Performance-based compensation is the most commonly used method in measuring
productivity and more and more institutions are increasingly using this method as it
attempts to link compensation with performance. The primary aim of this research
study was to explore the underlying structure of the construct: employees’ perceptions
of performance-based compensation (PBC) systems, and its subsequent impact on
employee behaviour. This was achieved by identifying differences in the employees
who received performance-based compensation and those who did not. In addition, the
research also attempted to observe the impact that factors such as long-term service,
job grade, gender and education may have on employees’ perceptions of performancebased
A non-probability stratified convenience sampling method was adopted to meet the
objectives of the research. A survey instrument was used to determine employees’
attitudes towards PBC systems and its overall effect on employee perceived behaviour
when performing job-related tasks. The survey was administered online to the
Industrial Development Corporation (IDC) employees.
The latent structure of the data was explored using an exploratory factor analysis and
appropriate comparative statistical methods were followed to gain sufficient evidence to
either support or reject the guiding hypotheses. The study determined that it was
possible to explain the main variability in the research construct by three latent factors.
The results were encouraging in that there was sufficient evidence to explore the
various research hypotheses. Differences in the perception of PBC systems were
found between various demographic categories such as job level, gender, length of
service and actually obtaining an incentive reward.
Key words: Nurturing communication, objective recognition, individual motivation,
intrinsic motivation, extrinsic motivation.
Mini-dissertation (MBA)--University of Pretoria, 2012.