This paper assesses the impact of employee
total rewards on the success of Small and Medium
Enterprises, answering the following research question;
“What is the impact of employee total rewards in the
success of SMEs in Mozambique?” The following
hypotheses were tested in this study: H0 “Employee total
rewards promote high employee performance leading to
the success of SMEs” and H1 “Employee total rewards
increase production costs leading to the failure of
SMEs”. In developing economies many SMEs are facing
financial challenges in starting, expanding and
consolidating their businesses and employee total
rewards are being overlooked as the backbone to the
success of their businesses. In this context Mozambique
is not an exception. Total rewards are all aspects of the
employment offering which include remuneration
packages such as fixed pay, incentive pay and benefits
and intangible aspects of the psychological contract, such
as: the working environment, career development and
employment security. Remuneration packages are also
known as extrinsic rewards, while psychological rewards
are also known as intrinsic rewards. Thus extrinsic and
intrinsic rewards amount to employee total rewards,
which require the employer’s financial input for them to
be in place. In general, there is an assumption that in the
short run employee total rewards drain the financial
coffers of the employer but in the long run, the return on
investment is high. Through total rewards, employees
are motivated to perform above expectations, thereby
promoting high productivity in a firm. Therefore, this
paper examines the relationship between employee total
rewards and the success of SMEs in Mozambique.
Keywords : Small and Medium Enterprises, New Institutional Economics, Employee Total Rewards and Productivity.