QUESTION 1: Remuneration Inequities at ProTech Industries
1.1 Influence of Company Background and Internal Factors
(a) Influence of Background (3 marks)
ProTech’s history as a family-owned business likely fostered an informal and subjective approach to
remuneration. The founder, Sipho Mahlangu, personally negotiated salaries with individual
employees, suggesting a lack of structured HR systems or pay policies. This personalised style is
typical of small family businesses, where decisions are often based on personal relationships and
perceptions rather than formal job evaluation or market data (Nel et al., 2022). The recent
leadership change has revealed the shortcomings of these informal practices, exposing
inconsistencies and inequities that accumulated over time.
(b) Internal Factor (2 marks)
An internal organisational factor influencing ProTech’s remuneration approach is its managerial
philosophy and HR policy framework. The previous CEO’s reliance on subjective decision-making
and possible gender bias shaped pay outcomes. The HR manager’s admission that women were paid
less due to perceived “lesser financial need” reflects a discriminatory organisational culture and
weak HR controls (Bendix, 2020). This internal factor directly contributed to the current
remuneration disparities.
1.2 Designing a Fair and Transparent Remuneration Framework
(a) Recommended Practices (6 marks)
To correct inequities, the new CEO, Jabu Mokoena, should introduce the following remuneration
practices:
1. Conduct a Job Evaluation – Use systematic job analysis to determine the relative worth of
jobs, ensuring pay levels reflect job content and responsibility rather than gender or personal
relationships (Milkovich et al., 2020).
2. Implement Pay Structures and Grades – Establish formal salary bands with minimum and
maximum rates for each level. This ensures internal equity and transparency.
3. Develop Clear Pay Policies – Document guidelines for pay progression, bonuses, and merit
increases to reduce arbitrary decisions.
4. Adopt Market Benchmarking – Compare ProTech’s pay rates with similar roles in the
manufacturing sector to ensure external competitiveness.
5. Enhance HR Oversight – Empower HR to monitor compliance and ensure pay decisions align
with company policy and legislative requirements.
6. Introduce Pay Equity Audits – Regularly assess gender pay gaps and correct disparities
promptly.
(b) Application to Case Study (2 marks)
These practices directly address ProTech’s gender-based pay disparities and the lack of structured
pay determination under the previous CEO. Implementing them will ensure female supervisors are
compensated fairly and transparently compared to their male counterparts, strengthening fairness
and trust in the remuneration system.
1.3 Legal and Ethical Implications
(4 marks)
ProTech’s pay disparities raise both legal and ethical concerns.
Legally, unequal pay for work of equal value may contravene Section 6(4) of the Employment Equity
Act 55 of 1998 (EEA), which prohibits unfair discrimination in remuneration on grounds such as
gender. It may also violate the Basic Conditions of Employment Act 75 of 1997 (BCEA), which
requires employers to apply fair labour practices. If proven, ProTech could face claims at the
Commission for Conciliation, Mediation and Arbitration (CCMA) or the Labour Court, resulting in
financial and reputational damage.
Ethically, paying women less based on stereotypes about “less financial need” is discriminatory and
violates principles of fairness, equality, and respect in the workplace (Bendix, 2020). Such practices
undermine employee morale and contradict corporate social responsibility expectations.
1.4 Impact on Motivation and Retention
(8 marks)
(a) Effect on Motivation and Retention (4 marks)
Remuneration inequities can severely reduce motivation among underpaid employees, especially
female supervisors who may feel undervalued and discriminated against. According to Adams’ Equity
Theory, employees compare their input–outcome ratios with others; perceived inequity leads to
dissatisfaction, reduced performance, and withdrawal behaviours (Nel et al., 2022). Consequently,
talented employees may resign, increasing turnover and recruitment costs.
(b) Link to Case Study (4 marks)
At ProTech, the discovery that female supervisors earn less than their male counterparts can cause
resentment and erode trust in management. This undermines the company’s remuneration
objectives of attracting, motivating, and retaining skilled employees. For example, high-performing
female supervisors may leave for competitors offering fair pay, while remaining employees may
become demotivated, lowering productivity and morale. A fair and transparent remuneration
system, conversely, supports retention and fosters commitment.
References
Bendix, S. (2020). Industrial Relations in South Africa (7th ed.). Juta.
Milkovich, G.T., Newman, J.M., & Gerhart, B. (2020). Compensation (14th ed.). McGraw-Hill.
Nel, P.S., Kirsten, M., Swanepoel, B.J., & Poisat, P. (2022). Human Resource Management in
South Africa (7th ed.). Oxford University Press.
