Theory and practice: How the theory of mutual gains helps explain some of the results from this year’s Reward Management Survey. By Professor Stephen J. Perkins

The apparent decline in benefits revealed by the CIPD reward management survey (although with no accompanying overall cost reduction trend) is at odds with evidence cited in our analysis for the report that employees still consider them important.

This finding raises the following question for managerial practice: do benefits achieve what is expected of them?

The theory of mutual gains helps explain continuing investment in employers’ benefits offer[i]. Premised on the expectation that there will be a cumulative build up in employee commitment to an employer, effective management should be able to capitalise on it to achieve corporate priorities.

The changing character of the benefits package carries potential risks to reciprocal expectations and their consequences, if employers fail to ensure that their offer continues to align with what employees judge worthwhile.

Our survey results serve as an alert to organisational leaders, given the finding that, corporate understanding about what employees want is under-developed. Especially when complementary research leads to a call for non-cash, but still tangible, benefits to be better targeted towards different categories of people making up the workforce and, where possible, customised still further to align with individual circumstances[ii]. Including educating employees with an eye to their financial well-being.

So, when an employer invests in providing benefits over and above pay to their employees what sort of commitment should be expected? Where commitment in general is defined as a sense of engagement with the organisation, leading to particular job-related behaviours (such as solid attendance, cooperation with managerial requests, and acting as an ambassador for the organisation), is that question asked as part of both policy development and the ongoing review process? The survey findings indicate that only one in four organisations do review what return on investment employee benefits are giving them. This deficit needs consideration not only absolutely but also in terms of the criteria to be used.

If mutual gains, in the language of that theory, are expected to be expressed in commitment among employees, academic knowledge suggests that this commitment comes in at least one of three different forms, each carrying possible consequences to be thought through[iii].

Affective commitment is a state in which an employee feels emotionally attached to the organisation. Here the mutual gains may be the perception that the people who an individual interacts with as co-workers, as well as supervisors, can be relied on to act consistently and respectfully. And ones who are seen to be taking steps actively to work out what is important to that individual and to find ways either of addressing them or explain to them why despite best efforts it’s not within their or the organisation’s gift. Here the strategic choice for management is whether or not they feel able to create conditions where an employee senses they can influence realistically decisions on matters of interest to them, in return for cooperating with managerial priorities.

Continuance commitment is when an employee stays with an employer in order to retain access to the benefits they get from working for the organisation. Given the accent on avoiding costs of quitting – a more ‘my career’ than ‘my organisation’ orientation to work – the risk is passivity. One where the employer can’t be confident that retention will translate directly into work effort aligned with the organisation’s strategic goals. And the commitment is at risk if the ‘psychological contract’ of what’s expected by the employee runs up against attempts to make changes to the ‘deal’.

Normative commitment is a state that goes beyond mutual gains in a transactional sense to one in which the employee feels obligated to remain attached to the organisation, having first internalised the organisation’s values and goals that they perceive as morally meaningful to them. Dependability in recreating the moral conditions to which the individual is attached – and in turn attached to the employer – is the challenge for those who set the strategic direction and moral tone of the organisation.

What can be inferred from the analysis is that – just like we highlighted in last year’s report when discussing issues around performance management and reward – the interaction between the employee and the organisation needs to be actively managed. This management requires particular emphasis on micro-level relationships, especially between the employee and the person responsible for their day to day supervision, whose role includes acting as the conduit for transforming corporate policy into practical action.

And this is not limited simply to the single employee-line manager relationship. It also involves the interaction extending to the group of people whose work interacts with that manager-individual interrelationship, to get things done. Placing yet further onus on the line manger to interpret meaningfully what it is that work teams need to engage in. And to avoid the risk of employees getting distracted due to feelings of relative unfairness in the ways benefits and other forms of reward are applied in practice. Also, action by managers to ensure a better understanding of what will serve as positive reinforcement of mutual gains, through a benefits offer that matches as far as possible what every individual will find meaningful and valuable.

As with performance management, the practice learning point is for organisations, mediated through their HR specialists, to invest in front-line managers: to educate and support them in navigating this delicate path to benefits optimisation.


[i] Eleanna Galanaki (2017) ‘Outcomes of fringe benefits in turbulent times’. Paper presented to the 6th Reward Management Conference organised by the European Institute for Advanced Studies in Management, Brussels.

[ii] Antonina Lisovkaya (2017) ‘Benefits packages for an average employee’. Paper presented to the 6th Reward Management Conference organised by the European Institute for Advanced Studies in Management, Brussels.

[iii] Mayer, J. P. and Lynne, H. (2001) ‘Commitment in the workplace: towards a general model’, Human Resource Management Review.

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