Beyond Authority: The Effect of Relational Leadership on Employee Compensation Perceptions within a South African Organisation

Abstract

Relational leadership is a key antecedent of employee attitudes and rewards perceptions. However, empirical evidence linking its specific dimensions to compensation outcomes within South Africa’s context remains limited. Drawing on social exchange and equity theories, this study examines how specific relational leadership dimensions influence compensation perceptions. Data was collected from (N = 122) permanently employed personnel at a South African organisation, using a quantitative, cross-sectional design and validated self-report measures. The data was analysed by using Pearson correlations and multiple regression to predict employee compensation through relational leadership. The ethical component emerged as the most consistent and dominant predictor of employee compensation across all models. The empowering component showed significance in one model, but the dimensions usually linked to RLP, including inclusive, caring, and visionary components, had no statistically significant impact on reward outcomes. These findings highlight a critical distinction between behaviours that foster a supportive climate and those that validate the structural legitimacy of reward systems. The study concluded that in socio-economically complex environments like South Africa, employees prioritise ethical governance and fairness over interpersonal warmth when evaluating compensation. Consequently, organisations should prioritise ethical decision-making and transparent accountability in LDPs to enhance satisfaction and perceived equity.