Abstract
Orientation: Pay inequality remains a persistent challenge in South African organisations, particularly in competitive sectors such as fast-moving consumer goods (FMCG). Unequal and opaque pay practices shape perceptions of fairness, trust and legitimacy, influencing employee engagement and retention decisions.
Research purpose: This study explores employees’ experiences of pay inequality and how fairness perceptions influence engagement and retention in a South African FMCG context.
Motivation for the study: Despite frameworks promoting equal pay for work of equal value, pay disparities and opaque remuneration practices persist. Understanding how employees experience pay inequality is essential for organisations seeking to strengthen trust, commitment and retention amid intensifying competition.
Research design, approach and method: A qualitative, interpretivist design was employed, using semi-structured interviews with 11 FMCG employees. The study integrates Equity Theory and Social Exchange Theory to explain how pay inequality is interpreted as both a fairness judgement and a relational signal, shaping retention over time.
Main findings: Pay inequality is interpreted as a fairness and legitimacy issue. Inconsistent pay structures, opaque decision-making and limited transparency intensified social comparison, undermined trust and contributed to psychological withdrawal, disengagement and increased openness to external opportunities.
Practical/managerial implications: Organisations should address pay equity and governance by implementing consistent, transparent remuneration systems, strengthening communication and aligning transparency initiatives with corrective action to reduce disengagement and retention risk.
Contribution/value-add: This study offers context-sensitive insights into pay inequality in South African FMCG organisations, extending equity and exchange perspectives and informs fair pay governance and retention strategies.
Keywords: pay inequality; fairness perceptions; employee retention; fast-moving consumer goods sector; pay governance.
Introduction
Employee retention has become a pressing concern for organisations, particularly as the cost of replacing employees often exceeds the cost of improving or adjusting compensation structures (Kumar & Jayesh 2022). When employees leave, organisations incur additional expenses related to recruitment, training and the loss of accumulated experience, all of which place strain on organisational resources (Khalid & Nawab 2018). Retaining employees is therefore not only a human resource priority but also a strategic imperative for sustaining competitive advantage (Dhanpat et al. 2018). Within this context, pay inequality continues to pose a significant challenge in contemporary employment relations (Madingwaneng et al. 2024), especially in labour markets shaped by deep historical and structural inequalities, such as South Africa (Plagerson 2023). Despite legislative efforts to promote fairness and equal pay for work of equal value, many organisations continue to grapple with unclear pay structures, inconsistent remuneration practices and discretionary decision-making (Mabaso & Mdluli 2025). Gender pay disparities persist, including at the management level, raising concern in light of global commitments, such as the Sustainable Development Goals, aimed at advancing gender equality (Bussin & Adelekan 2018). These ongoing inequities have meaningful consequences for how employees experience their workplaces, influencing levels of trust, commitment and willingness to remain with an organisation. In highly competitive sectors such as fast-moving consumer goods (FMCG), where skilled talent is in demand and turnover costs are substantial, perceptions of unfair pay can destabilise organisational performance and continuity.
Remuneration remains a central marker of socio-economic status in South Africa, where labour market income is the primary source of household income and plays a defining role in shaping individuals’ material conditions, social standing and sense of self-worth (Mabuza 2020; Statistics South Africa 2019). Pay inequality rooted in gender and race continues to affect employees’ experiences of work despite policy interventions aimed at redress (Adelekan & Bussin 2018). Employees of colour, in particular, face intersecting disadvantages linked to pay disparities, occupational segregation and unequal caregiving responsibilities, with consequences that extend beyond the workplace to broader social and economic outcomes (Amushila & Bussin 2021).
The FMCG sector is a significant contributor to South Africa’s economy and employment, encompassing food processing, beverages, pharmaceuticals and personal care products. However, the industry has experienced increasing employee turnover, often linked to inadequate retention strategies and compensation-related concerns (Amushila & Bussin 2021; Iqbal & Faisal 2023). Despite persistently high national unemployment levels of 31.4%, the manufacturing sector, including the FMCG industry, continues to absorb a significant proportion of the labour force (Statistics South Africa 2025). At the same time, slow employment growth and unequal pay structures persist within the sector (Mangal & Dhamija 2023). Evidence suggests that fair compensation, clear career progression and job security play an important role in motivating employees, enhancing performance and strengthening intentions to stay (Mangal & Dhamija 2023).
Although prior research has consistently linked pay inequality to outcomes such as job satisfaction, organisational commitment and turnover intentions (Berber & Gašić 2024; Jogi et al. 2025; Li, Yuan & He 2024), much of this work relies on quantitative approaches that emphasise wage gaps, demographic comparisons or correlational patterns. While informative, these studies provide limited insight into how pay inequality is experienced and interpreted by employees and managers in their everyday organisational lives (Geradine & McWha-Hermann 2024). As a result, the processes through which pay inequality shapes retention decisions, particularly through perceptions of fairness, social comparison and reciprocity, remain insufficiently understood. This gap is especially evident in South Africa, where organisational practices intersect with enduring socio-historical inequalities in complex and context-specific ways.
Pay inequality influences not only whether employees choose to remain with an organisation but also the extent to which they are willing to invest effort and exceed formal job expectations (Murahwa 2019). Pay or income inequality refers to differences in remuneration among employees performing comparable roles and responsibilities and may be shaped by factors such as gender, race, age, disability and organisational hierarchy. Research indicates that gender-based pay disparities at senior levels can negatively affect employee performance, particularly among women, with broader implications for organisational effectiveness (Amore & Failla 2020; Li et al. 2022). While equal treatment and opportunity are central to the notion of decent work, pay inequality remains a persistent challenge both in South Africa and globally (Statistics South Africa 2021). In the South African context, these inequalities are deeply rooted in the legacy of apartheid, which continues to influence labour market structures and organisational practices (Francis & Valodia 2021).
