Rewarding employees in turbulent economies for improved organisational performance

Abstract

Purpose The purpose of this paper is to explore the application of total reward practices in small and medium-sized enterprises (SMEs) in the South-Eastern European (SEE) region and the reward elements positively affecting organisational performance. Design/methodology/approach The sample consists of 199 SMEs operating in SEE countries which are either under economic crisis or transition: Greece, Bulgaria, Romania, Albania, Kosovo and the Former Yugoslav Republic of Macedonia. Findings SMEs in the SEE region are implementing a total rewards model which is characterised by a weaker application of individual aspects and by a stronger application of transactional, relational and communal aspects. Within the communal aspects of the model, the study found three elements of the work environment that positively affect organisational performance; work-life balance, employee involvement voice mechanisms, and organisational culture supporting personal and professional development. Practical implications The study contributes to HR practice; the authors found that a better work environment is positively related to improved organisational performance in these SMEs. This means that in times of economic crisis or transition when HR budgets are limited such non-financial strategies can be a viable alternative to costly financial rewards to such organisations. Originality/value The study contributes to both theory and HR practice by shedding light on how employee rewards are affected in economies under crisis and transition, how SMEs can motivate their employees when faced with significant financial limitations, as well as explores which reward elements can lead to enhanced organisational performance in such organisations.