The perceived impact of a performance based salary on employee productivity in a South African short term insurance company

Ebrahim, Shakeel
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A performance based salary (PBS) system is a remuneration system utilised by organisations to reward employees based on their individual performances. The purpose of an organisation to utilise this pay system is the need to drive employees to perform at higher levels. This would results in higher productivity of employees, which would ultimately increase the performance of the organisation by improving efficiencies and employee output. This research focuses on factors which drive employees to perform better, and to investigate whether there is a correlation between employee productivity and a performance based salary system. During this study, a single case study of a short term insurance company was utilised. A mix method approach was followed during this study, by utilising existing data as well as conducting interviews within a short term insurance company in South Africa. Many factors were identified during the study, such as the perceived impact that the performance based salary system has on employees, as well as noting the reasons for this perceived impact. Other factors driving performance were also identified as possible factors which could further drive employee performance positively, such as training and coaching. The finding obtained during this study indicated that a performance based salary impacts on employee productivity in a positive manner. As this research focused on a single case study; the findings of this study cannot be generalised to all business across all spectrums, however there is learning from this study which could be beneficial to employers across the spectrum pertaining to the benefits and negatives of such a remuneration system.
MBA Thesis
Compensation management -- South Africa,Employee motivation -- South Africa,Performance awards -- South Africa,Labor productivity -- South Africa