There is scarcity of research investigating specifically the relationship between total rewards and work engagement internationally as well as nationally. The main objective of this study was to explore the relationship between total rewards and work engagement in a South African context. The Nienaber’s (2010) total reward preference model was used in this study. The following research questions were investigated:

The engaged life is an important concept as individuals spend more than a third of their lives engaged in their work (Van Zyl, Deacon & Rothmann, 2010). Work engagement is defined as ‘a positive, fulfilling, work related state of mind that is characterised by vigour, dedication, and absorption’ (Schaufeli & Bakker, 2010; Schaufeli, Salanova, González-Romá & Bakker, 2002, p. 74). Furthermore, according to Rothmann and Rothmann (2010, p. 28), work engagement is the extension of the self whereby individuals are provided with the opportunity to expresses their ‘…preferred self in task behaviours that promote connections to work and to others’. It is thought that this engagement occurs when individuals experience an optimum fit between themselves and their work roles.

Furthermore, Kahn (1990) identified three components that conceptualise work engagement: a physical dimension which refers to Schaufeli’s concept of vigour, an emotional dimension which indicates an individual’s commitment to his or her job and a cognitive dimension that is categorised by absorption (Schaufeli & Bakker., 2001; Schaufeli & Bakker, 2004). Vigour refers to increased levels of energy as well as mental resilience whilst working. Dedication is described as a strong immersion in one’s work and is characterised by a sense of significance, enthusiasm, challenge, pride and inspiration (Schaufeli & Bakker, 2001). Absorption is characterised by being happily engrossed and fully immersed in one’s work (Schaufeli & Bakker, 2001).

Engaged employees experience a psychological presence in the workplace which helps them develop a sense of identity (Rothmann & Rothmann, 2010). They are hands-on, dedicated to maintaining a quality performance standard and take responsibility for their own growth. Other research has found that individuals who are engaged in their work are more passionate, enthusiastic and happy (Schaufeli & Van Rhenen, 2006).

It is important to understand that organisations need to encourage and foster work engagement amongst employees in order to flourish and prosper during constant environmental changes (Shimazu & Schaufeli, 2009). Engagement occurs when individuals experience an ideal fit and identification between themselves and their work roles (Kahn, 1990). Work engagement aids in the contribution of employees’ organisational dedication as the organisation equips employees with not only the necessary resources to achieve their work goals but also the opportunity to grow and develop in their work (Korunka, Kubicek, Schaufeli & Hoonakker, 2009). The opportunity for individuals to express their true selves as well as their strengths may ‘lead to a greater work-role fit, which leads to work engagement’ (Van Zyl et al., 2010, p. 3). At an organisational level, levels of work engagement are a predictor of overall job satisfaction, level of productivity, commitment and lower level of turnover, therefore providing the organisation with an overview of how well the organisation is performing (Bakker & Demerouti, 2008; Bakker, Demerouti & Schaufeli, 2005; Richmond, 2006).

Work engagement is a complex and multidimensional construct. Although there are some similarities, it should not be confused with other constructs such as job satisfaction, involvement and commitment (Maslach, Schaufeli & Leiter, 2001, Schaufeli, 2013). According to BlessingWhite (2012), engaged people are fully aligned with the goals and objectives of the organisation with the aim to contribute, going beyond the sense of commitment. Researchers such as Maslach et al. (2001) noted that there was a clear difference between engagement and job satisfaction when it comes to personal fulfilment and energy. Fulfilment and energy could be associated with engagement, but not so clearly in the other two constructs. It is therefore reasonable to argue that engagement is a unique construct and contains a deeper dimension of well-being, emotional and behavioural responses, such as experiencing joy and fulfilment at work (Crabtree, 2013, Hallberg & Schaufeli, 2006; Schaufeli et al., 2002).

One of the key aspects seen as impacting employee engagement is rewards. According to Eric (1994), rewards can be defined as various different benefits that are offered to employees in exchange for work or value. Rewards may differ in that they may be intrinsic or extrinsic, direct or indirect, and financial or non-financial (Armstrong, 2006; Mahaney & Lederer, 2006; Mottaz, 1985).

