference score.

People with a preference for Sensing (S) are primarily interested in

actualities, and people with a preference for Intuition (N) are mainly

interested in possibilities (Myers & Myers, 1995). People with a

preference for Sensing (S) are furthermore described as being

sequential, factual and present, with a practical and realistic

perspective (Martin, 2009). Sensing (S) individuals prefer to

concentrate on the details and have a preference for using sensory

data through the use of their senses (Myers & Myers, 1995). These

are all factors that support with the higher mean preference for

remuneration and benefits, as they would prefer to reduce risk-taking

and receive guaranteed benefits and opportunities. They enjoy more

tangible things and thus would need to know what their remuneration

and benefits in detail would entail. People with a Sensing (S)

preference appear to be better planners and more structured in their

thinking compared to people with a preference for Intuition (N)

(Myers, 1998) and would use the processes and products available

under the remuneration and benefit category to plan for their

personal needs.

The lower mean preference score observed for respondents with a

personality preference Intuition (N) fits well with the existing

descriptors, namely to follow their own inspirations, their head-in-the­

clouds approach, being imaginative, unconventional, intellectual and

having a general preference for change and new ways of doing

things (Pearman & Albritton, 1997). Intuitive (N) individuals require

more flexibility, have a preference for recognising relational, abstract

data through intuition (CPP, 2008; Kroeger & Thuesen, 1988) and

thus could have a reduced need for the specific details that relate to

258---- ---- -------- ----------- --- -

guaranteed remuneration and benefit structures per se and thus

could explain the relatively lower mean preference score observed in

respect to the reward categories.

Statistically significant mean preference differences were observed

for respondents with a personality preference for Thinking (T) and

Feeling (F) in respect of both reward categories. According to

Pearman and Albritton (1997) people with a preference for Thinking

(T) are pulled towards an analytical, cause-and-effect type of

judgement and people with a preference for Feeling (F) are pulled

towards a values-oriented, accommodating type of judgement. For

both of the reward categories, the respondents with a personality

preference for Feeling (F) reported significantly higher mean scores

in comparison to respondents with a personality preference for

Thinking (T). People with a personality preference for Feeling (F)

are typically described as subjective, fair-minded and humane. They

seek harmony, appreciate people, have social values and are

empathetic (Kroeger & Thuesen, 1988).

The affect that decisions have on people is an extremely important

component of the final decision reached and typically decisions taken

are done with interpersonal involvement. This description stands in

contrast to people with a preference for Thinking (T), who tend to be

more objective, firm-minded, policy-driven and detached, and who

tend not to get involved personally when decisions are made. Myers

and Myers (1995) furthermore state that the TF preference is the only

preference that shows a marked difference between men and

women, with the majority of women having a preference for Feeling

(F). This correlates with the results obtained in response to the

secondary research questions that indicated that the women

indicated significantly higher mean preference scores on both reward

categories, in comparison to the men. The descriptors for people with

a personality preference for Feeling (F) confirm the higher mean

preference for the reward category a conducive working environment,

259

as it supports their need to be accepted and be accepting, their acute

awareness of the intricacies of networks, their urge for consistency

with personal values and their seeking of consensus (Pearman &

Albritton, 1997).

No statistically significant mean preference differences were

observed in respect of respondents with a personality preference

Judging (J) and Perceiving (P). According to Myers and Myers

(1995), the personality preferences Judging (J) and Perceiving (P)

are not used simultaneously and are used as a method to deal with

the world and the challenges it poses. Personalities designated by

Judging (J) typically prefer a structured, scheduled, ordered,

planned and controlled environment where decisive and deliberate

decisions can be made. On the other side of the dichotomy, people

with a preference for Perceiving (P) enjoy an environment that

allows spontaneity and flexibility, in which they can be adaptive and

responsive to different situations. Perceivers (P) prefer to take a

'wait and see' attitude on what they do and how they approach

problems (Kroeger & Thuesen, 1988). Given these very explicit

differences in approach, it is surprising that there are no statistically

significant mean preference differences for the reward categories.

The fact that statistically significant mean preference differences

were observed for both reward categories confirmed that

respondents have different preferences, yet all indicated a relatively

high preference for both reward categories. The importance of a

combination of monetary and non-monetary rewards in the total

rewards offering cannot be underestimated, and the one should not

be offered in isolation from the other. Rewards should be

appropriately linked to performance indicators that reflect an

employee's input and competence. In addition, the role of the line

manager who offers constructive feedback on performance is critical.

The extent to which monetary rewards are offered in relation to other

260

types of rewards should be designed in accordance with employee

preferences in order to increase their effectiveness.

Some studies have been undertaken on the influence of personality

traits on earnings and preferences (Bowles et aI., 2001; Chiang,

2005; Furnham, 2003; Gray, 1973; Judge & Cable, 1993; Stewart &

Barrick, 2004). In addition, the reward preferences of individuals in

different countries but working for the same organisation were

researched (Gunkel, 2006; Hofstede, 1980; MacGrain Herkenhoff,

2000; Rehu et aI., 2006; Westerman et aI., 2009). Gunkel (2006) and

Rehu et al. (2006) report distinct differences in reward preferences

and reward motivators between employees in different countries.

Westerman et al. (2009) found a weak relationship between

individual personality variables (as used in the NEO personality

inventory that correlated positively with the MBTI®) and pay package

preferences. MacGrain Herkenhoff (2000) also did not find significant

differences in pay package preferences between different individuals

within the same countries, but did, as did Westerman et al. (2009),

find significant differences in the pay package preferences of people

from different national cultures.

Gray (1973) reported on the other hand that Extraverts have a

higher preference for variable pay due to their higher risk tolerance,

Extraverts prefer open-plan office environments, while Introverts

prefer quiet space to work (Judge & Cable, 1993), and more

conscientious people have a greater need for learning and

development opportunities and attach more value to an environment

that is characterised by good social relationships (Stewart & Barrick,

2004). Vandenberghe et al. (2008) contributed to previous studies by

reporting that the prominence given to work prestige or job level

correlates with the FFM personality traits "Openness to new

experiences" and Extraversion.

261

Furnham et al. (2003) reported that personality measures in the FFM

can be mapped onto the personality preferences of the MBTI®,

where Extraversion (FFM) correlated strongly with Extraversion ­

Introversion (MBTI®), Openness (FFM) correlated strongly with

Sensing - Intuition (MBTI®), Agreeableness (FFM) correlated

strongly with Thinking - Feeling (MBTI®) and Conscientiousness

(FFM) correlated strongly with Judging - Perceiving (MBTI®). As

previously stated, it is already known that some reward preferences

exist for certain personality traits and that these traits can be

correlated successfully with the MBTI® personality preferences.

Therefore, the research conducted by Vandenberghe et al. (2008),

where it was reported that Extraverts have a higher preference for

status, promotions and higher job levels, can be correlated with the

finding in this study that Extraverts have a higher preference for

remuneration and benefits compared to people with a preference for

Introversion.

As no significant mean differences were observed in the reward

preferences for people with a personality preference for Judging ­

Perceiving, the findings of Judge and Cable (1993), which indicated

that more conscientious people have a greater need for learning and

development opportunities and attach more value to an environment

that is characterised by good social relationships (which would

correlate with the reward category a conducive working environment)

(Stewart & Barrick, 2004), cannot be confirmed in this study.

However, people with a personality preference for Feeling (F)

reported consistently significantly higher mean scores for both reward

categories, and it can thus be said that people with a preference for

Agreeableness (FFM) will tend to have a higher preference for

reward categories remuneration and benefits and a conducive

working environment.

262

5.3.2 The correlation between personality preferences and

preferences for reward categories

Although each respondent is classified as having a preference for a

specific personality type, this type is made up of personality

preferences that are indicated on a dimension of Extraversion ­

Introversion; Thinking - Feeling; Sension - Intuition and Judging ­

Perceiving. The correlation analysis indicated the following

relationships between personality preferences and preferences for

the two reward categories.

A weak negative correlation was observed between a conducive

working environment and personality preference Extraversion­

Introversion (E-I). A weak positive correlation was observed between

a conducive working environment and the personality preference

Thinking - Feeling (T-F). Negative correlations were observed

between remuneration and benefits and personality preferences

Extraversion-Introversion (E-I) and Sensing - Intuition (S-N). A

moderate positive correlation was observed between remuneration

and benefits and the personality preference Thinking - Feeling (T-F).

No correlations between the reward categories and personality

preference Judging - Perceiving (J-P) were observed which is in line

with the earlier observation that there were no significant differences

in the mean preference scores between these two personality

preferences, in respect of the two reward categories.

This means that the higher the preference for Extraversion (E), the

higher the preference for both the reward categories and the higher

the preference for Introversion (I) the lower the preference for the

reward categories tends to be. The higher the preference for

Sensing (5), the higher the preference for remuneration and

benefits, and the higher the preference for Intuition (N), the lower

263

the preference for remuneration and benefits tends to be. The higher

the preference for Feeling (F), the higher the preference for both

reward categories and the higher the preference for Thinking (T) the

lower the preference for both reward categories .

The correlation coeffic ient in all cases appeared to be relatively small

(r=0.10 - 0.29). The practical significance of these correlations is

therefore limited due to the fact that the correlations are weak.

5.3.3 Comparing the theoretical and the empirical total rewards

frameworks

Table 25 contains the new empirical total rewards framework. In

order to understand how the theoretical and empirical total rewards

frameworks differ, the categories contained in both frameworks have

been compared (cf Table 48).

Table 48 : Theoretical versus Empirical total rewardsframeworks

TOTAL REWARDS FRAMEWORKS

THEORETICAL REWARD EMPIRICAL REWARD

CATEGORIES CATEGORIES

,,11, "0-,,Base pay Remuneration and Benefi ts

Contingency pay

Benefits

Performance and career Conducive work ing environment

management

Quality work environment

Work/home integration

26 4

Table 48 indicates that respondents do not differentiate in such a

graduated manner between the different reward categories that they

receive or would like to receive at work. The two reward categories

are similar to what is suggested in the literature review by Armstrong

and Brown (2006), Zingheim and Schuster (2007) and the Mercer

model (cited in Gross & Friedman, 2007). These authors have all

focused on a definite differentiation between financial and non­

financial types of rewards.

It is interesting to note that some of the reward components that

originally made up the category Work/home integration were

excluded through the factor analysis (as factor loadings were smaller

than 0.3) and are therefore no longer part of the total rewards

framework. The specific underlying reward components for this

category are flexible working hours, the ability to log into the

employer's computer from home, a laptop, 3G card, and phased-in

return to work after maternity/paternity leave. Flexible working hours

were excluded during the first-order analysis due to a loading of <0.3

and the remaining three components were excluded during the

second-order factor analysis due to loadings of <0.3. Work/home

integration, with the specific purpose of providing a bridge between

the office and the home environment to release the pressure from

dual responsibilities for employees and help create a harmonious

balance, (Gottlieb et aI., 1998) is included in the total rewards models

of WoridatWork (2007), CLC (2007a) and Towers Perrin (cited in

Armstrong & Brown, 2006). A number of companies use work/home

integration to enhance their EVPs (Christoffersen & King, 2006;

Cisco, 2008; CLC, 2008; Keuch et aI., 2006; Lingle, 2004) and it was

found by Moen (2000) that work/life effectiveness improves people's

psychological and personal well-being.

