Compensation
Compensation plays significant role in attracting and retaining good
employees, especially those employees who gives outstanding performance or
unique skill which is indispensable to the organization because company invest
heavy amount on their training and orientation. Overall satisfaction results from
a mix of rewards rather than any single reward. Both rewards must been seen as
timely and tied to effective performance. The employee must perceive the
reward offered as attractive. Lawler, (1971) further observes that, to maintain
employee satisfaction with pay, corporations have developed systems that are
intended to maintain pay equity with comparable internal persons or groups.
The consequences of inequity in employee pay regarding the external labour
markets are potentially very severe for a corporation, which would be unable to
attract and keep the talent required. They conclude that, high total
compensation does not however, ensure that the best employees are retained.
To keep them, a company must also pay its better performers more than it pays
poorer performers and the difference must be significant in the judgments of
the employee. According to Lawler,(1990); company adopt the strategy of low
wages if the work is simple and requires little training and companies
competing in high labor markets, adopt the high wages strategy.
Some researchers argue that competitive compensation package is the only
strong commitment and also build strong commitment on the workers side.
However, the contribution of compensation towards retention, help in retention
of employee irrespective of their skill and contribution to the company and it
likely affect both turnovers desirable and undesirable. The total amount of
compensation offered by other companies also affects the turnover.
Organization which offers high compensation package as compared to others
would have a large number of candidates applying for induction and have lower
turnover rate. Moreover, the high compensation package, the organizations
would create culture of excellence, (Lawler, 1990).
Many organizations implement very good employee retention strategy without
offering high compensation or pay based retention strategy, (Pfeffer, 1998). In
such circumstances, a wide number of factors seem successful retention of
employees. The existence of other retention factors cannot be ignored. The
company objective to retain their valuable employee performance pay is
considered important factor for it. Compensation is considered the most
important factor for attracting and retaining the talent. Fair wages are the key
element of the implied and contractual bond between employers and
employees, the underlying supposition being that monetary can persuade
behavior, (Parker and Wright, 2001). Organizations often offer high pay
packages i.e. stock options, special pay, retention pay, gain share pay,
performance base pay and bonus etc. for attraction and retention of talented
employees of the market. Many organizations claim to base pay raises on
performance, but that is not actually the case. Some companies try to
emphasize a team environment, but continue to reward people for individual
achievement, (Feldman, 2000). These inconsistencies can cause frustration and
cynicism by employees. It is especially difficult when employees are not seeing
significant pay raises, yet company leaders are richly rewarded, (Feldman,
2000).
Communication
Studies have indicated that effective communications improve employee
identification with their agency and build openness and trust culture.
Increasingly, organizations provide information on values, mission, strategies,
competitive performance, and changes that may affect employees enthuse
(Gopinath & Becker 2000); (Levine, 1995). Many companies are working to
provide information that employees want and need in better way of
communication, through the most credible sources (e.g., CEO and top
management strategies) on a timely and consistent basis. Having in place a
good communication system where there is a flow of information between
managers and non- managers will ensure that there is no misunderstanding. In
addition, effective communication in teams where employees are free to
discuss and voice their opinions in projects such as holding an event for junior
account holders will result in increased performance as the best solutions are
offered and applied, (Smith & Rupp, 2004).
Work Environment and Socialization
Work environment is considered one of the most important factors in
employee‟s retention. According to Hytter, (2008), work environment is
generally discussed as industrial perspective, focus on aspect i.e. noise, toxic
substances exposure and heavy lifts. The interactions depend on the kind of job
or / and kind of business, it may be more or may be less. The interaction
between employees and clients and consumers moves from physical to
psychological dimension. Psychological work environment consist of work
load, decision, support, stressors, latitude and decision. It is of much
importance to know and recognize the emerging needs of employees and
providing good work environment in order to keep the employees committed
with organization.
Ramlall, (2003) posit that people strive to work and to stay in those
organizations that provides good and positive work environment, where
employees feel that they are valued and making difference. Proficient
employees of such organizations are dragging together to push the organization
forward. Organizations should focus on managing the work environment to
make better use of the available human assets.
People want to work for an organization which appreciates work performance,
has opportunities to grow, a friendly and cooperative environment and a feeling
that the organization is second home to the employee (Ontario, 2004). Three
types of environment that an employee needs in an organization are learning,
supportive and work environment, (Freyermuth, 2007). Learning
environment includes continuous learning and improvement of the
individual, certifications and provision for higher studies. For supportive
environment an organization can provide support in the form of work-life
balance. Work life balance includes flexible hours, telecommuting, dependent
care, alternate work schedules, vacations and wellness. However, work
environment includes efficient managers, supportive co-workers, challenging
work, involvement in decision making, clarity of work and responsibilities, and
recognition. The absence of such environment pushes employees to look for
new opportunities. The environment should be such that employees feel
connected to the organization in every respect.
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