The fourth industrial revolution and remuneration structures in South Africa: exploring workforce transformation, equity, and strategic organizational responses

1 Introduction and background

Rapid technological transformation associated with the fourth industrial revolution (4IR) is fundamentally reshaping labor markets, job roles, and organizational structures worldwide. Emerging technologies such as artificial intelligence (AI), automation, and the internet of things (IoT) are transforming how work is organized and performed, creating new skill demands while rendering some traditional roles obsolete (Schwab, 2016; Brynjolfsson and McAfee, 2014). These developments pose important questions for organizations regarding how remuneration structures should evolve to reflect changing skill requirements, workforce transformation, and the strategic need to attract and retain scarce digital talent.

Although the adoption of 4IR technologies is accelerating globally, its implementation in developing economies such as South Africa remains uneven and relatively nascent (Adeleye and Eboagu, 2019; Lefophane and Kalaba, 2022). South Africa continues to face high unemployment, skills shortages, and structural inequality, which complicate the integration of technological innovations into labor markets. National initiatives such as the national development plan (NDP) 2030 highlight the importance of digital transformation for economic growth and employment creation. Yet, the implications of these technological shifts for organizational remuneration practices remain insufficiently understood.

Technological disruption has significant implications for compensation management. As organizations increasingly rely on specialized digital capabilities, remuneration systems must adapt to reward emerging skills, support workforce reskilling, and maintain internal equity (Marler, 2024; Datta and Pela, 2023). At the same time, automation and digitalization may contribute to wage polarization and perceived inequities between technologically augmented roles and traditional occupations (Hémous and Olsen, 2022). These dynamics highlight the strategic importance of designing remuneration structures that balance competitiveness, fairness, and organizational sustainability.

Despite growing interest in the future of work, empirical evidence examining how 4IR influences remuneration practices remains limited, particularly within emerging economies such as South Africa. This study addresses this gap by exploring how organizations adapt remuneration structures in response to workforce transformation driven by the Fourth Industrial Revolution.

Specifically, the study investigates how organizations navigate issues of pay equity, skills-based remuneration, and strategic reward practices within technologically evolving workplaces. By examining these dynamics, the study contributes to the literature on strategic compensation and workforce transformation while offering practical insights for HR practitioners and policymakers.

2 Literature review

2.1 Theoretical framework

This study is grounded in three complementary theories human capital theory (HCT), agency theory, and equity theory, which collectively provide a multi-dimensional lens for understanding how remuneration structures evolve in response to workforce transformation driven by the fourth industrial revolution (4IR). Each theory addresses distinct but interconnected aspects of skills, incentives, and fairness, offering insight into organizational strategies and employee experiences. Figure 1 below illustrates theoretical framework for the current study.

2.1.1 Human capital theory

Human capital theory (HCT) posits that an individual's knowledge, skills, and education are a form of capital. Investing in these resources through education, training, and experience enhances an employee's productivity and economic value to an organization (Blundell et al., 1999; Tan, 2014). In ideal labor markets, wages are closely linked to productivity, which motivates individuals to continually upgrade their skills until the costs and benefits of education equalize (Altman, 2022). The fourth industrial revolution (4IR) fundamentally changes the skills required in the modern workplace. Traditional skills are being automated or rendered obsolete, while competencies in areas such as artificial intelligence, data analytics, cybersecurity, and human–machine collaboration are becoming increasingly valuable (Fullan, 2016; Magwentshu et al., 2019; Brynjolfsson et al., 2014; Naidu, 2018). HCT provides a lens to analyze how organizations adjust their compensation practices to reflect these new skill demands (Morandini et al., 2023). Employees with scarce, high-value digital skills are now earning higher salaries, a phenomenon called a “skill premium” (Bone et al., 2025). This is a direct result of the 4IR transforming most jobs into skill-premium roles (Leawsakul, 2025). In South Africa, where significant skills shortages exist, HCT explains why competitive remuneration packages are offered to attract and retain limited talent (Mabaso and Mathebula, 2025; Mashele, 2023; Musakuro and De Klerk, 2021; Thusi and Chauke, 2023). Furthermore, HCT provides a theoretical justification for organizations to invest in upskilling and reskilling their workforce (Gruenewald and Mueller, 2025). This is based on the idea that enhancing employee capabilities is a form of capital accumulation that yields measurable returns through sustained productivity, increased innovation, and strengthened competitiveness (Istenič et al., 2022). Within the context of the 4IR, HCT also suggests that compensation structures should increasingly reward skills acquisition, adaptability, and continuous learning, thereby aligning pay practices with the evolving demands of digital transformation (Bezuidenhout, 2022; Ankiah et al., 2024; Taiwo and Vezi-Magigaba, 2021).

2.1.2 Agency theory

Agency theory, formulated by Meckling and Jensen (1976), conceptualizes the relationship between principals (owners) and agents (managers or employees), highlighting potential divergences in goals and incentives. Applied to remuneration, it emphasizes the strategic design of incentive structures that align employee performance with organizational objectives (Moloi and Marwala, 2020; Joseph, 2023). Standard mechanisms such as performance-based pay, profit sharing, gain sharing, and stock options reduce agency costs by motivating employees to act in the organization's best interests while securing their financial outcomes (Johnson and Clark, 2020). Within the 4IR context, where innovation and productivity are central to competitiveness, these incentive systems help balance organizational imperatives with employee expectations (Ankiah, 2022; Esan, 2023; Gwala and Mashau, 2022; Saah and Mbohwa, 2025).

In South Africa, where employee retention and turnover remain pressing challenges, strategically designed incentives further enhance commitment, encourage desired behaviors, and align workforce efforts with long-term organizational goals (Kedige, 2024; Mabaso, 2025; Macpherson, 2024; Mujajati et al., 2024; Timsina, 2024). Extending this perspective to digital transformation and environmental innovation, agency theory posits that well-crafted reward packages drive performance and cultivate sustained commitment to future-oriented, sustainable innovation practices (Liu et al., 2025). In this way, remuneration and incentives operate as governance mechanisms that align individual interests with organizational objectives, offering a robust explanatory framework for understanding how compensation structures can stimulate innovation, enhance performance, and strengthen employee engagement within digitally transformed and technologically dynamic workplaces (Mabaso, 2025; Feng et al., 2024; Liu et al., 2025; Żur, 2022).