Flexible work arrangements also have well-documented positive

effects on productivity, retention, recruitment, job satisfaction,

employee engagement and stress reduction (Berger & Berger, 2004)

265

and employers are therefore encouraged to invest in these type of

interventions. Sharp (2008) reports that more than 47% of employees

who fall in the Generation X and Y categories leave their employers

due to a lack of work/life balance. This reward component is

therefore generally considered to be an important and valued part of

the employment offering, and as it also attracted high ratings on the

Reward Preferences Questionnaire it should not be excluded from

the reward offering.

Moreover, the results from sections three and four of the Rewards

Preferences Questionnaire, however, also confirmed that work/life

balance does not playa critical role in the attraction, retention and

motivation of employees, and neither is it one of the most important

reward categories. It begs the question whether this reward category

has become a norm that people expect it and no longer consider to

be a differentiating factor in a rewards framework or if it is something

that can be negotiated and therefore not part of the standard reward

offering. It may very well be considered a more tangible aspect of the

total EVP (Backhaus & Tikoo, 2004), included in the psychological

contract between the employe and the employee (cf Baruch, 2004).

The meaning of work/life balance for employees. whether it should be

incorporated into the total rewards framework or whether it forms part

of the unwritten psychological contract, requires further investigation.

Reward components such as a balanced scorecard, regular monthly

communication sessions and constructive and honest feedback on

performance, which previously formed part of the reward category

performance management, are now included under a conducive

working environment. The inclusion of these reward components

reinforces the critical role of the line manager in creating an attractive

work environment for employees (Richman, 2006). Strong leadership

also enhances an organisation's EVP (Black, 2008). Performance

management addresses the need for goal-setting to optimise

performance in some employees (Locke & Latham, 2002). In

266

addition, the performance appraisal process also takes care, to some

extent, of employees' needs for recognition, appreciation and

acknowledgement (Maslow, 1943). This may in turn have a positive

influence on engagement and the retention of employees (Gentry,

2007; McAdams, 1996).

The reward component growth, learning and development

opportunities is also part of a conducive working environment. This

remains an important reward offering, as Rehm (2006) states: he

found that regardless of the generation that employees belong to,

they will seek opportunities for learning and development. The

inclusion of these components under the reward category a

conducive working environment concurs with a similar component in

some of the models studied, namely work experience and work

environment (Armstrong & Brown, 2006), total rewards other than

pay (Zingheim & Schuster, 2007) and positive workplace (Armstrong

& Thompson, 2003). Performance management in the broad

definition is often seen as part of the total rewards process not only

because it is often used as a way of determining increases and

incentives to employees (Armstrong & Murlis, 2007) but also

because it positively contributes to the motivation and engagement of

employees (WorldatWork, 2007).

In summary, financial, extrinsic rewards were collectively ranked as

most important and non-financial rewards, intrinsic rewards were

collectively ranked as second most important. However, the reported

reward preferences changed when the respondents were asked to

indicate what would retain them within the organisation. The results

showed that the non-financial, intrinsic reward categories were

ranked most important in retaining them in organisations.

After considering the empirical research and the results of the factor

analysis, the new total rewards framework designed for purposes of

267

this study is depicted in Table 49, with a short description of the

reward components included in each of the two reward categories.

Table 49: Descriptions for reward categories in the new total

rewards framework

A Conducive WorkingRemuneration and BenefitsEnvironment

Non-financial, intrinsic Financial, extrinsicrewards rewards

~

A conducive working environment Remuneration, incentives, benefits

that enhances levels of motivation and on-site convenience facilities.

including regular, transparent Financial assistance with child

communication sessions, good tuition, dependent parents and

working relationships with team purchasing of a house.

members and a suitably laid-out,

safe and comfortable working

environment, agreed goal-setting

and continuous learning and

development opportunities.

The new total rewards framework (cf Table 25) contains financial and

non-financial reward components, but the preference for the non­

financial rewards appears to outweigh the financial components in

terms of employee responses analysed through the analysis of

variance methods. This combination of non-financial and financial

components supports the literature study, which confirmed the

increasing importance of non-financial rewards in the rewards

offering (CLC, 1999a; Gerhart & Rynes, 2003; Stein, 2007).

As indicated in Chapter Two, progressive employers select from a

range of reward components to design their total rewards

frameworks. When the ranking of the relative importance of each of

268

the reward components is analysed, it is clear that respondents

prefer certain reward categories over others. It is therefore important

for employers to assess which components are appropriate and

preferred in their specific working environments and to develop total

rewards models or frameworks accordingly.

Although the ideal would be for employers to assess the preferences

of the employees working in their organisations, guidance could be

taken from this research on the types of reward categories that could

be included in the total rewards framework. Specifically the reward

categories that attracted the highest mean scores can be interpreted

as being the most important reward categories for the respondents in

this survey.

5.3.4 The influence of demographic variables on reward

preferences

There is very little research in the South African context that provides

insight into the influence that demographic factors have on reward

preferences. Previous studies indicated that, internationally, reward

preferences were influenced by culture (Hofstede, 1980; MacGrain

Herkenhoff, 2000; Westerman et al. 2009), demographic variables

such as age, gender, race and job level (CLC, 2002a) and

personality traits (Vandenberghe et al. 2008). Research furthermore

indicated significant gaps between what employees report as their

top reasons for joining and leaving organisations and what employers

think these reasons are (Ellis, 2009). To align these views, input

should be solicited from employees on their reward preferences

when designing total rewards models (Lawler, 2000).

This study confirms that reward preferences differ in terms of certain

demographic factors - for example, race, number of children, age,

educational qualifications, job level, years of service, marital status

269

and gender of which the raw data was reported in Chapter Four.

These differences are described in more detail in the next section.

5.3.4.1 The influence of race on reward preferences

In both reward categories, respondents recategorised as 'Black',

referring collectively to African, Indian and Coloured respondents (cf

4.2), indicated significantly higher mean preference scores than the

White respondents in both reward categories.

Hofstede (1980), MacGain Herkenhoff (2000) and Westerman et al.

(2009), confirmed that national culture has an influence on reward

preferences. In addition, the South African legacy of apartheid

significantly contributed to the skills shortages that are being

experienced and the earnings differentials that are still very apparent

despite having a democratic society for 16 years - a history which

could also influence reward preferences (Horwitz, et aI., 2002). It is

thus not surprising that similar findings were obtained in South Africa,

given the diverse cultures in the country. Although the Black

respondents have stronger mean preferences for both reward

categories, it does not necessarily indicate that the preference for the

respective reward categories is less for White respondents. In

research conducted by Taylor and Yiannakis (2009), Black

respondents scored higher on the Expressive-Contained facet scale

(in the direction of Expressive), compared to the White respondents.

In line with these findings, it is possible that Black respondents are

more expressive (and even vocal) in stating their preferences.

In addition, a history marked by marginalisation (Horwitz et aI., 2002;

Thomas, 2002a) could also potentially explain why Black

respondents who are now finally being offered equal opportunities,

are more assertive and expressive in stating their reward

preferences. These feelings could also extend beyond reward

preferences to broader employment practices.

270

5.3.4.2 The influence of number of children on reward

preferences

No statistically significant mean differences were observed in the

preferences for the two reward categories between respondents with

no children, one child or more than two children. It is surprising that

there are no significant mean differences, as 60% of the respondents

have at least one child. In addition, one would expect that some of

the reward components, namely subsidised tuition for children and

on-site child care, which form part of the reward category a

conducive working environment, would be an attractive option for

respondents. The fact that the majority of respondents have relatively

high academic qualifications (79.8%) and are either in senior

management (25.3%) or specialist/professional positions (36.7%),

suggest that their earning potential may be relatively high. They

could therefore find themselves financially in positions to afford their

children's education.

The respondents with no children indicated the highest mean

preference (albeit not statistically significant) in respect of the reward

category a conducive working environment. It could be argued that

people who do not have children are typically younger and more

concerned with building a career and therefore components such as

learning and developing opportunities, relationships with their

colleagues, study leave and bursaries for tertiary education could be

more important than for respondents with children. Although not

statistically significant, the respondents with one child indicated the

highest mean preference for the category remuneration and benefits.

Included in this category are components such as inflation-linked

increases, a variety of on-site convenience facilities and financial

assistance to buy a house - all aspects that would play an important

role for first-time parents.

271

5.3.4.3 The influence of age on reward preferences

Statistically significant mean differences were present in respect of all

age groups, in terms of both reward categories. For both reward

categories, the respondents in the age group 18 years - 38 years

indicated the highest mean preference score and the mean

preference score progressively lowered as the respondents got older.

The assumption can therefore be made that reward categories such

as remuneration and benefits and a conducive working environment

are much more important to the younger employees, and reduce in

need as employees get older. As was also indicated in the literature

review, there tends to be no firm indication that the differences in

reward preferences are related to the different generations but

instead to life stage and age rather than the specific period or time of

birth. Giancola (2006b) furthermore states that personality

characteristics tend to remain fairly stable for life, but that attitudes

and beliefs change when people undergo different life-changing

experiences. In fact, the reward preferences that people have in

terms of retention, satisfaction and performance are mostly similar

between people of different age groups (Giancola, 2006b).

5.3.4.4 The influence of educational qualifications on reward

preferences

In terms of preferences for the reward category remuneration and

benefits, statistically significant mean differences were observed for

respondents with a matric qualification, respondents with a

degree/diploma as their highest qualification and respondents with a

postgraduate qualification. In all cases, the lower the level of

educational qualification, the higher the mean preference score.

These results coincide with the analysis between reward preferences

and age: the older the respondents, the lower their preference for the

reward categories. In relation to job level: the higher the job level, the

lower the mean preference for the reward categories.

272

Apart from generational aspects, it is possible that employees with a

postgraduate qualification could already be earning at a level of

remuneration that they find satisfactory. They may also feel more

secure in the knowledge that they are earning a market-related salary

due to their level of education. The earnings potential of people with

no post-matric formal qualification is also substantially less than for

employees with post-matric formal qualifications, and especially post­

graduate qualifications. Respondents with a matric qualification

probably therefore earn less than their graduate counterparts, and

this may explain the trend for a higher preference for remuneration

and benefits. In addition, the higher the qualification, the greater the

ability of an individual to influence his or her own salary (i.e. through

negotiation or job-hopping). In terms of Maslow's hierarchy (1943), a

basic need (such as salary) can be expected to be rated as of higher

importance than a conducive working environment, for those who are

earning lower salaries.

5.3.4.5 The influence of job level on reward preferences

This study has shown that in both reward categories, statistically

significant mean differences were observed in the reward

preferences for respondents who are on different hierarchical levels

within organisations.

It was evident from the research that the higher employees move up

the organisational hierarchy, the lower the mean preference for both

reward categories. This is possibly because the higher an employee

moves up the organisational hierarchy, the higher their earnings and

the more influence they have over ensuring a conducive work

environment for themselves. The findings in terms of age may thus

be an artefact of older respondents occupying higher job levels. In

terms of the reward category a conducive working environment, the

difference in mean preference was significant for employees

273

employed at an administrative level in comparison to senior and

executive management as well as between junior management,

senior and executive management. No statistically significant mean

preference differences were observed between respondents in

specialist/professional levels and other job levels.

In terms of the reward category remuneration and benefits, significant

mean differences were observed in respect of most of the job levels.

In all cases, the lower levels in the organisation, namely

administrative and junior management levels, indicated significantly

higher preferences for the reward category compared to senior and

executive management. This trend mirrored the trend that was

observed in respect of age groups and educational qualifications and

are possibly all related to each other.

