MBA 2009/10 Utilizing Non-Financial Rewards as a Competitive Advantage in Attracting and ...

120 Pages·2010·1.42 MB·English

MBA 2009/10
Utilizing Non-Financial Rewards as a Competitive
Advantage in Attracting and Retaining Employees
By

René S. Thumbran
29621692

Submitted in partial fulfilment of the requirements for the degree of
Master of Business Administration (MBA)
At the Gordon Institute of Business Science, University of Pretoria

Mobile: [phone]
[phone]
Home: 012 661 0510
Email: [email protected]

Supervisor: Dr. Mark Bussin
November 2010

©© UUnniivveerrssiittyy ooff PPrreettoorriiaa
Declaration

I, René S. Thumbran declare that this research report is my own work. It is
submitted in partial fulfilment of the requirements for the degree of Master of
Business Administration at the Gordon Institute of Business Science,
University of Pretoria. It has not been submitted before for any degree or
examination at any other University.

René S. Thumbran

Signed at Centurion on the 10th day of November 2010.

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Abstract

Most research in terms of reward focuses on the financial aspects. Little has
been done to understand the value of non-financial rewards. The objective of
this study is to determine if South African organisations are utilising non-
financial rewards as a competitive advantage in attracting and retaining
employees.

A survey was developed and distributed to gather data regarding the
preferences of organisations and individuals for financial versus non-financial
rewards. The data was statistically analysed to determine the organisational
value of both – with special attention on how organisations use non-financial
rewards.

As expected, organisations indicated a preference for financial rewards, but
this preference was also strongly indicated by individuals. Given the cost
effectiveness of non-financial rewards, and its long-term value, the study
determines that there is still a place for such rewards within the broader
context of the total reward approach. The cost and legislative implications
associated with financial rewards makes non-financial rewards, if well
positioned, an attractive option as a distinctive competitive advantage in
attracting and retaining employees. In addition, it presents organisations with
a certain level of fluidity in offering alternatives to employees and in dealing
with profitability challenges.
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Acknowledgements

I would like to express my sincere gratitude and appreciation to my
supervisor, Dr. Mark Bussin, for his insights, guidance and encouragement
during the trying times.

To my fantastic wife Chenelle, a special word of thanks and
acknowledgement. She encouraged, challenged and inspired me during this
profound journey. More importantly she never stopped believing in me.

Thank you to my son, Treston, for reminding me “to feel the wind” and my
daughter Chané whose words of encouragement and acknowledgement
served me well during the difficult moments.

To my MBA colleagues and the Gibs lecturers, thank you for one of the most
fulfilling journeys of my life.

Finally, thank you to Adam Martin, who assisted me with the statistics. He
truly is a legend.