According to Gross and O’Malley (2007), rewards now include the opportunity for career enhancement as well as the impact that the working environment may have on the individual. Organisations are required to propose both intrinsic and extrinsic rewards as a means of increasing organisational outcomes (Mahaney & Lederer, 2006). Many different reward systems may operate within organisations (Blackburn & Rosen, 1993). It is important to understand that a reward system will essentially impact individuals and team members’ performance and engagement levels within the workplace. It is therefore crucial to implement an effective and efficient reward system based on each unique organisation’s needs (Kerrin & Oliver, 2002).

Over the years, the reward systems have changed within organisations from merely financially remunerating individuals to motivating them in the workplace as well (Hankin, 2005). An organisational reward system should be designed to motivate employees in terms of higher performance, productivity, engagement and commitment levels. Furthermore, the rewards system should also match organisational strategies, goals and culture, as well as should ensure that organisations attract and retain their people (Allen & Killman, 2001). The alignment of the overall rewards system to organisational strategies will ensure workplace effectiveness, positive work outcomes and increased employee efforts (Bamberger & Levi, 2009).

Intrinsic and extrinsic rewards differ to a large extent. Intrinsic rewards focus on the job and work itself, whereas extrinsic rewards are external to the job and the work that surrounds the job. Intrinsic rewards include growth opportunities, a sense of accomplishment, status, acknowledgement, satisfaction, self-esteem, challenge, autonomy and responsibility (Mahaney & Lederer, 2006). An individual may derive intrinsic rewards through the ability to engage in challenging work, receive feedback and acknowledgement, as well as being provided with the opportunity for growth and development within his or her job (Mottaz, 1985). These employees will be able to produce results, yet at the same time remain engaged, satisfied and proud of their accomplishments (Mahaney & Lederer, 2006). Extrinsic rewards consist of pay, job security, benefits, promotions, raise in salary and bonuses (Mahaney & Lederer 2006; Mottaz, 1985). According to Goldsmith, Veum and Darity (2000), organisations remain competitive by continuously comparing their extrinsic rewards with other market players, thus ensuring higher levels of employee productivity, engagement, commitment to the organisation and lower turnover levels.

According to Bussin (2011), there are various disadvantages that accompany extrinsic rewards such as monetary rewards. Monetary rewards, including salary and bonuses, fall under extrinsic rewards. It is asserted that extrinsic rewards have the ability to decrease an employee’s intrinsic motivation to do the job (Balkin & Dolan, 1997; Bussin, 2011). The use of extrinsic rewards as a motivator may lead to individual employees and team members becoming money hungry, causing them not to focus on the work itself any longer (Balkin & Dolan, 1997). Extrinsic rewards may also act as a poor motivator and are not directly linked to an employee’s level of engagement and performance (Wruck & Jensen, 1998). On the other hand, extrinsic rewards are known to enhance productivity, increasing employee commitment to goals, decreasing turnover and attracting top talent individuals (Goldsmith et al., 2000). Thus, people may be attracted to their jobs, solely based on pay (Stajkovic & Luthans, 2001). Extrinsic rewards may be beneficial in allowing organisations to value their employees’ contributions through the distributions of cash bonuses and monetary rewards.

Long and Shields (2010) propose evidence that intrinsic or non-cash rewards have become more common within organisational practices. Many organisations that have adopted the practice of non-cash (intrinsic) rewards have the ability to recognise the individual employee as well as groups and teams within the organisation. These intrinsic rewards, whereby employees are recognised for their efforts, accomplishment and quality of work, ensure the commitment, engagement and motivation of employees and team members. It is now more evident that employees have the opportunity to make suggestions on the structure of the reward system within their own organisations (Allen & Killman, 2001). Sweins, Kalmi and Hulkko-Nyman (2009) propose that organisations should be obligated to explain to their employees how the reward system and structure works. Greater knowledge of the system is crucial in ensuring that employees understand what is expected of them.