2.1.3 Equity theory

Equity theory, developed by Adams (1965), is a motivational framework that explains how employees assess fairness by comparing the ratio of their inputs (effort, skills, experience, education) to outputs (pay, recognition, benefits) against those of others. Perceived inequity where this input-to-output ratio is seen as imbalanced relative to peers can lead to dissatisfaction, reduced motivation, and turnover (Negwaya et al., 2014; Ngo et al., 2022). Adopting fourth industrial revolution (4IR) technologies has created new sources of perceived inequity (Idowu, 2024; Mthombeni, 2024; Sincuba and Ncanywa, 2024). Pay disparities may arise between employees whose roles are augmented by technology and those whose positions are diminished or replaced (Lee, 2024; Karunakaran et al., 2025). For example, a newly hired data analyst may earn more than a long-serving employee whose role has been automated, creating inter-generational inequity and dissatisfaction. While AI can enhance human ingenuity, it also threatens job security, with professions such as radiology becoming vulnerable to full automation (Scheetz et al., 2021). This duality highlights the imperative for adaptation and risks of unemployment and social unrest (April and Daya, 2025). Beyond pay disparities, the integration of AI in HRM introduces ethical and social challenges. April and Daya (2025) stress that AI adoption in HR is not merely a technological shift but a transformative approach intertwined with ethical, moral, and human rights considerations, particularly concerning diversity, equity, and inclusion (DEI). Marler (2024) identifies four challenges in leveraging AI for compensation management: (1) determining when and how to use AI to automate decisions, (2) ensuring AI supports fairness and equity, (3) explaining how AI-driven pay recommendations are derived, and (4) aligning AI applications with broader strategic objectives. Equity theory provides a critical lens for addressing these challenges, particularly in designing transparent pay structures and communicating the rationale behind technology-driven pay changes. Organizations must also implement robust data governance policies to safeguard employee and stakeholder information. World Economic Forum (2024) note that businesses increasingly face risks such as data breaches, privacy violations, job loss, misinformation, and ethical dilemmas. Galiana et al. (2024) further argue that AI's evolution necessitates rediscovering liability, privacy, autonomy, and justice in digitally transformed workplaces. In South Africa, where historical inequities and employment equity legislation shape labor relations, applying equity theory to 4IR contexts highlights not only organizational risks but also a moral and strategic imperative: to ensure fair and transparent remuneration practices that promote equity and social justice.

2.1.4 Integrating the theories

When considered collectively, human capital theory, agency theory, and equity theory offer a comprehensive and multi-dimensional framework for analyzing remuneration in the context of the fourth industrial revolution (4IR). Human capital theory (Becker, 1964) provides an economic rationale for compensation by emphasizing the relationship between employees' skills, knowledge, competencies, and corresponding pay. From this perspective, organizations are incentivized to invest in continuous learning and development to enhance productivity and secure competitive advantage, particularly in environments where high-value and scarce skills are critical. Agency theory (Meckling and Jensen, 1976) positions remuneration as a governance mechanism that mitigates potential misalignments between employee and organizational interests. Organizations can reduce agency costs and drive behaviors consistent with strategic objectives by linking compensation to performance through incentive-based pay, profit sharing, and stock options. Equity theory (Adams, 1963), in turn, highlights the social and psychological dimensions of remuneration by emphasizing perceptions of fairness in the distribution of rewards relative to effort and contribution. This perspective underscores the importance of equitable compensation structures in fostering trust, motivation, and long-term retention.

Integrating these three perspectives advances a holistic understanding of remuneration as simultaneously an economic investment, a governance tool, and a social exchange process. This synthesis provides a robust theoretical foundation for analyzing how South African organizations can redesign remuneration systems to remain competitive, equitable, and responsive to workforce transformations driven by 4IR technologies.

2.2 Conceptualization of the fourth industrial revolution (4IR)

The fourth industrial revolution (4IR) is a transformative era defined by the convergence of digital, physical, and biological systems, driven by the rapid adoption of emerging technologies (Elyazed et al., 2024). Key technologies characterizing 4IR include automation, artificial intelligence (AI), the internet of things (IoT), big data, and digitalization, all of which are reshaping organizational structures, job roles, and workforce expectations (Tshabalala and Marnewick, 2025; Prabhakar, 2025). Building on the technological foundations of the third industrial revolution, which introduced computers, electronics, and the Internet, 4IR accelerates innovation at unprecedented speed, creating both opportunities and challenges for organizations and workers (McKinsey and Company, 2022; Moloi, 2021; Roblek et al., 2016; Whysall et al., 2019).

Work processes are increasingly partially or fully automated, affecting employment through both job creation and displacement while altering the skills required for workforce participation (Aziz et al., 2025; Rawashdeh, 2025; World Economic Forum, 2016; Razzano, 2022). Employees are consequently required to develop technical, analytical, and adaptive capabilities to remain productive and competitive (Ojan et al., 2025; Subrahmanyam, 2025; Samuel and Moagi, 2022).

Automation and AI enable machines and systems to perform tasks with minimal human intervention, increasing efficiency and productivity, while machine learning and natural language processing allow systems to improve over time, influencing job design and creating demand for high-skill labor (Schwab, 2016; Manyika et al., 2017; Brynjolfsson and McAfee, 2014). Similarly, the IoT connects physical devices and infrastructure via sensors and network connectivity, enabling operational insights and requiring specialized employee competencies (Kiran, 2019). Big data facilitates analysis of large datasets to generate actionable insights and support innovation, while digitalization transforms business models and operational practices (Marr, 2018; Behr, 2016; Dasho et al., 2016; Schmidt et al., 2017). While the fourth industrial revolution presents opportunities for enhanced productivity and innovation, it simultaneously raises complex questions regarding how organizations design remuneration systems that remain equitable, competitive, and strategically aligned with technological change. In contexts characterized by skills shortages and socio-economic inequality, such as South Africa, understanding how organizations adapt compensation practices becomes particularly important. Against this background, the present study addresses the following research question:

how is the fourth industrial revolution influencing remuneration structures, workforce transformation, and pay equity in South African organizations?

2.2.1 Impact of 4IR on industries and remuneration

The 4IR acts as a transformative force, enhancing productivity, creating new markets, and generating opportunities for venture creation and economic growth (Mbiza and Sinha, 2023). However, it also introduces risks concerning employment displacement, skill gaps, and socio-economic inequality. Routine tasks may be rendered redundant, while the demand for high-skill roles can exacerbate wage disparities and contribute to job polarization (Schwab, 2016; Manyika et al., 2017; Frey and Osborne, 2017).