The current study aims to understand how inconsistent pay practices give rise to perceptions of unfairness, gradually eroding trust and commitment, and shaping retention outcomes. In doing so, the study contributes both theoretically and practically to debates on fairness, pay governance and sustainable retention in inequality-sensitive organisational contexts. Despite extensive quantitative evidence linking pay inequality to employee outcomes, limited research has explored how employees subjectively experience and interpret pay inequality within their organisational contexts, particularly in inequality-sensitive environments such as South Africa. This study addresses this gap by adopting a qualitative approach to capture the lived experiences and meaning-making processes underlying perceptions of fairness and retention decisions.
Accordingly, the study is guided by the following research questions:
- How do employees experience and interpret pay inequality in FMCG organisations?
- How do these perceptions shape fairness judgements and social comparison processes?
- How do experiences of pay inequality influence employee engagement and retention decisions over time?
Literature review
Theoretical framework
This study draws on Equity Theory and Social Exchange Theory as complementary interpretive lenses for understanding how pay inequality is experienced and influences employee retention. Rather than being used to test causal relationships, these theories provide a conceptual foundation for interpreting employees’ and managers’ accounts of fairness, value and reciprocity within the employment relationship.
Equity theory
Equity Theory offers a valuable framework for understanding how employees make sense of pay inequality (Adams 1965). Initially developed by John Stacey Adams in the early 1960s, the theory proposes that workplace motivation is shaped by individuals’ perceptions of the balance between what they contribute to their work and what they receive in return, with social comparison groups playing a central role in fairness judgements (Adams 1963, 1965). Employees evaluate fairness by comparing their inputs, such as effort, skills, experience and responsibility, with their outcomes, including pay and recognition (Adams 1965; Greenberg 1987). These evaluations are inherently comparative, as individuals assess their own outcomes relative to those of colleagues performing similar roles (Colquitt 2001; Cropanzano, Stein & Goldman 2007).
In the context of this study, Equity Theory helps explain why pay inequality is experienced as unfair when pay structures are unclear, inconsistently applied or perceived to favour particular individuals or groups. The theory suggests that employees assess the fairness of work outcomes by comparing their input–output ratios with those of their peers (Hasyim & Bakri 2024). When employees perceive that their inputs relative to outcomes are lower than those of others in comparable roles, feelings of inequity may arise (Malik & Singh 2022). Equity Theory, therefore, provides a framework for evaluating the perceived balance between individual contributions and organisational rewards (Idemobi, Ngige & Ofili 2017). Participants’ narratives indicate that such conditions intensify social comparison processes, leading employees to question whether their contributions are appropriately recognised and valued (Greenberg 1990). When perceived imbalances persist, dissatisfaction may manifest in reduced motivation, emotional withdrawal or consideration of alternative employment (Ambrose & Schminke 2009). Equity Theory thus offers insight into the cognitive and evaluative processes through which pay inequality shapes employee attitudes and behavioural responses.
Social exchange theory
Social Exchange Theory provides a complementary perspective for understanding how employees interpret pay inequality within the broader employment relationship (Homans 1958). Developed by George Homans, the theory conceptualises social interaction as a series of exchanges in which individuals evaluate relationships based on perceived rewards and costs (Homans 1961). Over time, repeated exchanges generate expectations of reciprocity, trust and mutual obligation, which shape the quality and stability of social relationships (Cook et al. 2013). Within the employment context, Social Exchange Theory frames work as an ongoing relational exchange in which employees contribute time, effort and commitment in anticipation of fair treatment, appropriate rewards and organisational support (Blau 1964; Cropanzano & Mitchell 2005). When these expectations are met, the exchange relationship is reinforced, strengthening trust and commitment.
Reciprocity is a central principle of Social Exchange Theory, whereby the expectation of mutual benefit fosters obligation and sustained engagement (Gouldner 1960; Molm (2010). In this study, the theory helps explain how perceived pay inequality is interpreted as a breach of reciprocal expectations. Participants’ accounts suggest that repeated experiences of unfair or opaque remuneration decisions undermine trust in the organisation and weaken employees’ sense of obligation to remain committed. As perceptions of unfairness accumulate over time, employees describe gradual psychological withdrawal, reduced discretionary effort and increased openness to leaving the organisation. Social Exchange Theory, therefore, provides insight into the relational and temporal processes through which pay inequality erodes commitment and shapes retention-related behaviour.
Integrative perspective
Together, Equity Theory and Social Exchange Theory provide a complementary lens for understanding how employees evaluate and respond to pay inequality. Equity Theory explains how employees assess fairness through comparative evaluations, while Social Exchange Theory explains how these evaluations shape the quality of the employment relationship over time. Building on this foundation, the study advances an integrated conceptual framework that explains how fairness perceptions translate into relational exchange outcomes and, ultimately, employee retention.