5.3.4.6 The influence of service on reward preferences

No significant mean preference differences for remuneration and

benefits were observed for respondents who have indicated different

years of service with their current employers. This therefore confirms

that length of service does not influence the preference for

remuneration and benefits.

However, statistically significant mean differences were observed for

respondents with 0-2 years' service and those with 3-6 years'

service, in terms of their preference for a conducive working

environment. The longer employees are employed by an

organisation, the weaker their preference for this reward category, as

was seen with the analysis of age. One would expect that employees

who are new to the organisation would feel less confident about their

ability to integrate with their working environment, or be accepted by

their new teams, colleagues and their line manager compared to

employees with much longer service, and therefore would report a

stronger preference. Locke and Latham (2002) state that individuals

274

experience a higher level of motivation, which results in better

performance, if specific performance objectives have been agreed.

The matters of goal-setting and performance management are both

addressed by the reward category a conducive working environment,

and employees who are new to an organisation would then have an

even greater need for joint goal-setting than longer-serving

employees. It is thus important to ensure that employees with the

higher preference for a conducive working environment are on­

boarded properly, that includes the setting of goals to ensure that

they are productive very soon after joining the organisation, and more

inclined to stay.

5.3.4.7 The influence of gender on reward preferences

Statistically significant mean preference differences were observed

for men and women, in respect of both reward categories. The mean

scores were significantly higher for women than for men. Women

thus have a stronger preference for both remuneration and benefits

and a conducive working environment.

Earning differential studies between men and women have often

indicated that men earn higher salaries than women in comparable

positions (Muller & Plug, 2005). This could be as a result of many

women interrupting their careers during their child-bearing years - a

gap in tenure that has proven to be very hard to overcome in later

years when women resume their careers (Keenan, 2004). As women

are increasingly entering the workplace on an equal basis with their

male counterparts their preferences and earnings potential will have

to be recognised and acknowledged (Grbich, 1994). Women, who

were also marginalised in the past (Booysen & Nkomo, 2010;

Meulders, Plasman & Rycx, 2004), may therefore indicate a stronger

preference similar to what was found with the Black respondents.

The stronger preference for a conducive working environment can be

indicative of women having to fulfil multiple roles and therefore

275

require a more flexible and supporting working environment to meet

all these demands. In recognising the different preferences, more

flexible reward structures could be made available to women in the

workplace, assisting with their role as primary caregiver of their

children in addition to professional positions held.

5.3.4.8 The influence of marital status on reward preferences

No statistical significant mean differences were observed in terms of

the preferences for the two reward categories between single,

married or divorced respondents.

The differences in reward preferences observed for the majority of

demographic groups support the requirement for organisations to

offer flexible reward packages to employees. The total cost of

employment should be agreed with employees, who could then be

offered the flexibility to move the funds into different reward

categories or components to obtain better value in terms of their

personal circumstances. This flexibility would certainly contribute to a

more attractive employee value proposition (Crawford & Giowa,

2008).

5.3.5 The total rewards preferences framework

The findings in respect of the strongest preferences for reward

categories and components as observed for personality types,

personality preferences and demographic groups were consolidated

into the total rewards preferences framework. The total rewards

preferences framework, as indicated in Table 50, therefore indicates

the groups of respondents who indicated the strongest preference for

the respective reward categories.

276

Table 50: The Total Rewards Preferences Framework

TOTAL REWARDS PREFERENCES FRAMEWORK

A CONDUCIVE WORKING REMUNERATION ANDENVIRONMENT BENEF ITS

(non-financial intri nsi c) (fi nancial, extrins ic)

Women,

Women• "lrr--?·• 0-2 years' service

• Admin istrative/cler ical 1 • Administrative/clerical

employees '~r-7 employees

• Matric as the highest • Matric as the highest,

qualification ~7 qualification

• 18-38 years , 18-38 yearsI I ·

T~·• 'Re-categorised ' Black 'Re-categorised' Black

people ~7 people

• ESFP and ESFJ 1 • ESFP and ESFJ

personality types "l r r-~ personality types

• People with a preference ' • People with a preferenceI ~

for Extraversion ".rr- for Extraversion

• People with a preference

for Sensing

• People with a personality I • People with a personalityI I

preference for Feeling ,,' T /' preference for Feeling

Table 50 indicates that the total set of reward components were

divided into two categories that concur with Herzberg's theory of

hygiene factors (financial type of rewards serving as extrins ic

motivators) and growth factors (non-financial types of rewards

serving as intrinsic motivators) (Herzberg et aI., 2004). The main .

purpose of a differentiated total rewards model is to attract, retain

and motivate key talent.

277

The highest preferences were indicated by respondents with lower

levels of education, women, black respondents, respondents in lower

age groups and lower job levels. In reviewing the significant

differences summarised in Table 50, it is evident that with the

exception of personality preference Sensing (5), and length of

service (of 0-2 years), the respondents who indicated the highest

mean preference are the same for both reward categories. This begs

the question whether their preference should then be viewed in light

of the two reward categories respectively, or if it could not be stated

that these respondents indicated the highest preference for total

rewards, which by definition include all financial and non-financial

reward components offered to employees (WorldatWork, 2000).

It is also clear that reward preferences are not only influenced on a

number of different fronts but also that the types of rewards that can

be offered, are presented in different environments or settings as

indicated in Figure 20.

278

• INDIVIDUAL

• LINEMANAGER

• TEAM

• ORGAN ISATION

Figure 20: Variables affecting reward prefe rences

From Figure 20 it is clear that reward preferences are thus influenced

on four fronts. It has been confirmed in this study that personality trait

and personality type influence reward preferences, as do age,

gender, job level, length of service and educat ional qualifications.

These variables influence preferences for rewards that are presented

through the team environment, the line manager and the

organisation . All reward components can be sorted under these three

categories, which are all influenced by the variables included in the

primary and secondary research questions. This model could be

expanded more by for example including organisational culture ,

brand , reputation and flexible work pract ices that have all been

proven to influence organisations' ability to attract, retain and ,

motivate employees (Herman & Gioia, 2000 ), but as these

components were not included in the total rewards framework they

have been left out of Figure 20. It could also be said that rewards

279

offered as present in different parts of the organisation and should

receive as such the required attention in terms of building quality

teams, building an attractive organisational culture and specifically

ensuring that line managers are equipped and suitable for their ever­

increasingly important roles.

As significant mean preference differences were observed between

the different employee segments as defined, a segmentation

methodology could assist in determining reward preferences when a

total rewards framework is designed.

5.4 Conclusion

Although previous studies have indicated that there are common

motivations between different groups that drive engagement

(Giancola, 2006b), this study provides evidence that the reward

preferences are significantly different for different employee

segments. These results equip South African organisations with

specific information on reward preferences, which enables a more

focused approach to reward management and the design of an

appropriate and effective total reward offering. The impact of an

increasingly diverse workforce, and the expectation that these

diverse needs should be met is clear.

The significant mean preference differences observed are indicative

of the need for differentiated rewards offerings - without necessarily

increasing the cost for the employer. Total rewards frameworks

should however be seen as an end-to-end approach to total rewards

management that includes policies, processes and practices. Every

person is motivated by the achievement of personal goals. This need

can only be addressed through policies, practices leadership style '

and organisational culture. If managers can determine what

motivates employees, they are in a better position to create reward

280

systems and an environment that address these motivational needs,

with obvious benefits for the organisation and the employee.

Although most employee segments expressed a need for both

reward categories, the most prominent preferences, by demographic

and personality segments, have been integrated into the new total

rewards preferences framework. It is hoped that this research will

trigger a curiosity among employers to find out what the specific

reward preferences of their employees are and to respond by

developing a 'best fit' total rewards model for their organisations.

Finally, the role of the line manager cannot be underestimated, as it

clearly contributes to the motivation and retention of key employees.

Motivating employees is probably one of the most complex roles a

line manager has, and understanding what motivates employees and

how to influence motivational levels, can ease this role tremendously.

Line managers who respond to personal preferences, who offer a

degree of freedom to select from the choices, who encourage

employees to choose the approach to a task, allow them to fail

occasionally without punishment and offer stretching horizons will

most probably succeed in attracting, retaining and motivating the best

employees. Motivated employees are more productive, and more

likely to be retained by the organisation.

Rewards are the strongest means to align organisations' unique and

inimitable assets, their employees, with the strategic direction of the

organisation (Trevor cited in Corby, Palmer & Lindop, 2009). With

concerns about productivity and the motivation of employees in the

workforce, it is worthwhile investing time and effort in reward

strategies in order to strengthen this alignment. People have very

different individual motivations and preferences, often in complex,

combinations, and motivation is not necessarily only influenced by

monetary inducements. However, money, or financial rewards, is

definitely a key component of motivating employees.

281

CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS

6.1 Introduction

This chapter provides a summary of the aims for this study, the

empirical findings and the contributions of the research to the existing

body of knowledge. Recommendations, further research possibilities

and limitations are identified. These are followed by a final

conclusion.

6.2 Motivation for the study, aims and contributions

The current work environment is characterised by constant change,

severe cost-cutting demands, restructuring, tough performance

measures, employee demands, investor scrutiny, and increased

competition for the most talented resources. Remuneration has

turned into the panacea for employers to recruit, motivate and attract

employees, resulting in numerous creative remuneration and

incentive vehicles being designed and implemented. Attracting and

retaining the best performers is probably more difficult than before

when economies worldwide reached record performances. However,

offering 'one-size-fits-all' remuneration packages to talented

employees is no longer acceptable and understanding the different

preferences and needs of employees within an increasingly diverse

environment will enhance employers' ability to attract and retain the

best people. The paucity of empirical data on reward preferences,

specifically in relation to personality types, personality preferences

and different demographic variables within a South African context

strongly contributed to the decision to embark on this research,

project.

282

This study aimed to find empirical responses to the following

research questions:

The primary research question was to determine the relationship

between personality types and personality preferences as defined by

the MBTI® instrument and preferences for certain reward categories.

The secondary research questions were to determine, firstly, the

relationship between the reward categories and the underlying

components of the total rewards framework; secondly, to investigate

the influence that demographical variables have on reward

preferences; and, thirdly, to determine the categories of the

theoretical total rewards framework that mostly contribute to the

attraction, retention and motivation of employees.

In order to find responses to the research questions it was necessary

to design a Rewards Preferences Questionnaire on the basis of a

theoretical total rewards framework that contained both financial and

non-financial components. The responses to the Rewards

Preferences Questionnaire were used to analyse the rewards

preferences of respondents by different segments. Simultaneously,

data to identify personality types and preferences was collected

through the MBTI® Form GRV. Subsequent to receiving the

electronically completed questionnaires, a number of different

analyses were conducted on the data sets. The reward preferences

for different personality types and personality preferences were

calculated and results were reported. In addition, the reward

preferences for different demographic groups were analysed and

reported. The reward categories, as indicated in the theoretical total

rewards framework, which mostly contribute to the attraction,

retention and motivation of employees were identified. Finally, a total

rewards preferences framework consisting of two reward categories,

and thirty underlying reward components, was drafted.