The question is therefore proposed as to which rewards are the real motivators of work engagement. From a strategic perspective, it is crucial that an effective total reward system is designed to ensure greater employee and organisational outcomes.

Total rewards are seen as the combination of various different rewards, including financial and non-financial rewards and intrinsic and extrinsic rewards, which are made accessible to working individuals in exchange for their value-add in the workplace (Armstrong, 2006; Gross & O’Malley, 2007). There has been a change in defining rewards over the years, combining both remuneration and benefits, with the aim of attracting, retaining and motivating employees within the organisation (Armstrong, 2006; Hankin, 2005).

Various total rewards models and frameworks have been developed in recent years, offering different reward structures. Many of these programmes offer similar rewards and benefits. The WorldatWork model (2007) offers five main reward groups: (1) remuneration, (2) benefits,(3) work life, (4) performance and recognition, and (5) development and career opportunities. The Corporate Leadership Council (CLC) Total Reward Framework (2005) includes base pay, health and wellness benefits, leave benefits, retirement benefits, bonus and incentives, and family-friendly benefits in its model. Armstrong and Brown’s total rewards model (2006) had a similar structure as that of WorldatWork, but it added an additional category of work experience. Zingheim and Schuster (2007) grouped their model into three categories: total pay, performance and/or people management and other types of rewards. Their model was especially popular because of their integration with other human resources processes and their attention to retaining critical talent. Nienaber’s reward preference model (2010) was based on the integration of the existing models of the majority of reward categories of most of the prominent total rewards models (Armstrong & Thompson, 2002; CLC, 2007; Lawler, 1990; Milkovich & Newman, 1999; WorldatWork, 2007; Zingheim & Schuster, 2007). The different elements in each reward category were identified through a comprehensive literature review. The model consisted of six basic categories: (1) monthly salary or guaranteed remuneration, (2) variable pay, (3) benefits, (4) performance and career management, (5) quality work environment and (6) work–home integration:

Nienaber’s total reward preference model is presented in Figure 1.

Many researchers have emphasised the idea that there are certain demographic variables that have an impact on and are essential to the understanding of the relationship between total rewards and work engagement (Antoniou et al., 2006; Garner, Knight & Simpson, 2007). Age and gender, in particular, were highlighted as important variables in such studies (Garner et al., 2007; James, McKechnie & Swanberg, 2011). For instance, Bussin and van Rooy (2014) found that there were significant differences amongst generational cohorts (as a function of age) in terms of reward preferences. The older generations preferred rewards such as fixed and long-term compensation, whereas their younger counterparts leaned towards variable pay and mixed structures.

In terms of the relationship between total rewards and gender, previous research indicated that gender differences existed in relation to reward structure, seen against the significant gender differences in wages that persist even though individual and job characteristics have been controlled for (Murao, 2000). Furthermore, studies have found that reward structures between men and women may differ because of the vast differences and choice in occupation. On the other hand, Tam (1997) indicates that gender composition is not a factor that influences salary and reward structures.

Table 2 summarises the mean, standard deviation, skewness and kurtoses of the variables studied. Chronbach’s alpha and split-half method were used to determine internal reliability. The alpha coefficients of the subscales were found to be satisfactory when compared to the guideline of α > 0.70 (Nunnally & Bernstein, 1994). Performance and career management and conducive working environment had scores of α > 0.88 and α > 0.89, respectively, followed by total reward’s score of α > 0.91 and work engagement’s score of α > 0.95. The results for the split-half method were 0.75 and 0.82, respectively, supporting an acceptable internal reliability.