In this context, organizations face the dual challenge of promoting equity while remaining strategically competitive. Fair and transparent remuneration practices that recognize emerging skills, technological contributions, and innovative performance become essential for employee retention, motivation, and productivity. Employees must develop digital literacy, analytical thinking, problem-solving skills, and adaptability, while organizations must implement compensation systems that reward innovation, lifelong learning, and high-value contributions (Samuel and Moagi, 2022; Taheri Hosseinkhani, 2025).

In South Africa, where digital divides, skills shortages, and unequal access to technology persist, designing fair, data-driven, and forward-looking remuneration systems is critical to ensure inclusive workforce participation and sustainable organizational performance (George and Odubo, 2024; Olaniyi et al., 2024).

2.2.2 Workforce transformation

The 4IR reshapes industries, job roles, and workforce expectations through technological convergence (Schwab, 2016; Elyazed et al., 2024). Automation, AI, IoT, big data, and digitalization are transforming work processes, automating routine tasks, and generating new skill demands (Mbiza and Sinha, 2023; Tshabalala and Marnewick, 2025; Prabhakar, 2025). While these developments improve productivity and efficiency, they also create challenges such as job displacement, skill gaps, and wage polarization (Schwab, 2016; World Economic Forum, 2016).

Employees must acquire advanced technical, analytical, and adaptive skills, including AI and IoT proficiency, data literacy, critical thinking, creativity, and problem-solving abilities. Routine tasks are increasingly automated, leaving human judgment and innovation as key differentiators in higher-level roles (Bughin et al., 2018; World Economic Forum, 2020). Continuous training and development are therefore essential, with organizations investing in lifelong learning programs, in-house initiatives, online courses, and partnerships with educational institutions to bridge skill gaps and ensure employability (Bersin, 2017; Brynjolfsson and McAfee, 2014; Chui et al., 2016).

2.2.3 Organizational responses

Organizations are adapting remuneration strategies to attract and retain high-skilled talent in response to workforce transformation while ensuring equity. Traditional pay structures base pay, seniority-based pay, and benefits, are being enhanced through 4IR technologies to optimize productivity, tailor compensation packages, and improve employee satisfaction (Haig, 2020; Sinambela et al., 2022; Bieber and Moggia, 2021). Performance-based and skill-based pay systems incentivize employees to acquire and apply high-value competencies, aligning individual development with strategic organizational objectives (Stokes, 2022; Kang, 2023).

Flexible compensation packages now include telework benefits, digital allowances, and customized perks, supporting work-life balance and increasing overall job satisfaction (Kossek et al., 2021; Beckel and Fisher, 2022). Organizations also leverage digital payment systems and gig economy platforms to facilitate innovative compensation structures, reduce operational costs, and expand access to financial services (Chen and Chen, 2025; Akpan et al., 2022).

Equity and fairness in compensation are emphasized through pay transparency initiatives, periodic audits, and AI-driven remuneration systems, which ensure that pay decisions are consistent, aligned with contributions, and responsive to socio-economic impacts (Robert et al., 2020; Stofberg et al., 2022; Poxson, 2023). Strategic organizational responses extend beyond remuneration to include upskilling, reskilling, and workforce planning, preparing employees for evolving roles and ensuring competitiveness, innovation, and resilience (Manyika et al., 2017; Brynjolfsson and McAfee, 2014; Chui et al., 2016).

3 Methodology

3.1 Research design

This study adopted an interpretivist qualitative research design to explore how organizations experience and interpret remuneration transformation in the context of the fourth industrial revolution (4IR). Interpretivism is appropriate for investigating complex organizational phenomena where the meanings attached to experiences are central to understanding social reality (Denzin and Lincoln, 2005). Within this paradigm, reality is understood as socially constructed, and the researcher seeks to interpret participants' perspectives regarding organizational practices and workplace dynamics.

A qualitative exploratory approach was therefore considered suitable for examining how technological transformation influences remuneration structures, workforce practices, and organizational responses in South African organizations. Exploratory research is particularly useful for studying emerging or under-researched phenomena, as it allows researchers to identify patterns, themes, and relationships within complex contexts (Saunders et al., 2016; Leavy, 2014). Given the relatively limited empirical research on 4IR-driven remuneration practices in South Africa, this design provided a flexible framework for capturing participants' experiences and interpretations.

By employing an exploratory qualitative design, the study sought to generate rich insights into how organizations adapt compensation practices to technological advancements, evolving skill requirements, and broader socio-economic considerations. This approach enables a deeper understanding of contemporary organizational practices and provides a foundation for future research on remuneration strategies within digitally transforming workplaces.

3.2 Research approach

This study adopted an interpretivist qualitative approach to explore the fourth industrial revolution and remuneration structures (Denzin and Lincoln, 2005). By emphasizing individuals' subjective experiences and meanings, interpretivism allows for an in-depth understanding of how technological advancements, workforce transformation, and socio-cultural factors shape compensation practices. The exploratory nature of qualitative research facilitates the uncovering of complex organizational strategies and nuanced dynamics that may be overlooked by quantitative methods, particularly in addressing how organizations respond strategically to evolving workforce and technological challenges.

3.3 Research strategy

The study employs a phenomenological research strategy, which focuses on understanding the lived experiences of individuals and the meanings they attach to them (Newsome, 2016; Taherdoost, 2022). Phenomenology is particularly suited to capturing how compensation practitioners and employees perceive and experience changes in remuneration structures in response to the 4IR. Through in-depth interviews lasting one to 2 h, participants share their perspectives on evolving compensation practices, including performance-based pay, skill-based pay, flexible benefits, and remote work arrangements. This strategy allows the study to explore how these practices influence employee motivation, engagement, and perceptions of fairness and equity within organizations undergoing technological transformation. Phenomenology aligns with the study's objectives by enabling the investigation of subjective interpretations and socio-cultural dynamics that shape remuneration decisions. By focusing on lived experiences, the study captures the complexities of workforce transformation and strategic organizational responses, providing rich insights into how South African industries navigate the challenges and opportunities of the 4IR.

3.4 Research setting

The research was conducted within selected private-sector organizations in Gauteng Province, South Africa. The specific research environment was the organization's premises for the in-person and virtual interviews.

