Abstract
Orientation: Return on the investment in variable pay programmes remains controversial
because their cost versus contribution cannot be empirically justified.
Research purpose: This study validates the findings of the model developed by De Swardt on
the factors related to successful variable pay programmes.
Motivation for the study: Many organisations blindly implement variable pay programmes
without any means to assess the impact these programmes have on the company’s performance.
This study was necessary to validate the findings of an existing instrument that validates the
contribution of variable pay schemes.
Research design, approach and method: The study was conducted using quantitative research.
A total of 300 completed questionnaires from a non-purposive sample of 3000 participants
in schemes across all South African industries were returned and analysed.
Main findings: Using exploratory and confirmatory factor analysis, it was found that the
validation instrument developed by De Swardt is still largely valid in evaluating variable pay
schemes. The differences between the study and the model were reported.
Practical/managerial implications: The study confirmed the robustness of an existing model
that enables practitioners to empirically validate the use of variable pay plans. This model assists
in the design and implementation of variable pay programmes that meet critical success factors.
Contribution/value-add: The study contributed to the development of a measurement instrument
that will assess whether a variable pay plan contributes to an organisation’s success.