Lindiwe Sebesho, Managing Director of Remchannel

Most South African employers’ reference individual performance outcomes when differentiating pay, highlighting the need for robust performance-management systems to ensure that annual salary increases are consistent, transparent and defensible.

According to the Remchannel October 2025 Salary & Wage Movement Survey, over 70% of employers factor in individual contribution when awarding increases for non-bargaining-unit staff, which includes executives and management. Yet many are not confident in the efficacy of their appraisal systems to appropriately guide these decisions, a concern given that fair and transparent evaluations are central to maintaining trust and retaining high-performing talent.

“With payroll costs under pressure and competition for critical skills intensifying, companies must ensure that the performance-management processes they use are robust and result in objective differentiation,” says Lindiwe Sebesho, Managing Director at Remchannel. “Employers and employees both have a role to play in ensuring that performance is clearly defined, evaluated and rewarded fairly and consistently. When that happens, trust grows, motivation rises, and talent retention improves.”

Pay and Performance

The biannual report, which draws insights from 66 organisations covering more than 336 000 employees across key sectors, found that most companies anticipate and award increases with reference to multiple criteria such as CPI (89.4%), company performance (75.8%) and individual contribution (71.2%).

However, not all employers are confident that their appraisal system enables them to make well-informed decisions, and 40.9% partly rely on managerial discretion. “Linking pay to performance isn’t new,” Sebesho says. “The main challenge has been ensuring performance-management system efficacy through transparent, data-driven appraisals that support strategic goals, encourage dialogue and safeguard against potential bias.”

Retention and Trust

Overall employee turnover remains high at 20.7%, with resignations still driving most exits. More than 60% of those who resigned in the past year had fewer than five years’ service. Sebesho says the real risk lies in losing people who take performance seriously and expect their contribution to be recognised.

She explains: “Highly skilled and performance-driven individuals who consistently deliver results but do not see their efforts rewarded are usually the first to leave. This poses a challenge for any organisation, which is why proactive performance management that engages both managers and employees in a process focused on shared outcomes is essential.”

“When performance systems are transparent and participatory, employees trust them, and trust is what keeps people committed,” Sebesho adds.

Governance, Fairness and Accountability

The absence of consistent, evidence-based appraisals has also become a legal blind spot, Sebesho warns. “When organisations lack structured, documented evaluations, subjective factors and prejudice can influence pay decisions. Transparent systems protect both employers and employees by ensuring that every decision can be explained and defended.”

Under South Africa’s Employment Equity Act, pay differentiation is lawful only when based on objective and non-discriminatory criteria such as qualifications, skills, experience and measurable outcomes.

Additional Findings

• Salary movements over the past year averaged between 4.7% and 5.7%, broadly exceeding average year-to-date inflation readings.
• 77% of employers say staff now actively seek remote or hybrid work, making flexibility a baseline expectation rather than a perk.
• Salary forecasts for the next 12 months suggest moderate growth, with increases expected to average 5.2%.

Sebesho says organisations that continue to reward without measuring contribution do so at their own risk. “Whether the goal is to retain talent, demonstrate fairness or meet compliance standards, the message is clear: performance data, developed and applied transparently, must become the foundation of pay decisions,” she concludes. “And we all need to take it seriously.”

ENDS