Pay inequality in organisational contexts
Pay inequality refers to differences in remuneration among employees performing comparable work and may arise from factors such as gender, race, job level, tenure and discretionary managerial practices (Kanten & Pazarcik 2025). In evaluating the fairness of pay, employees consider both the absolute level of remuneration and how their pay compares with that of others, as well as the balance between pay and perceived productivity relative to peers. As Adams (1963) observed, inequity is perceived when individuals believe that their job inputs and outcomes stand in an unfavourable relation to those of others, with negative reactions intensifying as perceived inequity increases. While some variation in pay may be justified by differences in skills, responsibility or performance, inequality becomes problematic when such differences are perceived as unfair, unexplained or inconsistently applied (Gutierrez, Obloj & Zenger 2025; Strah et al. 2024). Research further indicates that opaque pay structures and limited transparency amplify perceptions of inequity, particularly in contexts shaped by historical and structural disadvantage, such as South Africa (Mabungela, Nyusani & Davids 2025).
Within the South African labour market, pay inequality remains closely associated with gender and race, reflecting the enduring legacy of apartheid era labour segmentation (Dlanjwa 2025; Gumede et al. 2026). Despite legislative frameworks aimed at promoting equal pay for work of equal value, disparities persist across sectors and occupational levels (Mabaso & Mdluli 2025). These inequalities extend beyond material outcomes, as remuneration also functions as a symbolic marker of recognition, status and organisational value (Filippi et al. 2025). Consequently, pay inequality shapes how employees evaluate their standing within organisations and engage in both internal and external comparisons (Gutierrez et al. 2025; Strah et al. 2024).
Recent research has increasingly emphasised employees’ subjective perceptions of pay inequality, rather than objective wage gaps alone (Cullen 2024; McGee et al. 2024). Even where pay differences exist, it is employees’ interpretations of whether these differences are justified and procedurally fair that determine their influence on attitudes and behaviour (Gupta et al. 2024; Mirbabaie et al. 2025). This shift highlights the importance of examining how pay inequality is experienced and understood in everyday organisational contexts, providing a strong rationale for qualitative inquiry.
Employee retention
Employee retention remains a persistent challenge for organisations across sectors (Alhmoud & Rjoub 2020). It refers to an organisation’s ability to retain its workforce over time and is shaped by a combination of financial, psychological and relational factors (Michael 2008). From a managerial perspective, retention involves deliberate practices that encourage employees to remain with the organisation, including fair reward systems, supportive management relationships and healthy working conditions (Cascio 2003). High turnover imposes significant costs through recruitment, training and the loss of institutional knowledge, rendering retention a strategic priority for organisations (De Vos et al. 2025). Although compensation is not the sole determinant of retention, it remains a central influence on employees’ decisions to stay or leave, particularly in competitive labour markets (Mayowan et al. 2025).
Research has consistently linked perceptions of unfair pay to reduced job satisfaction, weakened organisational commitment and increased turnover intentions (Pei et al. 2025). Similar patterns have been observed in the FMCG sector, where pay-related inequities are associated with adverse employee attitudes and retention outcomes (Saw 2025). Employees who perceive that their compensation does not adequately reflect their contributions or compares unfavourably with that of peers are more likely to disengage and consider alternative employment (Oladimeji 2024). Retention decisions, however, are rarely immediate. Instead, they unfold gradually, with dissatisfaction accumulating, commitment eroding and psychological detachment preceding the eventual decision to exit (Georgiadou, Vezyridis & Glaveli 2025).
In sectors such as FMCG, where external employment opportunities may be readily available, retention is further shaped by employees’ perceptions of alternative labour market options (Bobek, Kreinecker & Horvat 2025). When pay inequality is perceived as persistent and unlikely to change, employees may tolerate short-term dissatisfaction while remaining open to exit opportunities (Nagel 2025). This highlights retention as a dynamic process shaped by ongoing evaluations of fairness, opportunity and reciprocity rather than a single decision point (Shinde 2025).
Fairness and exchange
Perceptions of fairness play a central role in linking pay inequality to retention outcomes (Shinde 2025). From an equity perspective, employees evaluate the balance between their contributions to the organisation and the rewards they receive, often through social comparisons with colleagues (Cullen 2024). When this balance is perceived as unequal, employees experience psychological discomfort and attempt to restore equity by reducing effort, withdrawing psychologically or exiting the organisation altogether (Shinde 2025).
Social exchange perspectives further emphasise the relational nature of employment relationships. Work arrangements are sustained through reciprocal exchanges in which employees contribute time, effort and loyalty in anticipation of fair treatment and appropriate rewards (Saraiva & Nogueiro 2025). When pay practices are perceived as inconsistent, opaque or biased, the quality of the exchange relationship deteriorates (Shinde 2025). As a result, trust in the organisation diminishes, and employees may feel that their contributions are no longer recognised or valued (Bahadır et al. 2024).
Organisational justice perspectives integrate these insights by highlighting the importance of both distributive justice, the perceived fairness of outcomes such as pay and procedural justice, the perceived fairness of the processes through which pay decisions are made (Obalade & Mtembu 2023). Even when pay outcomes are unfavourable, transparent and consistently applied procedures can buffer negative reactions and sustain commitment (Aggarwal et al. 2025). Conversely, ambiguous or highly discretionary processes tend to intensify perceptions of injustice and accelerate disengagement. Collectively, these perspectives suggest that pay inequality influences retention not only through material consequences but also through its effects on fairness perceptions, trust and the overall quality of the employment relationship.
