Employee Perceptions of Executive Compensation Transparency in South African SOEs

Abstract

Orientation: Executives in state-owned enterprises (SOEs) are responsible for maximising shareholder value, yet concerns persist regarding the fairness of executive compensation. This study explores how transparency and communication around executive pay influence employee motivation and engagement within an SOE.
Research purpose: This study aims to explore employee perceptions and lived experiences regarding the transparency and communication of executive compensation and how these perceptions influence their motivation and engagement in an SOE in Gauteng.
Motivation for the study: Transparency in executive pay remains debated in the public sector. This study examines employees’ lived experiences and perceptions of compensation practices.
Research approach/design and method: An interpretivist qualitative research approach used in-depth interviews to explore employees’ perspectives. Thematic analysis was conducted to identify recurring patterns and insights.
Main findings: Thematic analysis revealed that perceived opacity in executive compensation created feelings of exclusion, mistrust and disengagement. Participants viewed unexplained pay disparities as symbolic of organisational injustice, damaging their psychological contract and motivation. In contrast, transparency and inclusive communication about pay criteria (e.g. performance metrics) were linked to enhanced trust, fairness perceptions and engagement.
Practical/managerial implications: Improved communication and equitable pay structures could enhance trust, morale and organisational commitment.

Contribution/value-add: This study deepens the understanding of executive pay transparency and offers practical recommendations for improving compensation practices in SOEs.