Employee perceptions of executive compensation transparency in South African SOEs

Summary

This research by Mabaso and Mdluli (2025) investigates employee perceptions and lived experiences concerning the transparency and communication of executive compensation within a South African State-Owned Enterprise (SOE) in Gauteng, and how these perceptions impact their motivation and engagement. The study was motivated by the ongoing debate surrounding executive pay transparency in the public sector and the need to understand employees' experiences with compensation practices. Concerns about the fairness of executive compensation in SOEs, where executives are tasked with maximizing shareholder value, underpinned the study's orientation. The researchers adopted an interpretivist qualitative research approach, utilizing in-depth interviews to delve into the perspectives of employees. The data collected from these interviews underwent thematic analysis to identify recurring patterns and insights, providing a rich understanding of employee experiences. This methodology allowed for a deep exploration of complex individual perceptions rather than broad generalizations. The main findings of the study highlighted a significant impact of perceived transparency on employee attitudes and behaviors. Specifically, perceived opacity in executive compensation led to feelings of exclusion, mistrust, and disengagement among employees. Participants often interpreted unexplained pay disparities as symbolic of organizational injustice, which subsequently damaged their psychological contract and motivation. Conversely, the study found that transparency and inclusive communication regarding the criteria for executive pay, such as performance metrics, were strongly associated with enhanced trust, perceptions of fairness, and increased employee engagement. The practical and managerial implications of these findings are substantial for SOEs. The study suggests that implementing improved communication strategies and establishing more equitable pay structures could significantly enhance trust, boost employee morale, and strengthen organizational commitment. By fostering an environment of transparency, SOEs can mitigate negative employee perceptions and cultivate a more motivated and engaged workforce. The contribution of this study lies in deepening the understanding of executive pay transparency within the SOE context and offering actionable recommendations for improving compensation practices, thereby fostering greater equity and trust in the public sector.