Conceptual integration and analytical framework
Building on the preceding discussion, this study develops an integrated analytical framework that links Equity Theory and Social Exchange Theory to explain how pay inequality influences employee retention. Rather than treating these theories as parallel explanations, the study conceptualises them as sequential and interrelated processes. Firstly, perceived pay inequality activates comparative evaluations, consistent with Equity Theory (Adams 1963, 1965), whereby employees assess the balance between their inputs and outcomes relative to relevant others. When discrepancies are perceived as unjustified, these evaluations generate feelings of inequity and dissatisfaction. Secondly, these fairness evaluations extend beyond cognitive assessment to influence the relational exchange between employees and the organisation. Drawing on Social Exchange Theory (Blau 1964; Cropanzano & Mitchell 2005), perceived inequity is interpreted as a breach of reciprocity, undermining trust, obligation and commitment over time. Thirdly, as these perceptions accumulate, they contribute to psychological withdrawal, reduced discretionary effort and increased openness to external opportunities, ultimately shaping employee retention outcomes. By integrating these perspectives, the study positions pay inequality as both a distributive and relational phenomenon. This framework advances existing literature by demonstrating how cognitive fairness judgements (Equity Theory) and relational exchange dynamics (Social Exchange Theory) operate together to explain the gradual and cumulative nature of disengagement and turnover risk in inequality-sensitive organisational contexts. Figure 1 illustrates the integrated conceptual framework underpinning the study, showing how pay inequality is theorised to influence employee retention through sequential cognitive and relational processes.
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FIGURE 1: Integrated conceptual framework of pay inequality and employee retention. |
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Research methods and design
Research design
The current study employed a qualitative research design grounded in an interpretivist paradigm (Saunders et al. 2023). Interpretivism assumes that social reality is socially constructed and best understood through individuals’ meanings and interpretations, making it well suited to exploring how employees and managers perceive pay inequality in relation to talent retention (Adil et al. 2022). A qualitative approach enabled an in-depth examination of participants’ lived experiences and sense-making processes within a commission-driven organisational context (Creswell & Creswell 2018). This study seeks to understand better whether pay inequality influences employee retention in the South African FMCG sector.
Research setting
The study was conducted within the FMCG sector in South Africa, focusing on employees based at the head office of a large, nationally operating organisation. The organisation is characterised by a hierarchical structure comprising functional departments such as sales, marketing, finance and operations. It employs a structured remuneration system that includes fixed salary bands, performance-based incentives and benchmarking against industry standards, although participants reported variability in their implementation. The FMCG sector was selected because of its significant contribution to the South African economy. According to Statistics South Africa (2024), the manufacturing sector recorded a 0.2% increase in gross domestic product (GDP) in the fourth quarter of 2023, contributing to an annual real GDP growth of 0.5%.
Participants and sampling
Participants were selected using purposive sampling to ensure the inclusion of information-rich cases relevant to the research objectives (Campbell et al. 2020). The study population comprised permanent employees working at the head offices of an organisation within the FMCG industry. Twelve individuals were initially recruited for participation. However, one participant withdrew before data collection, resulting in a final sample of 11 interviewees. Participants represented a range of organisational roles, including junior professionals, middle managers and senior managers across departments such as sales, finance and operations. This diversity enabled the study to capture multiple perspectives on pay practices and fairness perceptions across hierarchical levels. This sample size was considered sufficient for qualitative inquiry, as prior research indicates that data saturation in interview-based studies is often achieved within this range (Guest, Bunce & Johnson 2006). To be eligible to participate, employees had to have been employed by the organisation for at least 12 months, ensuring adequate exposure to organisational pay practices and employment processes. Participants also needed to occupy roles involving either managerial responsibility or a direct reporting relationship, such that they either supervised others or reported to a manager. Only permanently employed, full-time employees were included in the study; individuals in temporary, fixed-term or expatriate positions were excluded. Sampling continued until data saturation was reached, as indicated by the recurrence of themes and the absence of substantively new insights. The demographic profile of the participants is presented in Table 1.
| TABLE 1: Composition of research participants. |
Data collection method
The data collection method used in this study was semi-structured interviews. Adeoye-Olatunde and Olenik (2021) explain that semi-structured interviews enable researchers to explore participants’ unique perspectives rather than relying on generalised accounts of a phenomenon. This approach facilitated the collection of rich, detailed insights into how employees experience and interpret pay inequality and how these perceptions influence talent retention within the organisational context. The interview guide consisted of approximately 10–12 open-ended questions covering experiences with pay determination, fairness perceptions, social comparison processes and retention-related decisions. Interviews lasted 45–60 min and were conducted via Microsoft Teams (Redmond, WA, USA). This format provided flexibility while ensuring consistency across interviews, allowing participants to elaborate on their experiences while enabling the researcher to probe for deeper understanding where necessary.
Data recording
Data recording included taking notes and recording the interviews. The recording and transcription features of Microsoft Teams were used to capture and document interviews. For accuracy, interviews were transcribed, corrected and stored on a secure, password-protected computer.
Data analysis
Interview data were analysed using thematic analysis, following a systematic process of familiarisation, coding and theme development (Braun & Clarke 2021). This approach was appropriate for identifying both common and divergent patterns of meaning related to fairness perceptions and talent retention within an interpretivist framework. Braun & Clarke (2021) endorse thematic analysis for South African qualitative studies because of its suitability for exploring context-specific organisational phenomena. The method enabled the systematic generation of insights and supported the achievement of the study’s research objectives (Yam et al. 2023). Data analysis followed Braun and Clarke’s (2021) approach, beginning with familiarisation with the data through repeated reading of the transcripts. Initial open coding was conducted manually, followed by the development of focused codes and the identification of broader themes. Codes and themes were iteratively refined to ensure internal consistency and alignment with the dataset.