283

The following outcomes were obtained from this study. The

significant mean differences in preferences for reward categories as

indicated by different personality types and personality preferences

were observed and reported on. Albeit limited, this nevertheless

indicates that there is a relationship between reward preferences and

personality preferences, which supports the previous research

findings. In addition, it is now confirmed that individuals with a

preference for certain personality types, have different preferences

for certain reward categories. Not surprisingly, findings in this study

confirmed that people with different combinations of personality traits,

have different reward preferences. Furthermore, there is a stronger

relationship between reward preferences and personality

preferences, which supports the previous research undertaken that

confirmed the different reward preferences for people with different

personality traits.

In all cases, people with a preference for Extraversion (E), Sensing

(S) and Feeling (F) indicated significantly higher mean preferences

for either one or both the reward categories. To understand the

reasons for the differences found, a further study will have to be

done. These differences in reward preferences should be considered

by employers. Responding to the preferences of these employee

segments will result in a more attractive EVP and enhance

management's efforts to attract and retain the most talented

employees.

To answer the secondary research question, first- and second-order

factor analysis were done to identify the two reward categories with

thirty underlying reward components that formed the empirical total

rewards framework. The total rewards framework includes financial

and non-financial rewards categories and components that remained

post application of the data reduction technique. The empirical total

rewards framework is different from the theoretical total rewards

framework in that respondents clearly indicated that, in terms of

284

rewards management, they differentiate between remuneration and

benefits (financial rewards) and a conducive working environment

(non-financial rewards). The categorisation in the new framework

indicates a clear differentiation between financial rewards and non­

financial rewards.

The importance of non-financial rewards to employees was

confirmed. The reward category a conducive working environment

received significantly higher mean scores than the reward category

remuneration and benefits. The research confirms that employees

are attracted to organisations by base salary and typically financial

rewards, but that their retention and ongoing motivation to perform

are dependent on the non-financial components of the total rewards

framework, and more specifically the working environment, which

includes the line manager's style, ongoing feedback on performance,

goal-setting and learning and development opportunities.

Preferences for reward categories by different demographic groups

were confirmed. These significant differences underlined the need to

differentiate in the reward offering (and the leadership and

management style) for people in different demographic segments (for

example, race, gender, age, job level in the organisation). The

significant difference in reward preferences between Black and White

respondents in particular was noteworthy, with Black respondents

indicating significantly higher mean scores for all reward categories

than White respondents. Previous research has indicated significant

differences in reward preferences between respondents from

different countries, representing different national cultures. As this

topic was not included in this study, the relationship between reward

preferences and different cultures was not explored, but the resultant

findings in the different reward preferences between different race.

groups within the South African context could indicate that the

preferences are related to different cultures within the South African

country-specific context.

285

A total rewards preferences framework was developed on the basis

of the strongest reward preferences indicated by the employee

segments included in this study. The total rewards preferences

framework highlighted the different preferences of people from

different employee segments covered in this study.

This research confirmed that employee segments have significantly

different reward preferences and that employers should reconsider

their 'one-size-fits-all' approach to remuneration plans, and respond

to these preferences by crafting a more attractive, preference­

influenced total rewards framework. It is recommended that total

rewards models and frameworks should be structured for different

employee segments to obtain a better return on investment.

Employee segments could be very different from what was included

in this research and could be decided upon by management teams

on the basis of an appropriate approach based on the nature of the

organisation, the organisational culture, strategy and the employee

mix. Line managers and human resources managers should

investigate the preferences of employees or employee segments

within their organisations to obtain a more informed view of what

parts of the remuneration framework would result in a more attractive

value proposition, enhance efforts to retain employees and motivate

them to perform at optimal levels.

In structuring reward frameworks, it is recommended that personality

type should not be used as an employee segment for the purposes of

structuring a reward model, as the relationship between the reward

categories and personality type was not strong on all personality

types. Designing reward models in accordance with individual

preferences is usually not feasible, but personality preferences as

well as different demographic factors such as age, gender, racial

groups and job level can confidently be used to guide the design of

total rewards frameworks.

-----..- ---------1-·-------- --286

6.3 Value-add in terms of practice and theory

This study adds value to the remuneration management body of

knowledge, existing descriptors of personality types and personality

preferences (as defined by the MBTI® instrument), methodological

value-add (through the reward preferences questionnaire) and has

practical application in a number of ways. It appears that, to date,

very little research has been done on determining the reward

preferences for people with a preference for different personality

types and personality preferences. The reward preferences for

people with different personality types and personality preferences

are now known. In addition, the statistically significant mean

preference differences for the different personality types and

personality preferences have been observed and reported. Previous

research findings that indicated that there is a relationship between

personality traits and reward preferences were confirmed through the

relationships that were reported between personality preferences and

reward preferences. The findings of this study enhance the existing

body of knowledge on particularly the reward preferences for different

personality types and personality preferences as defined by the

MBTI®.

In addition, this study was undertaken to provide insight into the

reward preferences of people within the South African corporate

environment and to understand whether reward preferences differ in

terms of employee segments such as the demographic groups.

Limited previous research have been conducted on this matter within

South Africa and the research results therefore add to the existing

body of knowledge on this matter. The research results can also be

used by employers in the design of total rewards frameworks. The.

results confirmed that different segments have different reward

preferences that should be considered by employers to enhance

efforts to attract, retain and motivate employees.

287-_.._---~----,------ -----

The empirical total rewards framework (cf Table 25) as well as the

total rewards preferences framework (cf Table 50) emerged from

empirical research on how different reward components are clustered

by respondents. The research emphasises the need for customising

the reward offering in the workplace and integrating financial and

non-financial reward components. The results confirmed the very

important role that non-financial reward components play within the

working environment, specifically for certain personality types and

demographic groups.

The critical role of the line manager has once again been

emphasised through this study. Line managers need to understand

what motivates employees in their teams, and create reward

offerings that address these motivational and other reward

preferences. The role of the line manager in remuneration related

processes such as performance management, learning and

development and in motivating employees is crucial in the work

place. It is understood that reward preferences are influenced by and

can be addressed on four fronts namely individual characteristics and

demographics such as personality type, personality preference, age,

gender, race, job level; secondly by the line manager who is required

to provide constructive feedback on performance, to recognise

performance and to provide growth opportunities. Thirdly, the

environment that a team in the work place creates is evident in some

of the non-financial reward preferences. Lastly, the organisation

provides the opportunity for different reward offerings as well as a

safe work environment, a comfortable work environment and

convenience facilities.

6.4 Suggestions for future research

There is uncertainty as to whether a greater number of statistically

significant mean preference differences for personality types would

have been observed, if the sample size for the different personality

288

types was larger. Although the overall sample was considered

sufficient to provide reliable data, within the distribution of the

responses there were too few responses for personality types ENFJ,

ISFP and INFJ, which were then excluded from the subsequent

analysis. For personality types ISTP, ESTP and ESFP less than thirty

responses were received and it could be debated that these results

need to be retested on a bigger sample, particularly as a number of

significant mean preference differences were observed for

personality type ESFP.

In the context of employment equity and affirmative action, diversity

management is a key priority for most South African organisations.

The fact that significant differences in reward preferences were

prevalent between Black and White respondents and men and

women, deserves further investigation. This should also be seen in

the context of a relatively small sample of Black respondents in this

study. In addition, understanding the specific differences in reward

preferences between African, Coloured and Indian people is

necessary. Assessing the influence of South African cultures on

reward preferences and requirements in the workplace could

constitute an insightful study that could contribute to the design of

more attractive reward offerings. The influence of the apartheid

legacy on reward preferences and employment preferences, could

also constitute an interesting study. Enhanced reward offerings

positively influence levels of engagement, which in turn influence

organisations' ability to attract and retain key employees and

contribute to better organisational performance.

Flexible work practices have received a lot of attention globally in the

last few years and employers often use this type of reward to

enhance their EVPs. Through the factor analysis, flexible work

practices were excluded as a reward component from the final total

rewards framework. It is recognised, however, that this type of

reward is in high demand and key to the design of rewards

289

frameworks. Further research could be done to understand how

flexible work practices could be included in a total rewards

framework.

The Rewards Preferences Questionnaire was used to collect data on

reward preferences. However, information was not obtained on which

reward components employees would choose if they had to select a

few components from a list of alternatives. A follow-up study could be

done by using a different approach - for example, a conjoint analysis

to determine the relative importance of the reward components

included in the total rewards framework. This analysis will provide

more insight into what combination of the reward components will be

the most preferred when organisation-specific total rewards

frameworks are designed.

6.5 Strengths and limitations of this study

The number of responses contributed to valid results. The

satisfactory Cronbach alpha results confirmed the internal

consistency or reliability of the items in the Rewards Preferences

Questionnaire.

The significant mean differences for reward categories were

confirmed for all employee segments included in the study.

Considering the relatively small sample sizes of some of the

personality types, different findings may be obtained in another study

with larger sample sizes and thus generalisation of the results

relating to personality type should be done with caution.

The results observed and reported on the relationship between

personality preferences and reward preferences are in support of

previous research conducted, where the differences in people with

different personality traits were established.

290,~-

The questionnaires were distributed to employees working in mainly

large corporates and therefore the results could be skewed towards

the views of employees working within large corporate as opposed to

for example the government sector. Generalisation of results should

therefore be done with the required caution.

The fact that passwords could not be matched in 195 responses

received on the MBTI® questionnaires could indicate that

respondents were not clear on the instructions to use the same

password on both the questionnaires or that a language barrier was

present. Using two completely different questionnaires enhances the

complexity of research and should be considered when instructions

are sent to respondents.

6.6 Conclusions

Given the current worldwide economic downturn, a lot of managers

and leaders find themselves operating in recession mode. They are

wrestling with the possibilities of reducing the staff complement while

clinging to talented employees, and are considering alternatives to

cutting budgets to the bone in order to survive.

However, as the global economy starts to recover, organisations will

again return to the challenge of attracting and retaining highly

capable professionals to help drive organisations to new heights. In

doing this, the reality may then hit home that the landscape for this

talent war has changed from what it was.

A remixed set of rewards may be required, where a different set of

reward components should be offered as part of a broader employee

value proposition to attract key employees. Given the findings of this

research, it appears that the reward remix of the future will be

challenging and liberating for talent and reward managers, as it will

mean that money, which used to be the primary motivator, will now

291

be strongly complemented by non-financial rewards, which may be

less expensive to fund and yet enable organisations to offer a greater

variety of attractive non-financial benefits. Organisations have over

the past few years gone to extremes to build diverse reward

portfolios that consisted of a combination of different types of reward

components, but most of these were of a financial nature, namely

short-term incentives, medium-term incentives, deferred bonus plans,

co-investment share plans, option plans, share appreciation plans, to

name but a few. Perhaps the feedback given by Emperor Joseph II to

Wolfgang Amadeus Mozart should be heeded: "My dear young man,

don't take it too hard. Your work is ingenious. There are simply too

many notes, that's all. Just cut a few and it will be perfect" (IMDb,

1984).

Even in the current recession, where many employers are unable to

offer incentives and pay increases, some attitudinal changes towards

the benefits of non-financial rewards may be the key to attracting

high-potential and valuable employees. And perhaps the answer lies

in greater simplicity: two reward categories instead of six or even

more; greater alignment to employee preferences associated with

well-designed processes, policies and practices and integrated with

the employee value proposition.

The integration of results from the data collected on motivational

theories, personality types, personality preferences, demographic

factors and reward preferences resulted in a total rewards framework

that offers employers a perspective on employee reward preferences

by different employee segments. With a richer understanding of the

preferences of different types of people or employee segments (in

terms of personality types, race, gender, age), organisations can

design total reward models that align best with the preferences of the

employees they are competing for, that support sound management

practices and aid in the achievement of business goals by motivating

employees to perform at continuously high levels.