3.5 Population and sampling

The study employed purposive sampling to select participants with relevant knowledge and experience related to remuneration practices and workforce management in the context of the fourth industrial revolution (4IR). Purposive sampling involves deliberately selecting individuals who can provide rich and relevant insights into the research phenomenon (Jackson, 2009; Saunders et al., 2023). Qualitative studies commonly utilize smaller samples to facilitate detailed exploration of complex phenomena (Creswell and Poth, 2016). The sample size was therefore appropriate for achieving depth of understanding rather than statistical generalization. A total of 15 participants were recruited for the study, including rewards managers, HR practitioners, rewards specialists, and employees who are recipients of organizational reward systems. These participants were selected because of their direct involvement in or exposure to compensation structures influenced by technological transformation within their organizations. This sampling approach ensured that participants possessed the experiential knowledge necessary to provide meaningful insights into how remuneration practices are evolving in response to 4IR-driven organizational changes. Data collection continued until data saturation was reached, at which point no substantially new themes or insights emerged from subsequent interviews. Data saturation indicated that the dataset was sufficiently rich to support the thematic analysis and address the study's research objectives. This is illustrated in Table 1.

Table 1. Demographic characteristics of the sample.

Source: Research data collection.

3.6 Data collection method

The study used a semi-structured interview approach, and the information gathered from this research includes the objectives and research questions, which are aimed at exploring the incorporation of the fourth industrial revolution from the perspective of employees and employers. The semi-structured format enables a dialogue with the flexibility to “evolve” with the participants' narration flow, allowing them to articulate their unique perspectives and views. This method, which mixes the traditional components of prepared questions or topics with the freedom of interviewees to speak their truths freely, permits the participants room to express themselves candidly. A semi-structured interview is a qualitative research method in which the interviewer has a list of questions to ask or the topics to be covered but also has some reason to lead the conversation freely. This interview-type empirical approach is efficient regarding their practical features (Liamputtong, 2017). It gives the interviewees more power to express themselves as they formulate their opinions and thoughts. According to Liamputtong (2017), semi-structured interviews provide researchers with the flexibility to explore participants' experiences in depth while maintaining a consistent structure across interviews. The study will use semi-structured interviews to collect data from the compensation practitioners and employees who shared their perspectives on compensation practices in the era of 4IR.

3.7 Data storage

Good data storage is vital to ensuring the study remains valid, accessible, and retrievable; these are the fundamental principles of scientific research. Cloud storage, primary, secondary, and tertiary storage are the most relevant methods of data storage in the era of 4IR (Dastjerdi and Buyya, 2016). In the study, semi-structured interviews conducted virtually via Microsoft Teams and Zoom, which can record, transcribe, and store data on the researchers' password-protected computer devices. All the data trails were then saved on an external hard drive (kept in a locked safe) and in the Cloud, where they were supposed to be kept for a minimum of 5 years.

3.8 Strategies employed to ensure data quality and integrity

Trustworthiness in qualitative research ensures that findings are credible, transferable, dependable, and confirmable (Lincoln and Guba, 1985). Several strategies were implemented to enhance the rigor of the study. Credibility was established through prolonged engagement with participants and member checking, which allowed participants to verify the accuracy of interpretations derived from their responses (Shenton, 2004). Transferability was supported by providing rich descriptions of the research context, participant characteristics, and research processes, enabling readers to assess the applicability of the findings to other settings (Lincoln and Guba, 1985). Dependability was ensured through detailed documentation of the research procedures, including data collection, coding, and thematic analysis processes (Morrow, 2005). Finally, confirmability was maintained through reflexivity and peer debriefing, which helped minimize potential researcher bias and ensured consistency in theme development (Creswell and Miller, 2000). These strategies strengthened the credibility and analytical rigor of the study's findings.

3.9 Data analysis

Interview transcripts were analyzed using reflexive thematic analysis following the six-phase framework proposed by Braun and Clarke (2021), a widely used approach for identifying and interpreting patterns within qualitative data. This method enables researchers to systematically organize, code, and interpret qualitative data in order to generate meaningful themes (Creswell and Poth, 2016; Charmaz, 2006). The analysis began with data familiarization, during which the interview transcripts were repeatedly read to gain an in-depth understanding of participants' perspectives. In the second phase, initial codes were generated to capture meaningful units of information relevant to the research objectives. These codes were then grouped into broader themes that represented recurring patterns across the dataset. The themes were subsequently reviewed and refined to ensure coherence and consistency with the data and the study's research objectives. Where appropriate, sub-themes were developed to capture nuanced insights into remuneration practices in the context of the fourth industrial revolution (4IR). The final themes were defined and interpreted in relation to the study's theoretical framework, namely human capital theory, agency theory, and equity theory, to provide a deeper understanding of how technological transformation influences remuneration structures, workforce dynamics, and organizational responses. Through this process, thematic analysis enabled the identification of key themes related to workforce transformation, the impact of 4IR on work and labor, equity and remuneration structures, employee wellbeing and engagement, and strategic organizational responses, providing a comprehensive interpretation of compensation practices within digitally transforming workplaces.

3.10 Ethical considerations

Ethical considerations were of utmost importance in this qualitative study due to the nature of the research process, in which participants shared their own experiences and perceptions (Saunders et al., 2023). Ethical clearance was obtained from the University before commencing the research. The purpose of data collection was explained to participants, who were allowed to decide whether they wished to participate. A consent form was provided to participants to ensure confidentiality, and respondents were informed that they could withdraw from the study at any time during data collection without any adverse consequences.

4 Findings

The thematic analysis of the interview data revealed several recurring patterns regarding the influence of the fourth industrial revolution (4IR) on remuneration structures and workforce dynamics. Participants discussed how technological transformation affects job roles, skill requirements, organizational practices, and perceptions of fairness within remuneration systems. Participants highlighted varying levels of transparency in remuneration structures, with some expressing concerns about limited clarity regarding pay decisions, particularly for roles influenced by technological skill requirements. Communication surrounding compensation practices also emerged as an important issue, with employees reporting mixed experiences regarding how remuneration information was conveyed within organizations. While some participants appreciated regular updates and communication from management, others found information about remuneration systems inconsistent or difficult to interpret. Participants further indicated that perceptions of transparency and communication influenced motivation and engagement. Employees who perceived greater openness in remuneration practices reported feeling more valued and motivated, while those experiencing limited transparency expressed concerns about fairness and trust. These observations suggest that transparent remuneration practices and effective communication play an important role in supporting employee engagement and organizational commitment in technologically evolving workplaces. Overall, five themes and 13 subthemes emerged from the analysis. The themes were workforce transformation, Impact of 4IR on work and labor, equity and remuneration structures, employee wellbeing and engagement, and strategic organizational responses. To enhance analytical transparency, Table 2 illustrates how first-order participant statements were grouped into second-order themes and subsequently synthesized into broader aggregate dimensions, following the approach proposed by Gioia et al. (2013).

