This is according to research conducted by PWC, supported by a REMchannel online survey, stating that 72 per cent of general staff category employees, representing around 500 000 employees, reported that they receive a guaranteed bonus 13th cheque as a benefit.
“This means that employees do not have to meet any performance conditions to receive the guaranteed bonus,” said René Richter, PwC partner responsible for managing the research division of human resources services.
According to the survey, it costs South African employers around five billion rand to pay employees a guaranteed cheque while 63 per cent of staff also receive short term incentives or performance bonuses, an additional compensation paid to an employee or department as a reward for achieving specific goals or predetermined targets.
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Performance bonuses are typically awarded after conducting performance appraisals with employees or analysis of projects.
The survey showed that at managerial level, 29 per cent of respondents receive a 13th cheque while 76 per cent were granted performance bonuses in the past 12 months.
At executive levels however, 16 per cent collected a bonus cheque while 80 per cent received performance bonuses.
“It is important to understand that the prevalence of paying a 13th cheque is not the norm across industry sectors. There is no requirement in the South African labour laws for companies to pay bonuses of any sort. It is a contractual matter or company policy, usually based on historical practices,” added Richter.
“What we do know is that employees tend to rise to a standard set for them. The more you expect the more they will achieve but it is important to maintain the balance which will energise the organisation and will set the framework for greater achievement and performance.”
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The survey also noted that 83 per cent of respondents in the pharmaceutical and chemical industries, 63 per cent in the construction and engineering sector, followed by 30 per cent in the financial services industry, all received 13th cheques.
PWC said that for performance targets to be effective in motivating employees, it must be linked to the organisation’s overall strategy as staff who don’t understand their roles within the business are more likely to become disengaged.
“What is critical to sustainability is to make sure that employees think and act like owners. Employees who understand their contribution to the sustainability and the growth of the organisation will feel empowered to act and make the right choices,” she concluded.