292

Open-minded and creative managers will find new ways to satisfy the

workplace preferences and demands of the talented employees they

seek - and will continue to monitor the changing attitudes and

preferences of employees. Organisations that will succeed in

retaining key employees post the current economic crisis will be the

ones who recognise their employees' shifting preferences, needs and

values - and find ways to make the work environment meaningful on

the employees' terms. Line managers will understand the key role

they play in attracting and retaining talent and will be recognised and

rewarded for their contribution in this regard.

The key to attracting and retaining the best employees lies in an

enriched, diversified total rewards framework that is a key building

block for the employee value proposition. There is no doubt that we

live in a money-motivated world. No amount of human relations can

make up for the lack of financial rewards that people need to meet

personal needs that can only be addressed through financial means,

but ...

... it's not only money that counts ...

293

A Management Tale

"In earlier times, the executives turned to their most trusted advisers,

- the engineers and the economists - and asked how workers should

be managed. "Rationally," they replied, for such was their training.

"Workers are often emotional and must be controlled. We must give

them simple tasks with many rules, and watch closely to make sure

they obey them."

"And will they obey?" asked the executives.

"Yes, for they are poor and we will deny them money and work if they

do not."

"Very well," said the executives, and their advisers happily designed

detailed rule books and compensation systems, and built tall

hierarchies to administer them. This took time, but the world moved

slowly then and there was little competition, and so their

organisations prospered.

As time passed, the workers gathered into unions to protect

themselves from low wages and firings. They shared in the general

prosperity and became more educated. As this came to pass, they

began to petition the executives that their emotional needs might

better be met. This frightened the advisers, who truly believed that

emotion was the doorway to chaos. But the executives made them

modify the rules to permit modest participation and job enrichment,

and their organisations prospered.

But shortly thereafter, as these things were measured, the executives

beheld great change. The world grew small, competitors abounded in

all its realms, and buyers of their wares began to demand great

speed, quality, and customisation. As their hierarchies and rules

began to fail them, the executives again turned to their advisers.

"How can we meet these demands?" they asked.

294

Their advisers, of course, answered, "Rationally': and fashioned the

cost-cutting sword of Value Add. Wielding this sword, the executives

made great slashes in their hierarchies. They also gutted the rule

books that workers might better innovate and meet customer needs.

When the cutting was done, the executives found that much had

changed for their workers. There were no tall hierarchies to closely

monitor and direct them, nor detailed rules to comply with. What, the

executives wondered, will ensure that workers act responsibly now?

In answer, they heard the voices of new management gurus, who

spoke of partnership with the workers, and the need for workers to

feel passion for the work and to derive fulfilment from it. And the

executives heard in this message the truth of their own energy for

work.

The executives then turned to their trusted advisers. "How can we

manage for passion and fulfilment?" they asked.

"We cannot answer that question, " replied the advisers, "for it is not

rational" (Thomas, 2002, pp. 1 - 2).

295

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Appendix 1: Rewards Preferences Questionnaire

Dear Colleague

Doctoral research: The relationship between personality typesand reward preferences

I am currently engaged in doctoral research and am investigatingthe relationship between preferences for different types of rewardsand personality types. This research is being done as part of thecourse requirements for the degree D Com, for which I amregistered at the University of Johannesburg (UJ). My promoters areDrs Mark Bussin and Carolina Henn.

It is hoped that the results of the research will be used by employersin having an enhanced understanding of the reward preferences ofemployees and as a result offer more suitably tailored rewardofferings to their employees in order to enhance retention andengagement efforts.

I would greatly appreciate your assistance in this regard bycompleting two questionnaires. It is critical that both questionnairesare completed for purposes of using the data for the research.

Two questionnaires

The first questionnaire is a reward questionnaire that aims todetermine individual preferences for different types of rewards.Annexure 1 provides some explanations for some of the terms usedif you are unfamiliar with these.

The second questionnaire is the Myers Briggs Type Indicator" FormGRV that will identify your personality type. The Myers Briggs Typeindicator" is a well known personality type assessment instrumentthat is used worldwide and has been validated on many occasions.More information about this instrument is attached as Annexure 2 foryour information.

Privacy

Please note that your privacy is guaranteed. No personal data willbe disclosed. The responses to the reward questionnaire will becollected by STATKON, a division of the University of Johannesburgand the responses to the MBTI® questionnaire will be collected' byCPP in the USA. Raw scores will be made available to theresearcher but the identity of the respondents will remainundisclosed. In order to match reward preferences with personality

323----------~~--~-~~----------~~-~~----~ ~ ~ ~--------------~

types, it is important that you identify yourself by either a uniquecode, a pseudonym or your own name. This identification codemust be the same on both questionnaires to ensure that the datafrom the personality type questionnaire is matched accurately withthe data from the Rewards Preferences Questionnaires. This codecan be typed in, in either numeric or alphabetic characters, up to amaximum of 6 characters.

You will receive a career report electronically via e-mail within a fewminutes after completing the MBTI® questionnaire. However, if youare interested in your MBTI® type, you need to include your firstname and surname on both questionnaires. This information will bemade available after all survey results have been collected andanalysed.

Participant instructions

Reward Preferences Questionnaire:Please open the questionnaire by clicking on the link below. Kindlyindicate the same identification code as you have used for theMBTI® questionnaire. This questionnaire is short and simple andshould not take you longer than 10 minutes to complete. Pleaseselect the most appropriate answer for each question. This file doesnot save your data; therefore, if you exit the file without submitting,you will lose your responses. Kindly therefore complete thequestionnaire and click on the submit button at the bottom.

MBTI®GRV:

1. Please open the questionnaire by clicking on the following link:http://discovery.skillsone.com/register.asp?assessment=2&language=1&adid=752.You will be directed to a registration page, where you will need toregister using a username and password of your choice.2. Enter a username and password of your choice. Please check theblock indicating "New User".3. Click "Submit"4. You will be directed to a page where you will be asked to enteryour personal details. Please use the "Surname" category to enteryour unique code or pseudonym if you choose not to enter your ownname. Please make sure that is the same one that you use for therewards questionnaire.5. Please complete all the fields requested - these results will beused for research only. Click "Submit" once you have entered allyour details. .6. Click the "Take It" button for the MBTI® GRV, and follow theinstructions for completing the questionnaire. You may log out onceyou have completed the questionnaire.

324

Completion date

The completion of both questionnaires will take 35 - 40 minutes intotal of which the MBTI® questionnaire will take approximately 25minutes. I appreciate that this may seem like a lot of time given yourvery busy calendars and really appreciate your willingness tosupport the research. It will be appreciated if both questionnairescould be completed and submitted on-line by 01 September 2008.

If you are interested in a summarised copy of the research findings,please indicate this via an e-mail to me and I will gladly provide thisreport to you at the end of the study.

Thank you in advance for taking the time to complete and return thequestionnaires.

Yours sincerely

Ronel NienaberHR Executive: People PracticesE-mail address:roneln@nedbank.co.za

325

Annexure2:Reward Questionnaire:

Forstatistical purposes."'Ieneedto compare theresultsof this survey, withyourr.l)'ers 8riggs t.pe. You aretherefore askeoto usethe same codenameI code I name in the blockbelow. on bothquestionnaires:

Identificationnumber I code:

Section1: Demographicfactors:

This section asks you some basicbacKground information, The lntormaticn youpro,ideNill be usedto determine an)' siQnificantdifferences in opinionsbetNeen groups.andwill notidentif)youas an indi.idual.

TicK in the boxmost applicable to you:

'Nhatis Jourgender? r.lale Female

';'i'hat is yourracial group? ;!rican cctcureo ';'Ihite Indian

',','hat is yourage? 18-27 28-38 60+

'>','hich ofthe follo,ving describe your marital I.tarried; Ii',ingtogether Single Oi,crced 1':;ido'Ned lseparatedlOther

IfyOUindicated other, pleaseelaborate:

32oHo-",. man)'childrendo you nave livingathome Iwith you? , :::...- ..L_...:-__~____.::._...L_.:..__

Pleaseindicateif you have otherresponsibilities suchas parents II,ing.vith you anc : cr wno arefinanciallj dependant on you

'.'.'hich ofthe follo,ving bestdescribesyourhighestle"el of educanon? I,latnc

Yes fJo

If -cu indicated other. pleaseelaborate:

'.'.hatjo:b le,el best represents yourcurrentposition?

GeneralSpecialist Junior serucr manage-i Pr,:les- mana~e· manage- ment .

.t-.Cministratile l Clencal SI,:n31 ment ment E'-.€Cutl.€ Other

If you indicated other. pleaseelaborate

In »;natjob lamlly does jour current POSitionbestfit?

Precess~.Cmtnls· Sales & & PrcJed

Human rescur':€s trau.e SJ?r.,ce IT rn jt

l.Iarlel,n;;: Crec.t

Ccrnrnuru Finance Consul-trr.esnnent bar-fin;; cancn Ria, tin';; Cth€:f

II yOU mcrcatec ether pleaseelaborate

HowI·ong nave you been ....or.!:lng fer leurcurrent emplo,er? 10 -2 ,-ears

326

Section 2: Reward preferences

Section2(aj: The following questions are aimed at determining hew important dltferent benefits and t.pes of reward structures are to vou Pleaseindicate iour choice on the scale of 1 - 7 providec where 1 = not at all impcrtant anc 7 boing ewemel: important b. cllrf'lng on the appropriate box- -

Extreme-IJotatalJ Iyimportant important

1,ly salar!! guaranteed remuneration is .., 1 2 3 .l s 6 7

1,1i annual pertormance bonus / incennve is 1 2 3 .l : 6 7

?.onual allocations of shares and or share options are 1 2 3 .l s 6 7

1,ledical aid benefits throuch a medical aid scheme are 1 2 3 .: s 6 7

Retirement and disability benefits are 1 2 3 .l : 6 7

The opportunity to take study lea',e for further studies is 1 2 3 .l s 6 7

The opportunity to take sabcaucat teave is 1 2 3 .: : 6 7

.Adedicated parKing ba, in the building where I worx is 1 2 3 .l : 6 7

1.1 onthly communication sessions about business progress with m, manacerare 1 2 3 .: : 6 7constructive and honest feedback on rn. pertormance is 1 2 3 .l : 6 7

The opportunity to rotate and experience dltferentl:pes of Jobs is 1 2 3 .: s 6 7

Gro.,th cppcrtunltlas. learning and dsvelcpment are 1 2 3 .: s 6 7

I thinK coaching and mentoring are. 1 2 3 .: : 6 7

Informal recognition for a job well done te.a. a thank vcu nole) is 1 2 3 .: = 6 7

Fcrmal recognition for a job \A,iell done (e.g. a full/ paid o.erse as trip) is 1 0 3 .: s: 6 7

Ha"'ing a balanced scorecard or partcrmance agreement I contract With a,;ree,jobjectrles is .. 1 2 3 .l : 6 7