Table 2. Data structure for theme development (Adapted from Gioia et al., 2013).

In addition, Table 3 summarizes the classification of themes and subthemes identified during the coding process. To enhance analytical transparency, Table 2 illustrates how first-order participant statements were grouped into second-order themes and subsequently synthesized into broader aggregate dimensions following the approach proposed by Gioia et al. (2013).

Table 3. Classification of themes and sub-themes.

4.1 Theme 1: workforce transformation

This theme reflects how the fourth industrial revolution (4IR) is reshaping organizational roles, skill requirements, and work processes. Participants consistently indicated that technological advancements such as automation and digitalization are transforming the nature of work, requiring employees to continuously develop new competencies to remain relevant in technologically evolving workplaces. Three sub-themes emerged from the analysis: workforce transformation, job redundancy, and optimized processes and increased efficiency. Participants described workforce transformation as both an opportunity for professional development and a source of uncertainty. While some viewed technological change as enabling innovation and productivity improvements, others raised concerns about job security and the potential displacement of routine roles. These differing perspectives highlight the complex ways in which employees experience technological transformation within organizations.

4.1.1 Sub-theme 1.1: workforce transformation

Participants emphasized that technological change requires employees to adapt through continuous learning and skills development. Many organizations were reported to be promoting a culture of ongoing training and digital capability development to ensure that employees remain competitive in the evolving workplace.

Participant 2 noted:

“We are being encouraged into a culture of continuous learning in terms of training programs and workshops, online learning platforms and resources, and cross-functional training and job rotations.” (Female, Rewards Officer)

Similarly, participants 5 and 6 indicated that automation has shifted employees toward more strategic and technologically oriented roles:

“Automation has freed employees' time and allowed them to grow into other strategic and technological roles since they no longer perform manual tasks that are time consuming.”

Participants also highlighted that technological change affects leadership responsibilities. Participant 7 explained:

“We are constantly reviewing how technology reshapes our roles and leadership responsibilities. Upskilling is not just for junior staff; it's for leaders too, to guide the organization through transformation.” (White, Male, Head: Rewards)

Participant 8 further emphasized the need for organizations to equip employees with the skills required to work effectively with digital systems:

“The introduction of digital tools has required us to rethink HR processes. We now have to train employees on these systems to ensure they remain competent and adaptable.” (African, Female, HR Practitioner)

4.1.2 Sub-theme 1.2: job redundancy

Despite the opportunities associated with technological advancement, participants also expressed concerns about job security. Automation and digitalization were perceived as creating uncertainty about the future relevance of certain roles.

Participant 10 reflected this concern:

“We are currently working on an online remuneration system which will automate several of my functions and I am now concerned about my job safety once the system is online and fully functional.” (Colored, Male, Production Supervisor)

Similarly, Participant 12 expressed apprehension about the long-term Impact of automation:

“I sometimes feel uncertain about how automation affects my daily tasks. There's a constant need to prove that my role adds value beyond what machines can do.” (African, Male, Officer)

However, some participants viewed technological change as an opportunity to expand their roles and develop new skills. Participant 14 stated:

“While some positions are automated, I see it as a chance to learn new skills and grow into more strategic areas of the rewards function.” (African, Female, Junior Rewards Officer)

Participant 3 similarly noted that automation may encourage employees to broaden their skill sets:

“The automation of some responsibilities provides an opportunity for employees to expand their roles. It is becoming important to learn different functions to help you adapt to the changes in the world of work.” (White, Male, Rewards Officer)

4.1.3 Sub-theme 1.3: optimized processes and increased efficiency

Participants also emphasized that technological innovations enhance organizational efficiency by streamlining processes and reducing repetitive tasks. Automation was widely viewed as enabling employees to focus on more analytical and strategic activities.

Participant 3 observed:

“It has empowered and expanded the potential of the organization. There is so much more the organization can do to reach people in different areas. It has also increased the speed of delivery.” (White, Male, Rewards Officer)

Participant 10 similarly highlighted improvements in operational efficiency:

“Optimized processes enable us to focus on other responsibilities or functions, improving overall efficiency.” (Colored, Male, Production Supervisor)

Participants also reported that digital tools support more efficient decision-making processes. Participant 9 explained:

“Digitalization has helped streamline team workflows. Our meetings are now more efficient, and reporting is faster, which allows us to focus on strategic decision-making.” (African, Female, Manager)

Participant 15 further emphasized how automation enables employees to focus on higher-value tasks:

“Automation reduces repetitive work and lets me focus on analytical tasks that really contribute to the organization's goals.” (White, Male, Rewards Officer)

4.2 Theme 2: impact of 4IR on work and labor

This theme reflects participants' perspectives on how the fourth industrial revolution is reshaping work processes, labor dynamics, and organizational operations. Participants highlighted that technological advancements influence how work is performed, how decisions are made, and how organizations maintain competitiveness in digitally evolving environments. Two sub-themes emerged from the analysis: comprehension of 4IR and optimized processes and increased efficiency. Participants indicated that understanding technological change is essential for navigating the evolving nature of work. While many recognized the productivity benefits of digital technologies, others expressed concern that unequal levels of technological understanding could widen skill gaps and create unequal opportunities in the workplace.

4.2.1 Sub-theme 2.1: comprehension of 4IR

Participants emphasized that understanding technological transformation is critical for adapting to new workplace expectations and career development pathways. Employees who understood the implications of 4IR technologies were perceived as better positioned to navigate organizational change.