Trustworthiness of the research
In line with the naturalistic paradigm, rigour in qualitative research is established through trustworthiness rather than conventional validity criteria (Guba & Lincoln 1986). Trustworthiness comprises credibility, transferability, authenticity, confirmability and dependability. Credibility refers to the extent to which findings accurately reflect participants’ meanings and was enhanced through prolonged engagement, triangulation, member checking and reflexivity. In this study, the researcher adopted a reflexive stance, acknowledging their role as an active interpreter of participants’ accounts (Lincoln & Guba 1985). To minimise interpretive bias, reflexive journaling was maintained, and emerging interpretations were critically examined through peer debriefing, ensuring that findings remained grounded in participants’ narratives rather than in the researcher’s assumptions. Transferability concerns the applicability of findings to similar contexts and was supported through thick description. Authenticity ensures fair representation and participant involvement in the construction of meaning. Confirmability addresses the extent to which findings are grounded in participants’ accounts rather than in the researcher’s bias and is supported by audit trails. Dependability reflects methodological consistency and was strengthened through peer debriefing and transparent analytic procedures.
Ethical considerations
Ethical considerations were integral to the study, with the researcher–participant relationship grounded in trust and respect (Hammond & Wellington 2012). Ethical clearance to conduct this study was obtained from the University of Johannesburg Ethics Committee. The ethical clearance number is IPPM-2025-935(M). Participation was voluntary, and participants could withdraw without penalty. Informed consent was obtained prior to data collection. Anonymity and confidentiality were maintained throughout the study, and all data were securely stored and protected (Morse & Coulehan 2015).
Results
The analysis yielded four interconnected themes that explain how employees experience pay inequality, interpret fairness and respond through engagement and retention-related behaviours. Together, these themes illustrate a progression from perceived unfair pay practices to social comparison and, ultimately, to disengagement and turnover risk (Table 2).
| TABLE 2: Themes and sub-themes identified in the analysis. |
Theme 1: Perceived unfairness in pay practices
This theme captures how employees made sense of pay inequality as a fundamental issue of fairness and justice within the organisation. Participants described remuneration practices as uneven, discretionary and insufficiently grounded in consistent performance criteria. These perceptions extended beyond dissatisfaction with pay to shape broader evaluations of organisational legitimacy and the credibility of meritocratic principles. Perceived unfairness thus emerged not merely as a reaction to pay differences, but as a lens through which employees assessed the integrity and fairness of organisational systems.
Theme 1.1: Inconsistent pay structures
Participants consistently described pay inequality as rooted in inconsistent pay structures, particularly where remuneration outcomes were perceived as disconnected from merit or performance. Several participants emphasised that equal work was not always rewarded equally, regardless of role similarity or contribution:
‘If you are a woman or a man doing the same job, you get paid the same, that is my understanding of equal pay, which still is a pipe dream.’ (DR01)
Others highlighted invisible ceilings and inconsistencies within the same pay bands:
‘There is a ceiling that’s invisible to everybody, but it is not equal and not always based on merit.’ (DR02)
These accounts suggest that employees experienced pay inequality as a structural feature of remuneration practices rather than as isolated anomalies. Importantly, perceived inconsistencies in pay structures served not only distributive purposes but also as signals of organisational legitimacy, shaping how employees evaluated the fairness and credibility of reward systems.
Theme 1.2: Subjective decision-making and meritocracy concerns
Perceived unfairness was further linked to subjective managerial practices that undermined confidence in merit-based pay decisions. Participants expressed concern that performance recognition was unevenly applied and selectively interpreted:
‘… a lack of true meritocracy … sometimes subjective meritocracy where I choose to see some people’s performance achievements.’ (DR04)
Such perceptions reinforced the belief that remuneration outcomes were influenced by discretion rather than transparent, performance-based criteria. This subjectivity blurred the boundary between performance and preference, leading employees to question whether organisational processes were genuinely merit-driven or selectively applied. As a result, fairness concerns extended beyond outcomes to include doubts about the integrity of decision-making processes.
Theme 2: Transparency and understanding of compensation
This theme reflects how the absence or partial availability of information regarding compensation processes intensified perceptions of pay inequality. Participants emphasised that unclear communication and limited understanding of pay structures not only created uncertainty but also weakened trust in organisational decision-making. A lack of transparency therefore functioned as both an informational and relational deficit, amplifying perceptions of unfairness while undermining confidence in organisational intentions.
Theme 2.1: Lack of clarity in pay determination
Participants frequently reported uncertainty regarding how salaries, increases and market benchmarks were determined:
‘It would give me comfort to know how pay is calculated rather than based on subjective impressions.’ (DR02)
Secrecy around pay bands and salary thresholds was viewed as creating conditions in which unfairness could thrive:
‘That secrecy is the exact breeding ground for unfairness to happen … someone else getting more increase and that leader not having to justify.’ (DR06)
Ultimately, these findings suggest that when formal communication fails to provide clarity, employees turn to informal channels to validate their value, leading to the social benchmarking processes detailed in the next section. In this context, opacity did not simply obscure information but actively shaped perceptions of injustice by limiting employees’ ability to rationalise pay differences.
Theme 2.2: Communication and education on pay structures
Some participants acknowledged organisational efforts to educate employees about compensation structures but felt that these initiatives were insufficient to address underlying inequities:
‘I feel like maybe in the past year or so our previous HR Business Partner did a few sessions explaining how the package model is put together … but awareness alone is not enough.’ (DR01)
These accounts suggest that while communication initiatives were valued, they were perceived as fragmented and limited in their impact. Furthermore, these findings indicate a ‘transparency paradox’: Without concurrent corrective action to address pay gaps, increasing communication may inadvertently heighten employee frustration by confirming the very inequities the organisation seeks to manage. Thus, transparency without substantive change may intensify, rather than alleviate, perceptions of unfairness.