The Nienaber’s reward scale was originally based on a theoretical framework of six factors identified from the literature and previous studies. After being subjected to exploratory and second-order factor analysis, a newly formed two-factor reward structure emerged which replaced the original six factors proposed. The two factors were named conducive working environment and remunerations and benefits, and achieved Cronbach’s alphas of 0.88 and 0.86, respectively. The 46 items of the total reward scale were subjected to EFA. Principal component analysis with direct Oblimin rotation was selected. Items were only considered to be maintained when they met the criteria of factor loadings > 0.30, not cross-loading. To assist the decision on which items were to be included, the corrected item total correlations were scrutinised (DeVellis, 2011). This process was repeated until a clear factor structure emerged. The final structure that emerged was a two-factor structure and is presented in Table 3. The original scale can be requested from the author. The structure could only be partially replicated. The first factor could be interpreted as conducive working environment. The items for the second factor did not load as clearly. The majority of items came from the performance and career and quality working environment subscales. For naming purposes, this subscale is called the performance and career management scale because the most items came from the performance and career management subscale.

Performance and career management (0.88), conducive working environment (0.89), as well as the total reward scale (0.91) met the criterion of reliability in satisfactory manner. The results of this study only partially supported the factor structure found by Nienaber (2010). There are a few possible reasons that could explain the different findings. The two studies differed in terms of sample composition. The Nienaber sample consisted of 60% women and 75% white people, with most respondents being younger than 40 years. In the current study, the distribution in terms of race and age was more evenly spread, with women constituting 65% of the sample. There were also differences in terms of the industries in which participants worked. The Nienaber study focused on the banking sector and the current study included a variety of financial and other institutions. In terms of position, the Nienaber study had a big group of people in senior management positions, whereas the biggest group in the current study consisted of junior managers. These differences suggest and support other studies that have found that factors such as generational cohorts, age and position could all have an impact on workers’ reward preferences (Lawler, 2011; Nienaber, Bussin & Henn, 2011).

Another reason could be the rigour of the development of the instrument as such. Although relatively satisfactory scores were obtained for the two reward subscales, further scale refinement is recommended, as a large number of items have still been retained. In new scale development, one needs to take care to not merely discard items without investigating the instrument on item level. It is suggested that this instrument be further analysed through techniques such as Rasch analysis to further refine the scales. Rasch analysis is a more sophisticated technique utilised for the process of new scale development where more stringent measures are applied to assist with the decision to include or exclude items (Beninato & Ludlow, 2016; Boone, Staver & Yale, 2014; Holmefur, Sundberg, Wettergren & Langius-Ekl öf, 2015, Lim, Rodger & Brown, 2009).

On a theoretical level, one would expect to have found a different factor structure as many studies found support for a wider mixture of both intrinsic and extrinsic rewards (Kaplan, 2005; Shaul, 2007; Van den Berghe, St Onge & Robinae, 2004). Several studies have supported the inclusion of certain items into organisational reward strategies that did not make it into this scale, such as items linked to the organisation’s policies and procedures, for example, career progression and goal alignment, work–home integration and benefits that employees may feel they are not yet eligible for (e.g. allocation of shares) (Christoffersen & King, 2006; Cisco, 2008; Nienaber, 2010). A closer scrutiny is thus further warranted.

The statistically small-to-moderate significant correlation between total rewards and work engagement, although not as high as in previous studies, corresponded with results reported by previous research (Hewitt, 2015; Hulkko-Nyman, Sarti, Hakonen & Sweins, 2012). In this study, evidence suggested that respondents did not differentiate between rewards on such a sophisticated level, but grouped them into larger categories of rewards. This tendency has also been seen in other studies, such as Armstrong and Brown (2006) and Zingheim and Schuster (2007). The fact that the performance and career subscale correlated highest with work engagement sheds further light on workers’ preferences of rewards. Items in this scale predominantly reflected an esteem and growth nature, similar to the satisfaction factor of the Herzberg’s motivation-hygiene two-factor theory and the esteem level of Maslow’s need theory. As has been alluded to in the literature review, employees’ perception of rewards is linked to their levels of engagement. McMullen (2010) has similarly found that aspects such as career development, work quality and work–life balance have a greater impact on work engagement than monetary rewards have.