Participant 6 explained:

“4IR is the automation of current manual processes using the latest technologies to improve efficiencies and avoid human errors.” (African, Female, HR Officer)

Participants also emphasized how digitalization can enhance operational performance. Participant 4 stated:

“By facilitating the complete exchange of all relevant information at every link in the production chain, the fourth industrial revolution unites procedures like inventory control and boosts production efficiency.” (African, Male, Rewards Manager)

However, participants cautioned that employees who lack digital literacy risk falling behind in technologically evolving workplaces. Participant 11 noted:

“Understanding 4IR is key. Without grasping these technologies, employees risk falling behind in terms of skills and career development.” (African, Female, ER Practitioner)

Participant 13 further highlighted the strategic importance of technological understanding:

“We're exploring how AI and digital platforms can optimize reporting and finance operations while ensuring staff are prepared for these changes.” (African, Female, Manager: Finance)

4.2.2 Sub-theme 2.2: optimized processes and increased efficiency

Participants reported that the integration of digital systems and artificial intelligence enhances operational efficiency and organizational performance. Many indicated that technology enables faster decision-making and improved data management.

Participants 5 and 6 explained:

“AI and other systems integration have reduced lengthy response timelines, improved the integrity of data, and information is now centralized rather than being placed in different software systems.” (African, Female, Rewards Executive and HR Officer)

Similarly, Participant 7 highlighted the role of digital analytics in organizational decision-making:

“Centralized systems and AI analytics allow us to make faster, data-driven decisions. This optimizes both our operational efficiency and strategic planning.” (White, Male, Head: Rewards)

4.3 Theme 3: equity and remuneration structures

This theme reflects participants' perceptions of fairness and equity in remuneration systems amid technological transformation. Participants noted that the fourth industrial revolution has the potential to reshape compensation structures, particularly as organizations increasingly reward specialized digital skills. Three sub-themes emerged from the analysis: remuneration disparities, benefits, and pay-related equity. Participants indicated that while technological transformation creates new opportunities for skill development and career advancement, it may also widen existing pay disparities between employees performing technologically advanced roles and those in traditional positions. These dynamics raise important considerations for organizations seeking to design equitable remuneration systems in the digital era.

4.3.1 Sub-theme 3.1: remuneration disparities

Participants highlighted that the growing importance of digital skills may lead to differences in compensation between employees performing technologically intensive roles and those in routine or administrative positions.

Participant 5 noted:

“4IR has created an opportunity to expose pay discrepancies and introduce equal pay, equal value.” (African, Female, Rewards Executive)

Participant 3 emphasized the use of salary benchmarking tools to manage remuneration structures:

“Organizations are increasingly using survey companies, online reports and software to gather data on salary ranges in different locations, and they stick to those ranges.” (White, Male, Rewards Officer)

Participants also recognized the increasing value of specialized technological competencies. Participant 14 stated:

“It's clear that specialized digital skills command higher pay, which makes me aware of the areas I need to develop to remain competitive.” (African, Female, Junior Rewards Officer)

4.3.2 Sub-theme 3.2: benefits

Participants emphasized the importance of both financial and non-financial benefits in supporting employee motivation and wellbeing. Organizations were reported to be expanding benefits to accommodate evolving workforce needs.

Participant 3 explained:

“Our organization has taken to increase their contribution toward medical aid and pension.” (White, Male, Rewards Officer)

Participant 5 described the emergence of tailored benefits supported by data analytics:

“Data analytics are developing and introducing new benefits such as refined risk benefits, disability and funeral cover to suit employees and their different individual circumstances.” (African, Female, Rewards Executive)

Participant 12 highlighted the value of wellness initiatives:

“I appreciate that the company offers wellness programs and flexible arrangements. These benefits help us manage stress from constant technological change.” (African, Male, Officer)

4.3.3 Sub-theme 3.3: pay-related equity

Ensuring fairness in remuneration was identified as a critical factor influencing employee motivation and organizational commitment. Participants emphasized that equitable pay structures help sustain trust and engagement within organizations.

Participant 3 explained:

“Our organization in the retail sector adheres to strict pay ranges for every role, which are not impacted by gender, race, or level of education.” (White, Male, Rewards Officer)

Participants also noted that digitalization may create new global opportunities that influence remuneration dynamics. Participant 1 stated:

“Digitalization opens opportunities for South Africans to work for international organizations and earn in foreign currencies, which can lead to gaps in remuneration between domestic and international roles.” (African, Female, Rewards Officer)

Participant 13 emphasized the importance of transparency in maintaining fairness:

“Transparency in pay is critical. We try to ensure that employees performing similar roles are fairly compensated, regardless of location or seniority.” (African, Female, Manager: Finance)

4.4 Theme 4: employee wellbeing and engagement

This theme captures participants' perceptions of how technological transformation influences employee wellbeing and engagement. Two sub-themes emerged from the analysis: improved quality of life and process optimization supporting wellbeing. Participants indicated that while digital technologies can improve flexibility and efficiency, they may also create pressures related to job security and continuous technological adaptation. As a result, the Impact of 4IR on employee wellbeing appears to involve both opportunities and challenges.

4.4.1 Sub-theme 4.1: improved quality of life

Participants reported that automation and digital technologies may improve work quality by reducing repetitive tasks and enabling employees to focus on more strategic responsibilities.

Participants 5 and 6 stated:

“Automation and artificial intelligence simplify repetitive tasks, enabling employees to focus on more strategic aspects of their roles.” (African, Female, Rewards Executive and HR Officer)

Participant 1 highlighted organizational support initiatives:

“Our organization has introduced initiatives to offer counseling and support services to employees as they navigate increased technology and interconnectivity.” (African, Female, Rewards Officer)

Participant 8 emphasized the benefits of remote work arrangements:

“Remote work and digital collaboration tools have improved work-life balance, particularly for those with family responsibilities.” (African, Female, HR Practitioner)

4.4.2 Sub-theme 4.2: process optimization supporting wellbeing

Participants noted that streamlined workflows and automated systems may improve employee engagement by enabling individuals to focus on more meaningful work.

Participant 10 explained:

“Optimized processes enable us to focus on other responsibilities or functions, improving overall efficiency.” (Colored, Male, Production Supervisor)

Participant 15 added:

“Automation has allowed me to focus on meaningful projects instead of tedious tasks, which improves engagement and job satisfaction.” (White, Male, Rewards Officer)

4.5 Theme 5: strategic organizational responses

This theme reflects the organizational strategies implemented to address technological transformation and workforce change. Three sub-themes emerged from the analysis: organizational strategies, 4IR comprehension for strategic decisions, and innovative benefits. Participants emphasized that organizations must adopt proactive strategies to ensure that technological transformation supports both organizational performance and employee wellbeing.