Theme 3: Social comparison and pay evaluation
This theme captures the social processes through which employees evaluated the fairness of their pay. Participants described comparison as an embedded organisational practice through which pay outcomes were interpreted, justified or contested. These comparisons occurred both internally, among peers, and externally, against market standards. Social comparison emerged as a critical mechanism through which employees translated pay differences into meaningful judgements about fairness and value.
Theme 3.1: Comparisons with peers
Participants described comparing themselves with colleagues informally and during performance calibration processes:
‘It is a given in our line of work … those are the chats that come up.’ (DR01)
Others described comparison as involuntary:
‘It just naturally comes to have those thoughts and draw comparisons.’ (DR06)
However, confidentiality around pay limited employees’ ability to make meaningful assessments:
‘I have never discussed salary with anyone. It is confidential and people are unwilling to share their levels.’ (DR02)
These findings indicate that even in the absence of complete information, employees actively construct comparison frameworks, often relying on partial or inferred data. This process may amplify perceptions of inequity, as assumptions fill the gaps left by limited transparency.
Theme 3.2: Benchmarking against external organisations
In addition to internal comparisons, participants explicitly benchmarked their remuneration against external organisations:
‘If MRS and pay brackets were transparent, I’d compare our compensation model to competitors. Imagine working for a global brand while a smaller competitor pays more.’ (M01)
Such comparisons heightened sensitivity to internal pay disparities and reinforced perceptions of inequity. These internal and external comparisons do more than satisfy curiosity; they act as a tipping point, transforming perceived inequality into the concrete behavioural shifts and turnover risks explored in Theme 4. External benchmarking, therefore, extends the frame of comparison beyond the organisation, reshaping expectations of fairness and increasing sensitivity to perceived underpayment.
Theme 4: Retention consequences of pay inequality
This theme reflects how perceptions of pay inequality translated into behavioural and attitudinal outcomes over time. Participants described retention not as a single decision but as a gradual process involving reassessment, disengagement and openness to external opportunities. Retention outcomes emerged from accumulated fairness evaluations rather than immediate reactions to isolated pay decisions.
Theme 4.1: Influence on staying or leaving decisions
Remuneration and bonus structures were frequently cited as central to decisions to remain with or leave the organisation:
‘The increases below market-related salary brought me to the threshold … a strong bonus structure also encourages me to stay.’ (DR02)
Others described unresolved pay gaps that continued to influence their thinking:
‘Initially I considered leaving due to low pay, but after a decent increase, I stayed; ongoing gaps bring the thought back.’ (DR03)
These accounts suggest that retention decisions are dynamic and iterative, shaped by ongoing evaluations of fairness rather than single-point judgements.
Theme 4.2: Psychological withdrawal and disengagement
Beyond immediate exit intentions, participants described gradual psychological withdrawal associated with perceived underpayment:
‘If you perceive that you are putting in more work and you are being underpaid … it may very well lead to quiet quitting.’ (DR04)
This reflects a recalibration of effort, where employees adjust their level of contribution in response to perceived inequity, signalling a weakening of their psychological attachment to the organisation.
Theme 4.3: Perceived market alternatives and turnover risk
Awareness of higher-paying opportunities elsewhere intensified retention risk:
‘If you are underpaid, it could influence you to leave for a 20 per cent increase at a new company.’ (DR02)
Others were explicit about their thresholds:
‘I would accept another offer with a 25% increase from outside.’ (DR03)
Participants also recognised the organisational consequences of turnover:
‘If you’re constantly turning over employees, you’re losing knowledge and momentum.’ (DR06)
These findings suggest that perceived inequity not only weakens internal commitment but also increases responsiveness to external opportunities, thereby accelerating turnover risk.
The findings demonstrate that employees’ experiences of pay inequality unfold through a connected and cumulative set of perceptions and responses. Perceived unfairness in pay practices, compounded by limited transparency, shaped employees’ evaluations of the legitimacy of remuneration decisions. These perceptions were reinforced through ongoing social comparison with peers and external market benchmarks. Over time, unresolved pay inequality contributed to psychological withdrawal, reassessment of commitment and increased openness to external employment opportunities. Rather than triggering immediate turnover, pay inequality operated as a cumulative process that progressively weakened engagement and retention, highlighting its significance as a sustained organisational risk rather than a discrete issue.
Discussion
This study examined how employees in a South African FMCG organisation experience pay inequality and how these experiences shape engagement and retention outcomes. The findings indicate that pay inequality is not interpreted only as a monetary gap but as a fairness judgement and a relational signal that accumulates over time, shaping attachment to the organisation and openness to exit. This strengthens existing evidence linking pay inequality to job attitudes, commitment and turnover intentions (Berber & Gašić 2024; Jogi et al. 2025; Li et al. 2024) while responding to calls for more context-sensitive, experience-based insights into how inequality is interpreted in everyday organisational life (Geradine & McWha-Hermann 2024). The discussion integrates Equity Theory and Social Exchange Theory as complementary interpretive lenses (Adams 1963, 1965; Blau 1964; Cropanzano & Mitchell 2005; Homans 1958, 1961). Participants consistently framed pay inequality as an issue of fairness and justice, particularly when pay outcomes were perceived as inconsistent, discretionary or weakly connected to merit. This aligns directly with Equity Theory, which argues that employees judge fairness by comparing their inputs (effort, skills, experience, responsibility) with outcomes (pay, recognition) and by evaluating whether their input–outcome ratio is comparable to that of relevant others (Adams 1963, 1965; Greenberg 1987). In this study, the emphasis on ‘invisible ceilings’, uneven progression within pay bands, and selective recognition suggests that inequity was experienced as systemic rather than episodic, which helps explain the strength and persistence of participants’ reactions (Greenberg 1990; Walster et al. 1978). Consistent with prior literature, pay differences became particularly problematic when employees could not link them to legitimate criteria, such as performance or responsibility, or when criteria were applied inconsistently (Gutierrez et al. 2025; Strah et al. 2024).
