CHAPTER 2: LITERATURE REVIEW
2.5 TALENT MANAGEMENT STRATEGIES IN ORGANISATIONS
2.5.1 Elements of Talent Management
2.5.1.2 Generation X and Generation Y
64 talented employees participated in a research study that aimed to investigate the variables considered important by South Africa‟s talent. “In answering the question how long participants anticipated remaining with their organisation, most of the respondents stated that they would stay with the organisation as long as they were challenged, enjoyed work and did not receive any better employment offers” (Birt et al., 2004:28). Hence, job satisfaction helps organisations reduce intentions to leave amongst managerial-level employees.
South African organisations have to ensure that they effectively manage their managerial- level employees in order to keep them satisfied with their jobs and they should also take into consideration the differing needs of the generation X and Y at the workplace. This will be discussed further in the next section.
“The needs of employees have shifted in part due to a natural evolution of business (more technology, higher productivity, a global community) but also a result of the entry of generation X into the job market and they are defined by their „want, want, want‟ approach”
(Brown, 2007:32). Generation X and Y managerial-level employees are looking for totally different rewards (intrinsic and extrinsic) and working tasks, therefore organisations need to use this in order to retain their talent. Thus, South African organisations should ensure that they are able to distinguish between the various managerial-level employees generational groups‟ needs and wants in order to specifically cater for each group which will result in lower intentions to leave (Potgieter, 2007:5).
Intrinsic and Extrinsic factors
As depicted in Figure 5, intrinsic and extrinsic rewards are a sub-component of the talent management model and, as mentioned above, Generation X and Y talented management employees are looking for totally different rewards and working environments. „Extrinsic‟
motivation relates to material rewards and these are offered according to the type of organisation and job grades. „Intrinsic‟ motivation relates to the psychological rewards that organisations offer their employees (Gerber, Nel and Van Dyk, 1998:258). Figure 6 illustrates the types of compensation that can be offered to employees by organisations.
Figure 6: The Total Compensation System
Compensation Of employees
Extrinsic rewards
Monetary rewards Hourly wage Salary Bonuses Commissions Pay incentives
Benefits Insurance Retirement Paid holidays Paid public holidays Food services Medical Recreation
Recognition
Promotion opportunities Intrinsic rewards
Working conditions Interesting work Source: Grobler et al., 2006:351.
Figure 6 depicts the two types of rewards that South African organisations provide to their managerial-level employees (extrinsic and intrinsic). Extrinsic rewards are divided into two categories, monetary rewards and benefits. Monetary rewards to employees can be in the form of cash incentives (Armstrong, 2006:709). Money motivates managerial-level employees to put in an extra effort in attempting to accomplish their goals so that they are able to receive the monetary reward (Nel et al., 2006:323). Therefore, money encourages employees to seek employment in such organisations so that they are able to earn a living and meet their day-to- day financial obligations. Types of monetary rewards are as follows: hourly wages, salaries, bonuses, commission and pay incentives (Grobler et al., 2006:364).
However, not all managerial-level employees are motivated by monetary rewards. This is clearly pointed out by the findings of Sandweiss and Lewin in which the respondents (MBA students) did not mention money as their main motivation and only two out of the 11 respondents interviewed felt undervalued at work and needed more money (Sandweiss and Lewin, 2000:39). “A health care administrator explained that “Right now I see myself taking jobs not for the money but for the experience. I basically took a pay cut to take the job I‟m working now,” and added, “If the employer gives you the room to grow you will keep contributing and your value increases” (Sandweiss and Lewin, 2000:39).
South African organisations should ensure that their salaries are above market rates in order to retain their talent and reduce their employees‟ intention to leave levels. This is supported by Kinnear and Sutherland‟s study in which “104 knowledge workers from financial services, IT and Science and Technology sectors participated to help determine what makes them committed to an organisation” (Kinnear and Sutherland, 2000:106). The study findings show that South African knowledge workers need to earn a competitive package but on top of that have the opportunity to earn performance based bonuses (Kinnear and Sutherland, 2000:24).
Organisations that use performance based pay incentives should ensure that they set realistic and achievable work targets. This is because when unrealistic and unattainable work standards are set, it may lead to high frustration and lower levels of morale amongst employees when they fail to reach the set targets as they might end up not receiving their pay (Miner and Crane, 1995:451).
As depicted in Figure 6, another type of monetary rewards are benefits. “Benefits are legally required or voluntary compensation provided to employees in addition to their salaries or wages” (Plunkett et al., 2002:370). Benefits also help increase motivation and performance of employees in the workplace, as pointed out earlier, as they are a form of monetary reward and can be as follows: insurance (health, life and disability-accident), retirement benefits, paid
holiday vacation trips, paid public holidays, food services (free canteen meals), medical facilities (on-site clinic) and recreational programmes (football teams, picnics and dance groups). However, it should be noted that the study findings of a research study by Kinnear and Sutherland (2000:24) in which 104 South African knowledge workers who participated made it clear that traditional retention strategies aimed at promoting loyalty and a long-term view of the company are no longer effective. These included benefits such as medical aid, pension schemes and bursaries for their children. The knowledge workers prefer to be employable and not be dependent on anyone (Kinnear and Sutherland, 2000:24). South African organisations should provide more job security to their managerial-level employees in order to reduce their intention to leave.
Figure 6 depicts the intrinsic rewards that organisations can offer their managerial-level employees so that they have reduced intentions to leave. „Recognition‟ is where the organisation honours outstanding work achievement by their employees and this can be done in the form of awarding employees with certificates, trophies and gifts and monetary rewards (French, 1994:400). According to Kinnear and Sutherland‟s (2000:25) study, one of the main factors that was discovered on how to retain knowledge workers was financially rewarding and recognising high performance. Thus, South African organisations that recognise high performance motivate managerial-level employees and increase their feeling of belonging to the organisation which greatly reduces their intentions to leave.
„Promotional opportunities‟ can be used by South African organisations to offer intrinsic rewards to their managerial-level employees. South African organisations should be able to distinguish employees who are top performers and provide them with promotions so that they remain satisfied and motivated by their jobs. „Working conditions‟ of every organisation should be safe and healthy for employees. Managerial-level employees can be properly managed by organisations if they are provided with interesting work they enjoy and love doing.