4.5.1 Sub-theme 5.1: organizational strategies

Participants highlighted the importance of competitive remuneration and workforce planning to retain skilled employees and address emerging technological demands.

Participant 4 explained:

“Our organization is paying employees extremely competitive remuneration that will retain them and their skills. In some instances, fixed- to long-term contractors or experts are hired to transfer skills using the Critical Workforce gaps within the organization.” (African, Male, Rewards Manager)

Participant 9 noted:

“Strategic workforce planning now includes assessing which roles will evolve with 4IR and reskilling staff to fill emerging gaps.” (African, Female, Manager)

4.5.2 Sub-theme 5.2: 4IR comprehension for strategic decisions

Participants indicated that understanding technological trends enables organizations to make more informed strategic decisions regarding talent management and remuneration systems.

Participant 5 stated:

“It has also played an integral role in the rewards environment as it has helped with data analysis and led to strategic decisions.” (African, Female, Rewards Executive)

Participant 7 emphasized leadership's role in responding to technological change:

“Understanding technological trends helps us make proactive decisions about talent deployment and compensation frameworks.” (White, Male, Head: Rewards)

4.5.3 Sub-theme 5.3: innovative benefits

Participants highlighted the importance of innovative benefits in attracting and retaining talent in digitally evolving workplaces.

Participant 3 stated:

“Our organization has taken to increase their contribution toward medical aid and pension.” (White, Male, Rewards Officer)

Participant 5 described tailored benefits supported by digital analytics:

“Data analytics are developing and introducing new benefits such as refined risk benefits, disability and funeral cover to suit employees and their different individual circumstances.” (African, Female, Rewards Executive)

Participant 11 noted:

“We are introducing flexible benefits and wellness programs tailored to employee needs, which is critical in retaining digital-era talent.” (African, Female, ER Practitioner)

The findings presented above highlight how technological transformation associated with the fourth industrial revolution influences workforce dynamics, remuneration practices, and organizational strategies. The following section discusses these findings in relation to existing literature and theoretical frameworks.

5 Discussion

The purpose of this study was to examine how the fourth industrial revolution (4IR) influences remuneration structures in South African organizations, particularly in relation to workforce transformation, pay equity, and strategic organizational responses. The findings indicate that technological transformation associated with the 4IR is reshaping organizational practices and influencing the design and implementation of remuneration systems in digitally evolving workplaces.

The findings suggest that 4IR technologies are driving significant workforce transformation through automation, digitalization, and the increasing demand for advanced technological competencies. Emerging technologies such as artificial intelligence (AI), the internet of things (IoT), big data, and digital platforms are altering job roles, skill requirements, and organizational structures (Elyazed et al., 2024; Tshabalala and Marnewick, 2025). While these technological advancements enhance efficiency and productivity, they also introduce challenges, including job displacement, skills shortages and wage disparities (Schwab, 2016; Mbiza and Sinha, 2023). Participants in this study emphasized the growing importance of continuous learning, reskilling, and adaptability as organizations adopt new technologies. These findings align with previous research suggesting that organizations increasingly invest in training programs, mentoring initiatives, and job rotation schemes to enhance workforce adaptability and maintain competitiveness in technologically evolving environments (Bersin, 2017; Brynjolfsson and McAfee, 2014).

From a theoretical perspective, these findings support human capital theory (HCT), which emphasizes that investment in employees' knowledge, skills, and competencies enhances productivity and economic value (Blundell et al., 1999; Altman, 2022). In the South African context, where digital skills shortages remain prevalent, organizations may adopt competitive remuneration packages and targeted development programs to attract and retain scarce technological talent (Mabaso and Mathebula, 2025; Musakuro and De Klerk, 2021). Participants also noted that employees with specialized digital skills often receive higher compensation, reflecting the emergence of a “skill premium” associated with advanced technological capabilities. This finding is consistent with research indicating that technological change may contribute to wage differentiation between high-skilled and routine occupations (Hémous and Olsen, 2022; Karunakaran et al., 2025). In response, organizations increasingly use skills-based pay structures and performance-linked incentives to reward specialized competencies and support organizational innovation (Feng et al., 2024; Liu et al., 2025).

The findings further highlight that perceptions of fairness remain central in technologically evolving workplaces. Participants indicated that remuneration disparities may emerge between employees whose roles are augmented by technology and those performing routine tasks that are increasingly automated. These observations align with equity theory, which suggests that employees evaluate fairness by comparing their inputs and outcomes with those of others (Adams, 1965). When employees perceive inequities in pay or recognition, motivation and organizational commitment may decline (Ngo et al., 2022; Sincuba and Ncanywa, 2024). Maintaining transparent and equitable remuneration systems therefore becomes essential for sustaining employee engagement and trust in technologically disrupted workplaces.

In addition, the findings demonstrate that organizations are adopting strategic responses to manage the opportunities and challenges associated with the 4IR. Participants reported that organizations are redesigning remuneration and benefits systems to support workforce transformation and enhance employee engagement. Flexible reward structures, including telework benefits, wellness initiatives, and digital allowances, were identified as important mechanisms for supporting employee wellbeing and work–life balance (Kossek et al., 2021; Gallup, 2023). Organizations are also increasingly using digital technologies and analytics tools to benchmark salaries, manage incentives, and monitor pay equity more effectively (Robert et al., 2020; Poxson, 2023).

These practices also reflect the principles of agency theory, which emphasizes the strategic design of incentive systems to align employee behavior with organizational objectives (Meckling and Jensen, 1976). By linking remuneration to performance, innovation, and skill development, organizations can encourage employees to engage in behaviors that support technological transformation and long-term organizational competitiveness (Mabaso, 2025).

Finally, the findings suggest that technological transformation may influence employee wellbeing by reshaping how work is performed. Participants indicated that automation and process optimization reduce repetitive tasks and allow employees to focus on more strategic and meaningful activities. This shift may enhance job satisfaction and reduce work-related stress, particularly when organizations implement transparent remuneration practices and flexible benefit systems that support employee wellbeing (Brock and Von Wangenheim, 2019; Tavares, 2017).

