Studying the effect of the current remuneration practices in Route Management (Pty) Ltd: Cape Town

Bothma, Gustav (2012-12)

Thesis (MBA)--Stellenbosch University, 2012.


Many different definitions of human resources as a field of practice exist but few would disagree with the fact that a company’s remuneration practices play a crucially important role in the development and management of a productive workforce. Being such a crucial part of the employment relationship, a company’s remuneration strategy has the potential power to influence many factors contributing to employee well-being and operational success. The focus of this project has been an investigation of the current remuneration practices within Route Management (Pty) Ltd and the effect it has on employees, with specific reference to monthly paid employees at the Cape Town plant. The possibility of the current remuneration practices having a negative impact on employee satisfaction and crucial functions like skills retention have been scrutinised, and even where such concerns are not justified, the aim is to inform top management of the benefits that their current approach towards remuneration has to offer. In order to study the effect of the current remuneration practices deployed at Route Management, the research focused on employee satisfaction as a possible indicator of the impact these practices may have on employees. Employee satisfaction is a very wide construct, has many different components and has been studied widely in the literature. This complex construct along with some issues surrounding remuneration form the basis of the literature review presented in the report. A self-administered questionnaire was developed and with the size and physical location of the population in mind, a delivery and collection method was chosen to administer the questionnaires. This kind of questionnaire provided the respondents with the opportunity to complete the questions without any assistance from the researcher, ensuring that the researcher’s contribution was kept to an absolute minimum, and in doing so avoiding bias during the questionnaire data collection phase. Weights were assigned to questions in order to obtain a total employee satisfaction indicator score for each respondent, as well as two sub-indicator scores, namely a general employee satisfaction indicator and a remuneration satisfaction indicator for each respondent. Results showed that by far the majority of respondents are either satisfied or very satisfied with regards to their employment situation at Route Management with only 15 percent of respondents indicating that they are unsatisfied with remuneration practices at the company. All employees were found to be satisfied according to their general employee satisfaction and their total satisfaction indicator scores. The final analysis studied the relationship between remuneration satisfaction and general satisfaction. The results found that the company’s remuneration practices do not impact negatively on general employee satisfaction and with an average total satisfaction score of 72 percent, and 40 percent of all respondents found to be very satisfied, the company can be confident to work with a productive and motivated team at their Cape Town plant. Results showed that remuneration satisfaction does have some degree of positive impact on the level of general satisfaction which employees experience. Consequently, Route Management’s board of directors should consider these results as a positive indicator for their future decisions regarding remuneration practices, but should also consider the advantages of gaining more information from this type of research. It is therefore advised that this or similar studies should be rolled out and applied to the entire organisation.

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