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Table of Contents
1. INTRODUCTION 1
1.1. THE VALUE OF NON-FINANCIAL REWARDS 1
1.2. THE CASE FOR NON-FINANCIAL REWARDS 4
1.3. RESEARCH PROBLEM 6
1.4. RESEARCH MOTIVATION 7
2.1. INTRODUCTION 9
2.2. TOTAL REWARD 10
2.3. REWARD VALUE DRIVERS 13
2.4. TOTAL REWARD MODELS 14
2.4.1. WORLDATWORK’S TOTAL REWARD MODEL 15
2.4.2. ARMSTRONG AND BROWN’S TOTAL REWARD MODEL 16
2.4.3. TOWERS PERRIN’S TOTAL REWARD MODEL 17
2.4.4. ZINGHEIM AND SCHUSTER’S TOTAL REWARD MODEL 19
2.5. EMPLOYEE PREFERENCES AND TOTAL REWARD 20
2.6. EXTRINSIC MOTIVATION 26
2.7. INTRINSIC MOTIVATION 27
2.8. CONCLUSION 31
3. RESEARCH QUESTIONS 33
4. RESEARCH METHODOLOGY 35
4.1. INTRODUCTION 35
4.2. RESEARCH DESIGN 35
4.3. POPULATION 36
4.4. SAMPLING 37
4.5. DATA GATHERING PROCESS 37
4.6. METHOD OF ANALYSIS 39
4.6.1. DESCRIPTIVE STATISTICS 39
4.6.3. ANALYSIS OF VARIANCE (ANOVA) 41
4.7. CONCLUSION 41
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5. RESEARCH RESULTS 42
5.1. INTRODUCTION 42
5.2. SURVEY PRE-TEST 42
5.3. DEMOGRAPHIC PROFILE 43
5.3.1. GENDER PROFILE OF THE SAMPLE 43
5.3.2. ETHNICITY PROFILE OF THE SAMPLE 44
5.3.3. AGE PROFILE OF THE SAMPLE 45
5.3.4. EDUCATION PROFILE OF THE SAMPLE 46
5.3.5. JOB LEVEL OF THE SAMPLE 46
5.3.6. JOB FAMILY OF THE RESPONDENTS 47
5.3.7. YEARS OF SERVICE OF THE SAMPLE 49
5.4. ANALYSIS OF THE REWARD PREFERENCES 50
5.5. STATISTICAL ANALYSIS OF THE REWARD PREFERENCES 53
5.6. INFERENTIAL TESTING OF THE INDIVIDUAL REWARD PREFERENCES 59
5.7. CONCLUSION 76
6. DISCUSSION AND INTERPRETATION 77
6.1. INTRODUCTION 77
6.2. DEMOGRAPHIC PROFILE 77
6.3. DISCUSSION - RESEARCH QUESTION 1 78
6.4. DISCUSSION – RESEARCH QUESTION 2 82
6.5. DISCUSSION – RESEARCH QUESTION 3 84
6.6. DISCUSSION – RESEARCH QUESTION 4 86
6.6.1. THE INFLUENCE OF DEMOGRAPHIC VARIABLES ON INDIVIDUAL REWARD PREFERENCES 87
6.7. CONCLUSION 89
7. CONCLUSION 90
7.1 INTRODUCTION 90
7.2 MAIN FINDINGS OF THE STUDY 90
7.3. RECOMMENDATIONS 93
7.4. LIMITATIONS OF THE RESEARCH 94
7.5. SUGGESTIONS FOR FUTURE RESEARCH 95
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7.6. CONCLUSION 96
8. APPENDICES 97
8.1. APPENDIX ONE: REFERENCE LIST 97
8.2. APPENDIX TWO: REWARD PREFERENCES QUESTIONNAIRE 105

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LIST OF TABLES
Table 1: Gender Profile .................................................................................. 43

Table 2: Ethnic Profile .................................................................................... 44

Table 3: Age Profile ....................................................................................... 45

Table 4: Education Profile .............................................................................. 46

Table 5: Job Level .......................................................................................... 47

Table 6: Job Family ........................................................................................ 48

Table 7: Years of Service ............................................................................... 49

Table 8: Results of Part B .............................................................................. 51

Table 9: Part B – Preferred Rewards ............................................................. 52

Table 10: Part B - Least Preferred Rewards .................................................. 53

Table 11:Statistical Analysis .......................................................................... 54

Table 12: Part C – Attraction Rank Order ...................................................... 57

Table 13: Part C - Retention Rank Order ....................................................... 58

Table 14: Part D - Individual Reward Preferences ......................................... 59

Table 15: Composite of Demographics .......................................................... 61

Table 16: Gender - Group Statistics ............................................................... 62

Table 17: Mean Scores by Gender ................................................................ 63

Table 18: Race - Group Statistics .................................................................. 64

Table 19: Mean Scores by Race .................................................................... 65

Table 20: Age - Group Statistics .................................................................... 66
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Table 21: Mean Scores by Age ...................................................................... 67

Table 22: Qualifications - Group Statistics ..................................................... 68

Table 23: Mean Scores by Qualification ........................................................ 69

Table 24: Job Level Descriptives ................................................................... 70

Table 25: ANOVA .......................................................................................... 71

Table 26: Job Level - Dunnet T3 Test ............................................................ 72

Table 27: Job Family - Group Statistics ......................................................... 73

Table 28: Mean Scores by Job Family ........................................................... 74

Table 29: Years of Service - Group Statistics ................................................ 75

Table 30: Mean Scores by Years of Service .................................................. 75

Table 31: WorldatWork Total Reward Model vs. The Empirical Research ..... 80

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LIST OF FIGURES
Figure 1. WorldarWork - Total Reward Model ................................................ 15

Figure 2: Armstrong and Brown's Total Reward Model .................................. 16

Figure 3: Towers Perrin's Model of Total Reward .......................................... 18

Figure 4: Zingheim and Schuster's Total Reward Model ............................... 19

Figure 5: Gender Profile ................................................................................. 43

Figure 6: Ethnic Profile ................................................................................... 44

Figure 7: Age Profile ...................................................................................... 45

Figure 8: Education Profile ............................................................................. 46

Figure 9: Job Level ........................................................................................ 47

Figure 10: Job Family .................................................................................... 48

Figure 11: Years of Service ........................................................................... 49
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