Rewarding employees in economies under crisis and transition: the application of the total reward model in south-eastern European SMEs and its impact on organisational performance

Abstract

Total reward strategies are well known for their application in attracting, retaining and engaging employees in return for enhanced organisational commitment and performance. However, the unprecedented austerity measures imposed by many governments as a result of the recent economic crisis, as well as a series of deregulation policies, have affected employer reward strategies and practices. This study explores the application of total reward strategies, particularly the changes to their application due to the recent economic challenges and constantly increasing unemployment rate. It also explores which elements of the total reward strategies applied can positively affect organisational performance. The sample consists of 199 small and medium-sized enterprises (SMEs) operating in South-Eastern European (SEE) countries which are either under economic crisis or transition: Greece, Bulgaria, Romania, Albania, Kosovo and the Former Yugoslav Republic of Macedonia (FYROM). 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