A central insight from the findings is that unclear communication and limited understanding of pay determination processes intensified perceptions of inequity and weakened trust in organisational decision-making. This supports the argument that it is often employees’ subjective interpretations of pay differences, especially whether they are understood as justified and procedurally reasonable rather than pay gaps alone, that determine downstream behavioural consequences (Cullen 2024; Gupta et al. 2024; McGee et al. 2024; Mirbabaie et al. 2025). Participants’ repeated calls for clearer explanations of salary calculations, market benchmarks and pay band logic suggest that transparency functions as both an informational mechanism and a fairness signal. The findings further indicate a ‘transparency paradox’: When employees receive partial explanations without observable corrective action, communication can heighten frustration by confirming the very inequities the organisation is perceived to be managing. This is consistent with Equity Theory’s emphasis on comparative evaluation under ambiguity, where incomplete information can amplify perceived unfairness rather than reduce it (Adams 1965; Greenberg 1990), particularly in inequality-sensitive environments (Mabungela et al. 2025; Plagerson 2023).
In response to uncertainty, employees relied heavily on social comparison to evaluate pay fairness, drawing on both internal (peers and calibration discussions) and external (market benchmarking) reference points. This again reflects Equity Theory, which positions fairness judgements as inherently comparative and grounded in reference others (Adams 1963, 1965; Colquitt 2001; Cropanzano et al. 2007). The data show that comparisons served not only evaluative functions (judging fairness) but also strategic functions (assessing competitiveness and career readiness), reinforcing the idea that remuneration operates as a symbolic marker of recognition and organisational value, rather than merely a financial outcome (Filippi et al. 2025). At the same time, confidentiality norms limited employees’ ability to verify pay fairness, intensifying reliance on assumptions and indirect cues, which can heighten perceived inequity (Greenberg 1990; Walster et al. 1978).
Retention outcomes emerged as a gradual process involving reassessment, psychological withdrawal and increasing openness to alternative employment. This pattern aligns strongly with Social Exchange Theory, which frames employment as an ongoing exchange relationship shaped by reciprocity, mutual obligation and trust (Blau 1964; Cook et al. 2013; Cropanzano & Mitchell 2005; Homans 1958, 1961). When participants perceived pay decisions as unfair, opaque or inconsistently applied, these experiences were interpreted as a breach of reciprocal expectations, a failure by the organisation to reciprocate employee contributions appropriately, weakening obligation and commitment over time (Gouldner 1960; Molm (2010). Participants’ descriptions of ‘quiet quitting’, reduced discretionary effort and disengagement further support the view that dissatisfaction often precedes exit and that psychological detachment can function as an intermediary stage before turnover (Georgiadou et al. 2025). In a competitive sector such as FMCG, awareness of external opportunities and market comparisons heightened turnover risk, consistent with work emphasising the role of perceived alternatives in shaping stay–leave decisions (Bobek et al. 2025; Nagel 2025).
The findings indicate that Equity Theory explains how employees detect and evaluate pay inequality through input–outcome comparisons and reference groups (Adams 1963, 1965; Colquitt 2001; Greenberg 1987), while Social Exchange Theory explains how these fairness evaluations translate into relational outcomes, erosion of trust, reduced obligation and gradual disengagement over time (Blau 1964; Cropanzano & Mitchell 2005; Gouldner 1960; Homans 1958, 1961; Molm 2010). This integration clarifies why pay inequality constitutes a sustained organisational risk: Unresolved inequity judgements fuel comparison and dissatisfaction, which progressively weaken the employment relationship and elevate retention risk. Overall, the findings suggest that pay inequality in this FMCG context operates less as a discrete compensation problem and more as a combined fairness-and-relationship problem. Inconsistent and discretionary pay practices, compounded by limited transparency and intensified comparison processes, contributed to cumulative disengagement and turnover risk. This reinforces the need for organisations to address both the substance of pay equity and the reciprocal and legitimacy signals embedded in pay governance, especially in contexts shaped by historical and structural inequalities (Francis & Valodia 2021; Plagerson 2023; Statistics South Africa 2021). This study extends Equity Theory by demonstrating that fairness evaluations are intensified under conditions of opacity and structural inequality, where limited transparency and inconsistent pay practices amplify comparative judgements and constrain employees’ ability to rationalise pay differences. In addition, Social Exchange Theory is extended by showing how perceived pay inequity functions as a cumulative relational breach rather than a discrete violation, progressively eroding trust, perceived organisational support and reciprocal obligation over time. By integrating these perspectives, the study provides a more nuanced explanation of how cognitive comparison processes and relational exchange dynamics interact to shape employee retention, highlighting the cumulative and processual nature of disengagement in inequality-sensitive organisational contexts.