Bursaries /funding for tertiary quauncancns is 1 2 3 .l s 6 7

Having a good .vor}:ing relationship with colleagues is 1 2 3 .l s 6 7

A, corntcrtacte work err..ironment (decor. equipment: is 1 2 3 .l s 6 7

}on on-site fitness centre is 1 2 3 .l : 6 7

A.o en-site medical centre is 1 2 3 .l : 6 7

On-site or subsidised cnudcare facilities is 1 2 3 .l : 6 7

.AIl en-sits St31'f resta urant is 1 2 3 .l : 6 7

.:'11 en-sits ccnvenlencs store is 1 2 3 .l = 6 7

Personal sarer, and secunt, in the workplace IS 1 ~ 3 .l : 6 7

The quant, of co-woo-ers in rnv team IS 1 2 3 .l : 6 7

Subsidised tuiticn tcr m,: children is 1 2 3 .: : 6 7

The atilit:, to ;,\icrt< fle)'jble '.vcrHng hours is 1 2 : .: : 6 7

1 2 3 .: : 6 7

Section 2(bj: The foIlO_.lng cuestions are aimed at cetermlnlnQ the e<1entt,'htlich .cu agree (or net) with the fCllc,;\'ing statements PI€3Se in~jC3t€ .curchoice cn the scale of 1 - 7 prc·-.'idec, where 1 = tctau, dlsa~ree ..".-,th an,j 7 TotZllly FulIJ

being full,. agree b! dicl';nQ on the appropriate te, diS3are<l Anree

F.leritincreases should be hnlred to personal p€r1ormance 1 2 : .l : 6 7

J.1/saiar, must te market related 1 - 3 .: ;: 6 7-I wcurc ll~'e to structure rn, remuneration acccrcmc t-:: rn. CAn nt;€,j; 1 ;: 3 .l : : 7

Increases sncuic be ltn~'ed to inflatIon an,j net tc perscnal p'2rf:rm3nce 1 2 3 .: ;: '3 7

Bonus alrccaticns should be linked to m, per scnal ps-ri.:rmance 1 2 3 .l - 7

8cnus auccancns should be Iln~e.j to m, tearn s perfo)rmanse 1 - 3 .: ;: : 7~

U: ernptc.er should pre.ide me hlth finanoal a3~I'3t3nCI? tc cu. a h':'J~~ 1 2 3 .: ;: : -I sruc, ha-.ing tctat ccntrot ever m. wcrr msmccs l,\ith·:ut m man3;';r';;

mtertersnce 1 2 : .: = : 7

1.1/ career path planning sncuic aucn '.'with m ..p,;rS0nallnteresf:; a:v:: ,"·::31:; 1 2 3 .: ;: 7

r.t:jcb should te chailenr-inQ and test rn; abll:tles 1 2 3 .: = : 7

'sh'JUld be held aoccuntacle for m, pH3Cfiai Jct cUl,Ut3 1 2 3 .: : : -I ,-,"eulct Ii~'e t,) g.'J en an intern3tl;~nal seccndment 1 .

3 .: : 7~

J.Iana,::em€ntshculd enc~ur3,"e team perfc:rman,:e 1 2 3 .: : : -1.1: empl,,:;!er shculc pre.-lee h/)11~3J prc~r3ms f-:)r m: ':hilcren 1 2 3 .: = ~ -1.li emplc ..er shculd prc,ije me ',l,lthan a!1'::h"ance cr 3!J:J5i~: tc c.a:-,:::f,:rm;

finan.::i,3ll .. C€J:encant parents 1 2 3 .: = ~ 7

I need te ,.:g int·) the emplc..-H'S net-vsf1.> frcm h0me, 2 3 .l = : -

I need a '3pt-~O and 2G card tJ perlcrm cptimall,

~ : .l : ~ 7

I tr.in~~ emple!ers stlcul,j prc-.;,~e phas;c In retum t,: 's:rt a:-ter m,;tem;t!·patemrt: 1€3.e 1 2 3 .: : ~ 7

327

Section 3:Preferences forReward categories

If)'ou have the opportunilito structure your own reward pacl'age. which categories are the most important toJOU Please ranI' inorder ofmost preferred(l)to least preferred (6)without using anumber t',vice. bf placing the numbers 1to6ne-t toeach blocr

RanYfrom 1- 6\\lth1being most Important and 6least Important

I.!onthly salary orguaranteed remuneration

Variable Pay (bonus and I orleng term tncentives)

8enefits (medical aid. retirement funding disability benefits.lea,e)

Performance and career management (career and deielepment cppcrnmnes: quallt, perf'Jrmance ciscusstcns I'oith leurmanager)

Qualit!' work en',ironment lfitness centre on site. medical centre on site. latesttecnnclcc. computers:'Nerl/home integrauon (your abiliti te balance iourworr and home ccmmitments egne,ible IV·Jr}: schedules hal/dailea','e)

Section 4: Attraction, retention and motivation ofemployees

Please indicate which one cfthe following snrehard categenes has the greatest Impa::t onan erganlsati'Jns aMt: toattra.::t rstamand meti;ate you. Please ticrinone blocr loreach categorj:category Please cross one oftheboxes foreach category

~ltract (ie tojoinanorganisation

Retain (jests! \lithanorganisation)

I.leli;ate (ie has apcsin.e impactonycur performance)

~r~:ri!':a::e

:e-ef!; Rec:;r,~:c~ ~ Ca~eer a,a';:! ".cr',tr"',t:ca l rra"a;er-ifl"t for .'-:rc'"!~e~t if:~eS3 'I~"crk re~,e

I': L::e,e::~,,:,t'~: ce..t:ecr sie r:e;ra:;:i, I fexit:eI.'ern! rt~te~-t'rt c;~::~L.;t.)e! : ..a'tty r."Jt"j,ca'ce'"tre cr l·.crk:r~ tc..rs rl'155'5r{I Variatif 93j /tc!""i.:! : iC~; :e:!"'l f"~=ir; : c.sc.ssc-s

"!t"~ y:v !.1e. J!:e-!! =!i i~5,e atJri !c

) f\!':T'.l",r'\!'raticr trCI!';t~. e ea.e rr.!"a~e; ttd'rcrc"·y" , ,',en: tier:-: ~:r;e., ·0 ..ee"ef~j Rec~;r;t:c~ s Car~r Q",a,'ty ,',erf.,rr~:,ca f"':a"a;el:e;t er .':tc~""le ... t ! f't. ... es$ ','.'e';': rc'1'"~

I': ;ce.e-;:; "",e:t ce'"t'e C'" sie r:e.·a~,~:,. ! (:e"XI~ er"crt~~l re;re"'"ler: C;~;1 ..r~lt"$ ;~a:tt:, r:e1 ca: ce-t:"e c~ e, Cit~f'; rc,s ra"Sa'a)' : '1anat ie ;ay ,tc"':"s / ('~; ~e-n"': ~;,.":r; : :i:... S$:'"'S :,1"! :,':1..: sle !a~~st :a) ,ea, eo a: ,. ..I.}

rem("rera~:c: r:;:t:.e Iea.e "'a"a~e~ tec-rcc ... ·, ,', c~.- f,C"'"rc"')ePe..4:· ....,a ..:e

Ee-"ef~5 ;::.ec:;n.:" ~ Ca'~, CL!'~i \'.:'1:

'""t:ca' 1"'"a"!;er"'e"~ er.rc~ ...~ ... t ;I~"ess ,'.C": r:-e1 : '::~ .e:; .... e-: ce..tre "';' s·a r~e;'a~ :" ,....~ •. !:e

r'cr~r ~i re:re"'tf; ::;:~..":e3 : ..a't.) ~;:a ce-te . \'.:'ur ; ':.'; t·~"'

Saa~ : 'ia"Ia:;.e~a: I tc"'~S ".- :e·.., ,... : ~;' ; ::S:.. Si:;'~S .. t~ ICV ste. la.es: ~a} :ea.e a: ,. .... I

re~:\'~era::cl'" rce"'::.e ea.e rr-e~ a'~' ~e,:~r:~ ~. .'.c~ , -~ c-.-, ~=")e >

'i.e appreciate !curfeeCoac~ Thanr .cutcrhelping ustccesign amere apprepnat. reh3rC cffenng f:r .cu Piease diet en th.

submit butten tosubmit ttle qlJesti'Jnnaire

SUBMIT

328

Annexure 1 to the Rewards Preferences Questionnaires

Term Description/DefinitionBase pay The guaranteed basic payor salary received every

month by employees in exchange fortime/services/knowledge/competence, excludingincentives.

Benefits Programmes employers use to supplement cashremuneration, including health, income protection,different types of leave, savings and retirementprogrammes.

Bonus The incentive amount employees earn as a resultof performance. Also referred to as performancebonus.

Career Career plans based on individual careeropportunities objectives.Development A set of learning opportunities designed toopportunities enhance performance through improved levels of

competence.Guaranteed The concept according to which base pay,remuneration allowances and employer-related costs of benefits

are added to arrive at an amount referred to asguaranteed remuneration or also referred to asguaranteed package. Remuneration is alsoreferred to as compensation in mostly Americanliterature.

Incentives Payments typically resulting from performanceover a period of up to 12 months and madepayable after the results have been compared topre-determined targets.

Job Families Refers to a cluster of similar type of occupationsrequiring similar underlying competencies forexample sales, human resources, administration,information technology etc.

Learning Offered through coaching and mentoring,opportunities succession planning, overseas secondments,

internships and rotation plans.Long-term Incentives of which the measurement/exerciseincentives period is typically longer than one year, typically

share option, restricted shares, share appreciationrights, phantom shares.

MBTI® Myers-Briggs Type Indicator® developed byKatherine Briggs and Isabel Myers based on thepersonality theory of Carl G Jung.

Performance The incentive amount employees earn as a resultbonus of performance. Also referred to as a bonus.

329---------~-----------~---._-- -- - -----_._------

Recognition Acknowledgement of employee actions,performance and behaviour that meets intrinsicpsychological and emotional needs and can bedone formally, informally, in cash or non-cash (forexample trophies, certificates).

Share Option A right granted to an option holder, but not anobligation, to sell or acquire an underlying share ata specific price at a future date.

Shares Shares granted to eligible employees typically atno cost to the recipient.

Survey A study that is usually quantitative in nature andwhich aims to provide a broad overview of arepresentative sample of a large population

Total cost to Total remuneration plus the cost of long-termcompany incentivesTotal Guaranteed remuneration plus the cost of short-remuneration term incentives and associated benefits. Also

referred to as total package.Total rewards Everything that employees receive from their

employers (financial and non-financial rewards,intrinsic and extrinsic, direct and indirect) as aresult of their employment with an organisation,including goods and services that are offered aspayment in kind

Transactional Tangible rewards..

from transactionsarisingrewards between employers and employees, including pay

and benefitsTransparency Employees are informed of the reasons for pay

and reward policy decisionsVariable Remuneration that is not guaranteed, also referredpay/remuneratio to as incentives, either short- or long-termn

330

Annexure 2 to the Data collection questionnaires:

Background information about the Myers Briggs Type Indicator®

Introduction:

The Myers-Briggs Type Indicator® was originally developed by

Katherine Myers who was later joined by her daughter Isabel Myers­

Briggs. Both studied the work of Carl G Jung and wanted to find a way

of understanding the behaviours of people around them. The MBTI®

has applications in diagnosing organisational issues, teamwork,

communication, counselling, career development, self-understanding,

leadership and stress management and is the most widely used

personality type indicator internationally.

MBTI® interpretation:

MBTI® theory posits that each person is a unique individual, that their

personality type is an important element in their individuality, and that

their behaviour is influenced by their type but not necessarily restricted

by it.

The MBTI® assesses stated personal preferences in terms of the

following:

a) relating to other people (Extraversion or Introversion);

b) gathering information (Sensing or iNtuitive);

c) using information (Thinking or Feeling); and

d) making decisions (Perceiving or Judging).

