The relationship between the determinants of executive remuneration in South African state-owned enterprises

Frans Maloa

doi:10.4102/sajhrm.v18i0.1250

Abstract

Orientation: Research on executive remuneration should be able to indicate the necessary elements and dimensions at work when deciding on an executive’s package.Research purpose: The purpose of this article was to review a correlation of elements as determinants of executive remuneration.Motivation for the study: The limited research on executive remuneration tends to focus on how executive pay varies with performance and less on the determinants of executive remuneration.Research design and method: A quantitative research method was used. The target population consisted of executives from 21 South African state-owned enterprises (SOEs). The research design was a cross-sectional study. A categorical multiple regression analysis was performed.Main findings: The research results seem to suggest that there is a significant statistical correlation between organisation size and type of industry; job function and type of industry; organisation size and job function; and the level of education and job function as a determinant of executive remuneration within the context of South African SOEs. However, the extent of the correlations between the determinants of executive remuneration is not the same.Practical/managerial implications: The research results create awareness amongst human resources practitioners and consultants of the extent to which some of the determinants of remuneration may apply in practice.Contribution/value-add: This study highlights the importance of probing further with the effect of size correlation in quantitative research in the context of executive remuneration.

Highlights

Executive remuneration has been a sensitive issue for a long time
It is for the same reason that the current study argues that because there is no one-size-fits-all approach, the determination of executive remuneration can be approached from various angles including investigating the correlations between the elements that have been confirmed in extant theory as the determinants of executive remuneration
The organisation size composition of the sample shows that the majority of executives in the sample were in organisation size (1001–10 000 employees) at 40.1% followed by organisation size (501–1000 employees) at 18%, organisation size (50–500 employees) at 17.1% and organisation size (10 001–50 000 employees) at 15.8%

Summary

Introduction

Researchers have shown a sustained interest in understanding the determinants of executive remuneration (Bullock, Stritch, & Rainey, 2015; Datta & Iskandar-Datta, 2014; Pandher & Currie, 2013), as well as the difference between executive remuneration and employee remuneration (Magnan & Martin, 2018). Executive remuneration, both in terms of its quantum and the disparity between top and bottom wage earners, has become a major cause of social discontent, fuelling the debate on inequality (IoDSA, 2016).

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Discussion

Conclusion