The results post an encouraging sign for organisations that total reward structures are important tools in their strategies to boost engagement levels. Lastly, although the relationship between work engagement and total rewards is positive, it is not as high as one would hope for. This can be attributed to the total rewards scale still being in its development phase. It is believed that with further item refinement these relationships will also improve.

The second research question addressed which reward category had the most influence on work engagement. It was found that only performance and career management significantly predicted work engagement and explained 12% of the variance. This implies that there exist a number of other factors and constructs that contribute towards predicting work engagement. This study has not looked at factors such as the influence of generational cohorts, personality characteristics and tenure which could also help explain the variance (Shaul, 2007; Van den Berghe et al., 2004). Given the complex nature of total rewards and the multidimensionality of work engagement, it is not unrealistic to conclude that it is too simplistic to state that total rewards alone predicts work engagement. Total rewards as an engagement strategy is only at its infancy and more research is needed. Organisations need to experiment and engage with their staff to try and understand what they really want in terms of total rewards. As mentioned earlier, traditional rewards are no longer attractive and or suitable (Heneman & Coyne, 2007; Lyons & Ben-Ora, 2002).

This research question addressed whether age and gender moderated the relationship between total rewards and work engagement. For this sample, only age had a moderating effect. This is in support with other research done in South Africa where age did seem to have an influence on reward preferences (Bussin & Van Rooy, 2014). Hoole and Bonnema (2015) found in a South African study that baby boomers are significantly more engaged than their younger counterparts. These different age groups are therefore important for different reasons. Employers need to understand not only what kind of rewards will attract and retain younger cohorts but also what will keep older employees happy and engaged. A one-size-fits-all strategy will at best provide mediocre results. The current sample was, however, not representative enough to allow any robust conclusions and any interpretation should be treated with caution.

Some limitations must be noted. The findings of this study cannot be generalised to other demographic categories and cultures because of the non-representativeness of the sample. For example, there were far more women and white people in the sample than what are seen as representative of South African society. The reason for the unequal distribution of gender and race could be attributed to the sample being selected from organisations whose employees were predominately female. This was purely by chance. In addition, as the sample was drawn only from organisations within Gauteng, the participants cannot accurately represent other provinces and organisations within South Africa. Furthermore, the study used a cross-sectional design and was unable to determine the relationship between total rewards and work engagement over time. Through the use of a longitudinal study, deeper insight could be provided into the causal relationships between the different reward categories and work engagement. Common method bias could also have influenced the results. In addition, another limitation can be inferred by keeping in mind that the total reward instrument is still in the development phase and being tested.

This research has provided useful insights that can assist organisations in designing their total rewards models as part of their engagement strategies. As this investigation has been conducted during an economically volatile time which could have influenced the results, it is recommended that it be repeated in the form of a longitudinal study in order to determine the impact of different reward preferences on work engagement over time. Furthermore, the results have indicated that it would be beneficial for organisations to pay attention to the type of benefits they offer to their employees, as there are certain preferences which in turn influence their levels of work engagement such as constructive and honest feedback, challenging job, growth opportunities, informal recognition, career path planning and mentoring (Bussin & Van Rooy, 2014; Jacobs, Renard & Snelgar, 2014; Masibigiri & Nienaber, 2011; Sortheix, Dietrich, Chow & Salmela-Aro, 2013). Organisations should also be aware that their rewards models are not merely bouquets of rewards and benefits with no differentiation which offers no competitive edge. Customisation of reward and benefit programmes could offer more value to employees. Lastly, future studies need to investigate additional variables that could explain additional variance in a particular study’s context. In the field of total rewards constructs such as psychological contract, organisational support and organisational citizenship behaviour could also explain additional variance as they impact work engagement.

If organisations want to include total rewards as part of their engagement strategies, it is imperative that they understand the complex nature in the reward–engagement relationship and how best to use reward systems to meet the needs and goals of both the organisation and employees. Certain rewards are better predictors of work engagement than others, implying that companies should steer away from one-size-fits-all reward strategies.