Total rewards that retain: A study of demographic preferences

Abstract

Orientation: Changing workplace demographics and a dearth of employees with scarce skills have forced employers to better understand the various factors that retain talented employees.Research purpose: In this empirical study, the reward preferences and ideal combination of total reward elements (based on an estimation of their relative importance) that retain employees from various demographic groups, including employees of different race, gender and age groups, were investigated.Motivation for study: Organisations are competing for talented employees and to benefit from the value these individuals add, it is required of them to stay at the respective businesses. Previous studies have indicated that employees who are offered a reward package that is aligned to their personal preferences are prone to stay longer at the organisation and to be more engaged at work. However, new and novel ways need to be found to identify the reward preferences of employees.Research design, approach and method: A quantitative approach and descriptive research design was employed to estimate the individual reward preferences and identify an ideal mix of total reward elements that retain different cohorts of employees. Three questionnaires were distributed, including a Remuneration Managers Questionnaire (n = 7), a Remuneration Preference Questionnaire (n = 368) and a Choice-based Conjoint Task Questionnaire (n = 368). The latter two questionnaires were distributed as an online questionnaire to South African businesses and consisted of eight choice-based conjoint tasks, as well as a field survey.Main findings: The results of the choice-based conjoint analysis revealed that all respondents considered financial rewards (Benefits, Performance and Recognition, Remuneration, Career, in that order) as relatively speaking, the most important components in their total rewards package that would lead to their retention. For most demographic groups, the remaining three places (i.e. ranked) were Career Advancement, Learning and Work–life balance. Work–life balance was found to be relatively more important for Generation Y than career advancement. For those employees with only a matric qualification and those in non-managerial positions, access to learning opportunities were the least important in their retention.Practical/managerial implications: Human Resource managers and line managers should note that reward elements should be chosen and offered as total reward packages in such a way as to best be able to attract, engage and retain talented employees.Contribution/value-add: The findings of the present study adds value in a sense that it assists organisations in creating customised reward packages that best suit the needs of both employees and them as employers. Providing a more ideal or preferential combination of reward elements can, by increasing retention and engagement, provide a competitive advantage for organisations.