There are 16 different personality types formed on the basis of a

combination of individual preferences as stated above. Each

personality type is described in terms of unique descriptors and

characteristics. Should you wish to receive more information about

your personality type after you completed the questionnaire, please

contact the researcher.

331

The underlying assumptions of the MBTJ®are:

a. people have certain preferences that can be identified and are

different from others;

b. people can self-report on their preferences through completion of a

questionnaire;

c. preferences are equally valuable although for the persona, typically

one preference is preferred over the other and

d. there are specific dynamic relationships between the preferences,

which lead to the descriptions and the characteristics of the sixteen

types.

Why the MBTI®?

Many other psychometric instruments exist, but the MBTI® is different

in the following ways:

a) the MBTI® instrument does not evaluate mental health and there

are no bad, unhealthy or undesirable results;

b) the MBTI® instrument categorises people according to their

preferences into opposite categories, both of which are desirable.

Many instruments measure the amount or degree of a trait. Usually,

it is desirable to have more or less of a trait, whereas with the MBTI

instrument both preferences are desirable;

c) the MBT/® instrument does not compare results to those of other

people nor does it evaluate people by comparing them to any

normal or pathological standard;

d) the MBTI® instrument describes the interaction between all

preferences to create a type pattern rather than evaluating the

qualities of each separate preference or trait; and

e) the MBTJ® instrument allows people to determine their 'own

personality type through the completion of the questionnaire and if

they wish, a personal verification process.

332

Instruments like the MBTI® and other similar assessments are used by

organisations to develop employees' understanding of themselves and

others. This awareness greatly enhances employees' performance in

the workplace.

333

Appendix 2: MBTI® Form GRV questionnaire

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20 June 2008

To whom it may concern :

0ple van: C ";W • ••• :. , ..... a ': · : .. Of ; . ' C

o 0 yen

RE: Inclusion of psychological test material in the Ethics application forapprova l of study documents

This letter refers to the Ethics Com m ittee's request that sample material oritems of questionnaire s used in the student's study be inc luded in thedocumentation subm it ted to the Ethics Committee. The Myers-Briggs TypeIndicaton (MBTI®) has been classified as a psychological test by thePsychometric Committee of the Professional Board for Psychology at theHealth Profess ions Council of South Africa (Form 207). Individuals are alsorequired to comp lete the international accred itation train ing course to haveaccess to the MBTI®, as stipulated by the international publishers CPP, Inc.

With rega rd to the Eth ics Committee's request to obta in a copy of th e MBTI~

and keep a copy on file, it is the responsibility of Jopie van Rooyen & Partn ersSA (Pty) Ltd [JvR], as distributors of th is assessment, to refuse perm ission .Accord ing to the Health Profess ion s Act no. 56 of 1974, th e control overpsycho logical tests is deemed an act perta ining specially to th e profession ofpsyc holog y (section 37 , su bsection 2), and it would thus constitute an offencefo r the Ethics Committee to have such a psychological tes t in its possession ifth is was not under the cont ro l of a psycholog ist at all t imes. If you hav e anyqueries regard ing the above ma tter, please feel free to contactme.

Yours sincerely ,

Nicola Taylor MSc (Psych )Assoclate/H ead : Research

jopie van rooyen & partners sapsychologica l test providers in africa15 Hunter Avenue . Ferndale. RandburgP.O. Box 2560 . Pinegowne. 2123Tel: +27-11-7813705/6/7Fax: +27-11-781 3703e-mail: nicola@jvrafrica.co.zaweb: www.jvrafrica.co.zaCo. Reg. No. 2001/015618 /07VAT Reg. No. 4300195064i MBTI. Myers-Briggs. and Myers-Briggs Type Indicator , and the MBT/ log o are trade ma rks orreg istered trade ma rk of t he Myers-Briggs Ty pe Ind icat or Trust In t he USA and other countries.

334

Appendix 3: Glossary of terms

Term

Allowances

Base

pay/Direct

remuneration

Benefits

Bonus

Career

opportunities

Conditional

share schemes

Consistency

Description/Definition

Added components to base pay typically

dependent on the type of job for example stand­

by allowance, shift allowance, car allowance

The guaranteed basic payor salary received

every month by employees in exchange for

time/services/knowledge/competence, excluding

incentives (Du Toit et aI., 2007)

Programmes employers use to supplement cash

remuneration, including health, income

protection, savings and retirement programmes

often referred to as programmes that protect

families from financial risk. (McAdams, 1996;

WorldatWork, 2007)

The incentive amount employees earn as a

result of performance (CLC, 2002c)

Career plans based on individual career

objectives (WorldatWork, 2007)

Also referred to as Performance share

schemes. Awards of free shares which vest

after a specific time period subject to the

achievement of performance conditions

(Armstrong, 2006; CLC, 2007b)

Decisions (reward related in this context) do not

vary arbitrarily and are aligned with

organisational policies and values

335

Deferred bonus

plan/matched

plan

Demographic

factors

Development

opportunities

Employer

Branding

EVP

Schemes that encourage employees to invest a

portion of their performance bonus in

organisational shares. Often these shares are

matched on a ratio of 1:1 or 1:2 after a period of

time, sometimes subject to the achievement of

performance targets (Hopkins, 2005)

Differences in background factors of a

workforce or segments of the population, for

example gender, age, ethnicity, income levels

(DuBrin, 2005)

A set of learning opportunities designed to

enhance performance through improved levels

of competence (WorldatWork, 2007)

A form of corporate identity management by

creating both within and outside the

organisation, an image of the organisation as a

distinct and desirable employer (Lievens, Van

Hoye & Anseel, 2007)

Employee value proposition (also referred to as

employer value proposition); a set of attributes

that the labour market and employees perceive

as the value they gain through employment in

an organisation, that evoke emotive and

tangible benefits for current and future

employees and that form the foundation of the

employer brand (CLC, 2007c)

336

External equity Rewards that are comparable in

relation to others in the external market

or the organisation's stated market

position for example median, lower

quartile, upper quartile (CLC, 1999a;

2002a)

Extrinsic rewards Tangible benefits that follow as a result

of completing a task (Mouton, 2008)

Fairness Employees are treated justly in

accordance with the value they add

and what is due to them

Fringe

benefits/Benefits/Indirect

remuneration

Programmes used to supplement cash

remuneration, for example employer

contributions to medical

insurancelreti rement insurance/life

cover, leave (Du Toit et aI., 2007)

Guaranteed

remuneration

The concept according to which base

pay, allowances and employer-related

costs of benefits are added and

monetised to arrive at an amount

referred to as guaranteed

remuneration or also referred to as

guaranteed package. Remuneration is

also referred to as compensation in

mostly American literature (Bussin,

2004; Thomson & Westcott, 2006b)

Internal equity Rewards which are comparable in

relation to others in an internal

structure; can also refer to

differentiation on the basis of

performance (CLe, 2002a)

337~--------------~---~---------------- ---- ----- --- ---------------- -------

Intrinsic

rewards

Job Families

Learning

opportunities

LTI

MBTI®

Phantom

schemes

Emotional and psychological benefits and value

that accrue from completing a task (Mouton,

2008)

Refers to a cluster of similar type of occupations

requiring similar underlying competencies for

example sales, human resources,

administration, information technology etc.

Offered through coaching and mentoring,

succession planning, overseas secondments,

internships and rotation plans (WorldatWork,

2007)

Long-term incentives: incentives of which the

measurement/exercise period is typically longer

than one year, typically share option,

restricted/conditional shares, share appreciation

rights, phantom shares

Myers-Briggs Type Indicator® developed by

Katherine Briggs and Isabel Myers based on the

personality theory of Carl G Jung (Myers, 1998)

Beneficiaries are awarded a number of phantom

shares of Organisational shares. No real shares

are issued (and no purchase price is paid for the

phantom shares), but the phantom shares carry

with them economic interests in the organisation

comparable, although not identical, to the

organisation's ordinary shares (Silverman,

Bernheim &Vogel, 2002)

338

Recognition

Relational

rewards

Remuneration

policies

Remuneration

practices

Remuneration

procedures

Remuneration

processes

Acknowledgement of employee actions,

performance and behaviour that meets intrinsic

psychological and emotional needs and can be

done formally, informally, in cash or non-cash

(for example trophies, certificates) (WorldatWork,

2007)

Intangible rewards including learning and

development; recognition, status, challenging

work, employment security, the work experience

and the work environment (Milkovich & Newman,

1999; Armstrong, 2006). Also referred to as non­

compensation rewards related to the physical,

emotional and intellectual wellbeing of

employees (Henderson, 2003)

Guidelines on how to manage rewards and make

reward-related decisions covering aspects such

as equity, contingent rewards, pay levels, market

comparisons, transparency, governance

(Armstrong, 2006; Milkovich & Newman, 1999)

Practices that provide financial and non-financial

rewards (Armstrong, 2006; Milkovich & Newman,

1999)

Procedures operated to maintain reward systems

and to ensure that it operates efficiently and

flexibly, providing value for money (Armstrong,

2006; Milkovich & Newman, 1999)

Different processes followed in the management

of remuneration, for example job evaluation,

remuneration review, performance management

processes (Armstrong, 2006; Milkovich &

Newman, 1999)

339

Restricted

shares

Retention

bonuses

Reward

philosophy

Reward

strategy

Segmentation

Share Option

SARS

STI

Awards of free shares which vest after a

specified time period (Armstrong, 2006; CLC,

2007b)

Financial schemes implemented over and above

standard remuneration which aim to retain the

services of employees for a period of time

The general beliefs around transparency,

consistency, fairness and equity that underpin

the reward practices in an organisation

(Armstrong & Brown, 2006)

Strategies and practices in the longer term

providing a framework for developing reward

systems, policies and processes (Armstrong,

2006)

A process where the heterogeneous market is

divided into smaller, more homogeneous groups

with relatively uniform needs or characteristics

(Du Toit et aI., 2007)

A right granted to an option holder, but not an

obligation, to sell or acquire an underlying share

at a specific price at a future date (DuBrin, 2005)

Share Appreciation Rights. Rights that entitle the

holder to a benefit equal to the difference

between the market price and the grant price of a

company share. Cash or equity settled

(Armstrong, 2006; CLC, 2007b)

Short-term incentive: a plan or arrangement

(generally settled in cash) for which the period of

performance evaluation is one year or less and

that is paid out only once the performance

objectives have been achieved (Milkovich &

Newman, 1999)

340

Strategic/Reward

management

Survey

Total cost to

company

Total

remuneration

Total rewards

Transactional

rewards

Transparency

Variable

pay/remuneration

The vision for reward processes, formulation

and implementation as well as the

maintenance of reward strategies, policies and

processes (Armstrong & Brown, 2006)

A study that is usually quantitative in nature

and which aims to provide a broad overview of

a representative sample of a large population

(Mouton, 2008)

Total remuneration plus the cost of long-term

incentives

Guaranteed remuneration plus the cost of

short-term incentives and associated benefits.

