Strategic Value Beyond Compensation: How Integrated Non‐Monetary Rewards Drive Employee Adaptability and Perceived Sustainable Organizational Transformation

This study examines how an integrated bundle of non‐monetary rewards influences employee adaptability and perceived sustainable organizational transformation. Drawing on social exchange theory and the dynamic capabilities perspective, this study conceptualizes workplace friendship as a central relational mechanism linking non‐monetary rewards to individual and organizational‐level outcomes. Additionally, it examines the moderating role of generational cohort (Gen Z vs. Millennials) in influencing the strength of the relationship between workplace friendships and employee adaptability. The study employs a three‐wave time‐lagged survey design to mitigate common‐method bias and strengthen causal inference. Data were collected from 432 full‐time employees working in Indian IT/ITeS organizations and analyzed using partial least squares structural equation modeling (PLS‐SEM). Moderation effects were examined using PLS multi‐group analysis (PLS‐MGA) after establishing measurement invariance via the MICOM procedure. The results indicate that all three dimensions of non‐monetary rewards have a positive impact on workplace friendships. Furthermore, workplace friendships have a positive impact on employee adaptability and perceived sustainable organizational transformation. The results from mediation analyses have confirmed the significant role of workplace friendship as a mechanism through which non‐monetary rewards affect employee adaptability, organizational transformation, or both. Results from moderation analyses have also identified significant differences in the strength of the positive effect of workplace friendship on employee adaptability, which is higher among Gen Z workers than among millennial workers.