Overall, the findings suggest that remuneration systems in the context of the fourth industrial revolution must simultaneously address economic, strategic, and social considerations. Organizations are required to design compensation frameworks that reward emerging skills, maintain fairness, and support workforce adaptability in technologically evolving environments. In the South African context, where structural inequalities and digital skills shortages remain significant challenges, implementing equitable and forward-looking remuneration practices is particularly important for sustaining organizational performance and employee engagement.

6 Implications

6.1 Theoretical implications

This study contributes to the emerging literature on the fourth industrial revolution (4IR) and strategic remuneration management by integrating human capital theory, agency theory, and equity theory to explain how organizations respond to technological disruption. While previous studies have examined technological change and workforce transformation, limited research has explored how these dynamics influence remuneration structures within emerging economies such as South Africa.

First, the findings extend human capital theory (HCT) by demonstrating that technological transformation increases the value placed on advanced digital skills, adaptability, and continuous learning. The results suggest that organizations increasingly reward employees who possess scarce technological capabilities, reinforcing the notion that knowledge and skills function as forms of economic capital within modern organizations. In this context, remuneration systems serve not only as compensation mechanisms but also as strategic tools for attracting and retaining high-value human capital.

Second, the study contributes to agency theory by illustrating how organizations redesign remuneration systems to align employee behavior with organizational objectives in technologically evolving workplaces. The findings indicate that performance-linked incentives, skills-based pay, and innovation-oriented rewards are increasingly used to encourage behaviors that support digital transformation. This extends agency theory by highlighting how incentive structures can be adapted to promote technological adaptability and organizational agility in the context of the 4IR.

Third, the findings reinforce the relevance of equity theory in technologically disrupted labor markets. As technological change creates new skill hierarchies and wage differentials, perceptions of fairness become increasingly important for maintaining employee motivation and organizational commitment. The study therefore highlights the need for transparent and equitable remuneration systems that recognize evolving skill demands while minimizing perceptions of inequality among employees.

These insights contribute to the growing body of research examining how organizations navigate the intersection of technological transformation, workforce development, and remuneration management. By integrating these three theoretical perspectives, the study provides a more comprehensive framework for understanding remuneration practices in the context of the fourth industrial revolution.

6.2 Practical (managerial) implications

The findings of this study provide several important implications for human resource practitioners, organizational leaders, and policymakers seeking to design effective remuneration strategies in technologically evolving workplaces.

First, organizations should consider adopting skills-based remuneration systems that recognize emerging digital competencies and encourage continuous learning. As technological transformation increases the demand for specialized skills, organizations must ensure that compensation structures reflect the strategic value of these capabilities while supporting employee development and career progression.

Second, organizations should prioritize pay transparency and equity when implementing new remuneration structures. As technological change can lead to wage differentiation between technology-intensive roles and traditional occupations, transparent communication regarding pay decisions is essential to maintain employee trust, motivation, and organizational commitment.

Third, the findings highlight the importance of investing in workforce reskilling and upskilling initiatives. Organizations should implement training programs, digital learning platforms, and professional development opportunities that enable employees to adapt to technological change. Linking these development initiatives to remuneration incentives may further encourage employees to acquire new competencies required in digitally transformed workplaces.

Finally, organizations should adopt flexible and innovative reward systems that support employee wellbeing and engagement in the context of technological disruption. Flexible benefits, remote work incentives, wellness programs, and digital allowances may enhance employee satisfaction while helping organizations attract and retain talent in competitive labor markets.

In the South African context, where digital divides and structural inequalities remain significant challenges, implementing equitable and forward-looking remuneration systems is particularly important. By aligning compensation strategies with technological transformation and workforce development, organizations can enhance organizational performance while promoting inclusive and sustainable employment practices.

7 Limitations of the study

Although the study provides valuable insights into the relationship between the fourth industrial revolution (4IR) and remuneration practices, several limitations should be acknowledged. First, the study employed a qualitative design with a purposive sample of 15 participants, limiting the generalizability of the findings to the broader population. However, the qualitative approach enabled the generation of rich, in-depth insights into organizational experiences and perceptions of remuneration transformation within the 4IR context.

Second, some participants demonstrated varying levels of familiarity with the concept of the fourth industrial revolution. While this reflects broader organizational realities in which technological change is unevenly understood, these perspectives nonetheless provide meaningful insights into how employees interpret and experience technological transformation in their workplaces.

Third, although participants represented different organizational roles and industries, their perspectives may not fully capture the diversity of experiences across the broader South African labor market. Despite these limitations, several strategies were employed to enhance the credibility and trustworthiness of the findings, including member checking, detailed contextual descriptions, and systematic thematic analysis.

Future research could extend this work by employing larger quantitative or mixed-method research designs to examine how remuneration practices evolve across different industries and organizational contexts in response to 4IR-driven technological change.

8 Conclusion

This study has explored various aspects of the fourth industrial revolution and its Impact on remuneration in South Africa. These findings suggest that South Africa is still in the early stages of 4IR adoption. As a result, remuneration practices have not yet been substantially transformed, although participants anticipate that technological adoption will increasingly influence compensation structures in the future. Fundamentally, this study has highlighted the need for employees and employers to expand their knowledge of 4IR as we found that participants have a mixed understanding of 4IR which skews toward a general understanding. Some participants did not seem to fully understand the Impact of 4IR aside from the advanced software it brings. This supports the notion that South Africa is still lagging behind in the era of 4IR. The fourth industrial revolution is offering opportunities for organizations to automate processes, improve efficiency, minimize effort, and improve productivity. However, it is also evident that it poses a risk to human labor. It is for these reasons that employees need to upskill themselves and align with emerging technologies to remain relevant in the workforce. In South Africa, the evidence suggests that traditional remuneration practices such as pay scales continue to dominate despite the increasing demand for new skills led by the 4IR. As advanced technologies and automation continue to progress across industries, HR and rewards practitioners are required to redesign fair and flexible compensation structures as remuneration disparity has emerged as an important factor in this era as employees are concerned about job displacement and how 4IR will affect their compensation in future. This necessitates a re-evaluation of compensation strategies, and we found that organizations are prioritizing this as they have started using artificial intelligence, machine learning algorithms, and advanced compensation management software to benchmark salaries, conduct performance reviews, and manage incentives to promote pay equity.

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Footnotes

Edited by: Józef Ober, Silesian University of Technology, Poland

Reviewed by: Ranjita Islam, Queensland University of Technology, Australia

Nita Mennega, University of Pretoria, South Africa