Also referred to as total package

Everything that employees receive from their

employers (financial and non-financial

rewards, intrinsic and extrinsic, direct and

indirect) as a result of their employment with

an organisation, including goods and services

that are offered as payment in kind

(Henderson, 2003; Milkovich & Newman,

1999)

Tangible rewards arising from transactions

between employers and employees, including

pay and benefits (Armstrong, 2006; Milkovich

& Newman, 1999)

Employees are informed of the reasons for

pay and reward policy decisions

Remuneration that is not guaranteed, also

referred to as incentives, either short- or long­

term (Milkovich & Newman, 1999)

341

Vesting period The time period after which option or share

holders are free to exercise their rights with

regard to the options; or take ownership of

shares provided all other suspensive conditions

have been met

Work/Life

philosophy

An organisational philosophy informing a set of

practices, policies and programmes that actively

supports employees to achieve success at work

and home (WorldatWork, 2007) -

342------------_.~~-----------_._--_._-------.. -.

Appendix 4: Declaration of intent: Ethics in research

Researcher: Ronet Nienaber

Department: Industrial Psychology and People Management

Title of research project:The relationship between personality types and reward preferences

Type of project:

Doctoral degree:Masters degree:Contract research:

I intend to familiarise myself and comply with the specifics of thefollowing ethical obligations as contained in the faculty's guidelines forethics in research:

1. Conduct relevant and value-adding research2. Apply relevant research and reporting methodologies3. Practice research ethically

I intend to familiarise myself and comply with the specifics of thefollowing ethical research principles as contained in the faculty's ordepartment's guidelines for ethics in research:

1. Achieve objectivity and maintain integrity in my research2. Record and disclose my own data3. Follow ethical publishing practices4. Be accountable to society5. Be sensitive to and respect the right to privacy of my

respondents6. Be sensitive to and respect the right to anonymity and

confidentiality of my respondents7. Achieve objectivity and maintain integrity in my research8. Record and disclose my own data9. Follow ethical publishing practices10. Be accountable to society11. Be sensitive to and respect the right to privacy of my

respondents12. Be sensitive to and respect the right to anonymity and

confidentiality of my respondents

343

Appendix 5: Characteristics frequently associated with each MyersBriggs Type®(Martin, 2009; Myers, 1998, p. 13; Myers, McCaulley, Quenk &Hammer, 1998)

Sensing Types Intuitive Types

ISTJ ISFJ INFJ INTJ

Quiet, serious, earn Quiet, friendly, Seek meaning and Have original minds and

success by thoroughness responsible and connection in ideas, great drive for

and dependability. conscientious. Committed relationships, and understanding and

Practical, matter-of-fact, and steady in meeting material possessions. implementing their ideas

organised, realistic, their obligations. Want to understand and achieving their

responsible. Decide Thorough, painstaking, what motivates people goals. Quickly see

logically what should be practical, accurate. Loyal, and are insightful about patterns in external

done and work toward it considerate, notice and others. Deep concern events and develop

steadily regardless of remember specifics about for people and long-range explanatory

distractions. Take pleasure people who are important relationships. perspectives. When

in making everything to them, concerned with Conscientious and committed, organise a

orderly and organised-their how others feel. Strive to committed to their firm job and carry it through.I

work, home and life. create an orderly and values. Develop a clear Sceptical andN Complete tasks thoroughly harmonious environment vision about how best independent, have high

T and with great attention to at home and work. to serve the common standards of

R detail. Dominant quality is Dominant quality is an good. Organised and competence and

0 an abiding sense of abiding respect and decisive in performance for

V responsibility. Value sense of responsibility. implementing their themselves and others.

Etraditions and loyalty. Are Take their work seriously vision. Dominant quality Dominant quality is

intensely committed to and believe others should is their attention to their attention to the innerR

people and to the do as well. inner world of world of possibilities,T organisations they are part possibilities, ideas and symbois, abstractions,

S of. Take their work symbols. images and thoughts.

seriously. Insights in conjunction

with logical analysis.

Strong task orientation.

ISTP ISFP INFP INTP

Tolerant and flexibie, quiet Quiet, friendiy. sensitive Idealistic, loyal to their Seek to develop logical.

observers until a problem and kind. Enjoy the values and to people anaiytical explanations

appears, then act quickly to present moment, what's who are important to for everything that

find workable solutions. going on around them. them. Want an external interests them.

Logical and realistic. Prefer action to words. life that is congruent Theoretical, detached

Natural trouble shooters. Like to have their own with their values. and abstract, interested

Analyze what makes things space and to work within Curious, quick to see more in ideas than in

work and readily get their own time frame. possibilities. can be social interaction. Quiet.

through large amounts of Adaptable, concern for catalysts for contained. flexible.

data to isolate the core of possibilities. Loyal and implementing ideas. adaptable. Have

practical problems. committed to their values Seek to understand unusual ability to focus

Interested in cause and and to people who are people and to help in depth. Sceptical.

effect, organise facts using important to them. Dislike them fulfil their Sometimes critical.

logical principles. value disagreements and potential. Adaptable, always analytical.

efficiency. Dominant quality conflict. do not force their flexible. and accepting Dominant quality is to

is to understand how things opinions or values on unless a value is understand whatever

and phenomena in the real others. Dominant quality threatened. Dominant phenomenon is the

world work. Appear to be is caring for living things quality is caring and focus of their attention.

detached and pragmatic. combined with a quietly idealism about people. Little need to control

playful and adventurous their world

approach to life.

344

ESTP ESFP ENFP ENTPFlexible and tolerant, they Outgoing, friendly and Warmly enthusiastic Quick, ingenious,

E take a pragmatic approach accepting. Exuberant and imaginative. See stimulating, alert and

Xfocused on immediate lovers of life, people and life as full of outspoken. Resourceful

results. Theories and material comforts, Enjoy possibilities. Make in solving new andT

conceptual explanations working with others to connections between challenging problems.R bore them-they want to act make things happen. events and information Look for patterns and

A energetically to solve the Deep concern for people. very quickly, and meaning. Adept at

V problem. Focus on the Bring common sense and confidently proceed generating conceptual

E here-and-now, a realistic approach to based on the patterns possibilities and then

R spontaneous, enjoy each their work, and make they see. Want a lot of analyzing them

Tmoment that they can be work fun. Flexible and affirmation from others, strategically. Good at

5active with others. Enjoy spontaneous, adapt and readily give reading other people.

material comforts and style. readily to new people and appreciation and Have a deep need to

Learn best through doing. environments. Learn best support. Deep concern 'analyse, understand

Dominant quality is their by trying a new skill with for people. and know the nature of

enthusiastic attention to other people. Dominant Spontaneous and things. Bored by routine,

real life experiences. quality is their flexible, often rely on will seldom to the same

Energetic and adaptable enthusiastic attention to their ability to improvise thing the same way, apt

realists who prefer to real life experiences. and their verbal fluency. to turn to one new

experience and accept life Excited about Dominant quality is interest after another.

rather than judge or involvement in new their attention to real- Dominant quality is their

organise it. activities and new life experiences. attention to real-life

relationships. Excited by anything experiences.

new.

ESTJ ESFJ ENFJ ENTJ

Practical, realistic, matter- Warm-hearted, Warm, empathetic, Frank, decisive,

of-fact. Decisive, quickly conscientious, expressive, empathic, assumes leadership

Emove to implement cooperative. Want responsive and readily. Quickly see

decisions. Organise harmony in their responsible. Highly illogical and inefficientX

environment, with attuned to theprojects and people to get procedures and policies,T things done, focus on determination to establish emotions, needs and develop and implement

R getting results in the most it. Like to work with others motivations of others. comprehensive systems

A efficient way possible. Take to complete tasks Has a humanitarian to solve organisational

V care of routine details. accurately and on time. vision. Find potential in problems. Conceptual

E Orients thinking to facts Loyal, follow through everyone; want to help and strategic. Enjoy

and realities that give even in small maters. others fulfil their long-term planning andR

thinking a pragmatic Notice what others need potential. May act as goal-setting. UsuallyT

quality. Have a clear set of in their day-by-day lives catalysts for individual well-informed. well read,S logical standards, and try to provide it. Want and group growth. enjoy expandmg their

systematically follow them to be appreciated for who Loyal, responsive to knowledge and passing

and want others to also. they are and for what praise and criticism. it onto others. Forceful

Forceful in implementing they contribute. Dominant Sociable. facilitate in presenting their

their plans. Dominant quality is an active and others in a group, and ideas. Dominant quality

quality is their need to intense caring about provide inspiring is their need to analyse

analyse and bring logical people and a strong leadership. Dominant and bring order into

order to events. desire to bring harmony quality is an active and events. people and

in relationships. intense caring about things. Natural leaders.

people and a strong Actively pursue and

desire to bring harmony direct others in pursuit

in relationships. of goals.

345

Appendix 6: The extraverted and introverted mental functionsassociated with each Myers Briggs Type®

(Pearman & Albritton, 1997, p. 19).

Energy Perception Judgment Orientation Extraverted Introverted

mental function as mental

determined from function

orientation

preference

(J or P)

S T J Thinking (T) Sensing (S)

N T J Thinking (T) Intuition (N)

E S T J Thinking (T) Sensing (S)

E N T J Thinking (T) Intuition (N)

I S F J Feeling (F) Sensing (S)

N F J Feeling (F) Intuition (N)

E S F J Feeling (F) Sensing (S)

E N F J Feeling (F) Intuition (N)

S T P Sensing (S) Thinking (T)

I S F P Sensing (S) Feeling (F)

E S T P Sensing (S) Thinking (T)

E S F P Sensing (S) Feeling (F)

N T P Intuition (N) Thinking T)

N F P Intuition (N) Feeling (F)

E N T P Intuition (N) Thinking (T)

E N F P Intuition (N) Feeling (F)

Appendix 7: MBTI® Temperament Characteristics

(Kroeger & Thuesen, 1988, pp. 51-61; Linder, 2000, p. 99)

NF NT SJ SP

Management Positive, Strategic Good administrators Generate

affirming planners and of systems that solutions for

idealists; researchers; require precision and crises

tend to be can overlook organisation

too lenient day-to-day

business

"Mating" Need to give Intellectualise Relationship roles Unpredictable

and receive feelings and are clearly defined; Low priority

affection; emotions rituals & traditions for planning

avoid conflict important and structure

Parenting Unlimited Demand Rigid, provide Deliver

warmth and intellectual structure and handsomely

affection; prowess in boundaries; clear on immediate

ongoing children; high role and expectations expectations,

quest for standards may neglect

self-identity and desire to a vision for a

creates a inspire child's future

confusing independence

role model

Teaching Make Enjoy Punctuality and Best at

students feel challenging neatness can be as teaching

important; students; use important as content practical,

superb language hands-on

teachers precisely and skills

provides

conceptual

clarity

Learning Like to Work a given Respond well to Dismiss

please point to death teachers who are theory,

teachers; and hence organised and deliver orientated

take criticism can become towards

too tiresome practical

personally learning

347

NF NT SJ SP

Money Least Well- Responsible; Free spirited;

important; designed conservative, spontaneous;

altruistic financial cautious, structured risk-taking;

plans; bold

independent;

could be

overly

complex

plans

General Skilled in Skilled in Skilled in logistics; Skilled in

diplomacy; strategy; responsible, dutiful, tactics;

focus on driven to concerned; spontaneous,

relationships; understand life quest: belonging; flexible and

life quest: by logical, Achilles' Heel: resourceful in

identity; impersonal disarray/disorganisa- meeting

Achilles' analysis; life tion challenges;

heel: guilt quest: life quest:

competency; action;

Achilles' heel: Achilles'

incompetence Heel: routine

(self and

others)

NF NT SJ SP

348

"I don't want to get to the end of my life and find that I lived just

the length of it. I want to have lived the width of it as well."

Diane Ackerman

349