Practical implications
The findings offer clear practical implications for organisations in the South African FMCG sector seeking to improve employee retention through fairer pay practices. Firstly, the study shows that pay inequality is experienced primarily as a fairness and legitimacy concern rather than solely as a financial issue. Employees’ responses were shaped less by absolute pay levels than by whether remuneration outcomes were perceived as justified, consistent, and transparent. Retention strategies that focus solely on increasing pay without addressing perceived inequities or opacity are therefore unlikely to be effective. Organisations should prioritise internally coherent pay structures by implementing formalised salary band frameworks that define minimum, midpoint and maximum ranges for each role and explicitly link these to job evaluation, performance ratings and career progression pathways.
Secondly, the findings highlight the importance of procedural and informational clarity in pay governance. Uncertainty about how salaries, increases and market benchmarks were determined undermined trust and intensified social comparison. Fast-moving consumer goods organisations should move beyond vague references to ‘market-related pay’ by conducting regular pay equity audits (e.g. annual or biannual reviews comparing pay across roles, gender and tenure) and providing structured explanations of pay bands, progression criteria and benchmarking processes. Line managers should be equipped with standardised communication guidelines and training to ensure that pay-related decisions are explained consistently and credibly, in alignment with organisational policy.
Thirdly, the study points to a transparency paradox. Communication initiatives that lack corrective action may heighten frustration by confirming existing inequities. Transparency efforts should therefore be aligned with clearly defined remediation plans, such as phased salary adjustments, targeted equity corrections or structured review cycles, even where immediate changes are not feasible. In addition, organisations should establish formal grievance and review mechanisms through which employees can raise concerns about pay fairness and receive timely, evidence-based feedback.
Fourthly, managers should attend to early indicators of retention risk, such as psychological withdrawal, reduced discretionary effort and disengagement. These indicators can be monitored through regular one-on-one check-ins, employee engagement surveys and performance discussions. Addressing pay-related concerns at this stage through transparent dialogue and, where possible, corrective action may help prevent dissatisfaction from escalating into voluntary turnover.
Conclusion
This study explored how employees in a South African FMCG organisation experience pay inequality and how these experiences shape perceptions of fairness and retention outcomes. The findings indicate that pay inequality functions as a cumulative relational process rather than a discrete compensation issue. Uneven, opaque or discretionary pay practices were interpreted as signals of unfairness, gradually eroding trust, commitment and attachment to the organisation.
Drawing on Equity Theory and Social Exchange Theory, the study shows that employees evaluate pay through both comparative and relational judgements. When pay outcomes could not be linked to legitimate and consistently applied criteria, employees intensified social comparison and reassessed the reciprocity underlying the employment relationship. Over time, unresolved perceptions of inequity led to psychological withdrawal, disengagement and increased openness to external opportunities, particularly in a competitive FMCG labour market.
The study’s key contribution is to demonstrate that pay inequality operates as a cumulative fairness and relational signal that progressively shapes employee disengagement and retention decisions, particularly in inequality-sensitive contexts such as South Africa.
The study further contributes to the literature by providing qualitative, context-sensitive insight into how pay inequality is experienced within a South African setting shaped by historical and structural inequality. From a governance perspective, the findings reinforce the importance of equal pay for work of equal value, not only as a legal requirement but also as a strategic and relational concern. Sustainable retention depends on addressing both the substance of pay equity and the fairness signals embedded in pay systems.
Overall, the study highlights that pay inequality should be understood as a sustained organisational risk that evolves through cumulative fairness perceptions and relational dynamics, rather than as a once-off compensation issue.
Limitations and future research
This study was conducted within a single FMCG organisation, which may limit the transferability of findings. The reliance on self-reported perceptions reflects subjective experiences of pay inequality rather than objective remuneration data. In addition, the qualitative sample size does not allow for sector-wide generalisation. Future research could examine multiple organisations or industries to enable comparative analysis. Mixed-methods studies combining qualitative insights with objective pay data may further clarify how perceived and actual pay inequality interact. Longitudinal research could examine how fairness perceptions develop over time and how they influence retention decisions.
Acknowledgements
The authors express their sincere gratitude towards all participants of the study. This article is based on research originally conducted as part of Kiara Nyanhongo master’s dissertation in Human Resource Management titled, ‘Exploring the experiences and perceptions of pay inequality on employee retention in the FMCG sector in South Africa’, submitted to the College of Business and Economics, University of Johannesburg, 2026. The thesis is currently unpublished and not publicly available. The dissertation was supervised by Calvin Mabaso and Mark Bussin. The dissertation was reworked, revised and adapted into a journal article for publication. The authors confirm that the content has not been previously published or disseminated and that it complies with the ethical standards for original publication.
Competing interest
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
CRediT authorship contribution
Calvin Mabaso: Conceptualisation, methodology, formal analysis, writing-original draft, visualisation, Supervision. Kiara Nyanhongo: Conceptualisation, data curation. Mark Bussin: Methodology, Formal analysis, Supervision. All authors reviewed the article, contributed to the discussion of results, approved the final version for submission and publication and take responsibility for the integrity of it’s findings.
Funding information
The authors received no financial support for the research, authorship and/or publication of this article.
Data availability
The data that support the findings of this study are not openly available and are available from the corresponding author, Calvin Mabaso, upon reasonable request.
Disclaimer
The views and opinions expressed in this article are those of the authors and are the product of professional research. They do not necessarily reflect the official policy or position of any affiliated institution, funder, agency or the publisher. The authors are responsible for the article’s results, findings, and content.
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