8.Compensation & Benefits

 Mehta et al. (2014) stated that, the various reasons mentioned for employee attrition aredissatisfaction with internal job postings, work profile, personal causes and finally dissatisfaction with compensation/salary. So for better retention of talent organizations must improve pay/compensation and benefits and also factors like good working conditions, flexible work timings, cooperative teams, good bosses, culture and values of the organization. Haider et al. (2015) further argued that, remuneration is the foundation on which the employeeemployer relationship is determined and also shows the indication of expression of appreciation from an employee. It also increases the competition among the organization demands to retain more and more competent employees who can ensure the sustainability of the organization.

28Moreover, Irshad and Afridi (2007) viewed that the 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.

An attractive remuneration packages are one of the very important factors of retention because it fulfills the financial and material desires as well as provide the means of being social by employee’s status and position of power in the organization. Many researchers demonstrate that there is a great deal of inter-individual difference in understanding the significance of financial rewards for employee retention. An organization’s reward system can affect the performance of the employee and their desire to remain employed (Patra & Singh, 2012).

Das and Baruah (2013) viewed that the pay is considered as a motivator as well as employee retention technique. It clearly states that among all types of reward, monetary pay is considered one of the most important and significant factor in retention. In a research concluded recently

shows that, although compensation was not one of the top factors influencing non-management turnover but compensation can act as a critical factor in reducing managerial turnover and increasing commitment Factors that help to keep a person loyal and committed to the organization like having job security, interesting and challenging work, opportunity to learn new skills and a flexible working environment with good reputation, culture, values, competitive salary and benefits package that

suit the individual. Salary is a significant factor that affects a person’s decision to stay or leave the company. Challenging work of compensation department is salary differentials, both within the organization and in the industry.

A valued employee should be given a salary package at par or more than the existing industry average to get him/her to stay within the organization. But at the same time giving more money can have undesired side effects.

Firstly it makes other employees develop a mind-set that the way to get a pay hike is by frightening to leave and secondly when an employee is at the top of his/her salary scale and is offered more money for performing the same duties, it will affect organization-wide differentials (Mehta et al.,

2014). Moreover, Chandranshu and Ruchi (2012) stated that the relationship of benefits with retention is another aspect of making people stay is often investigated by researchers. In recent researchers found that, motivation to work productively in an organization is directly affecting to the pay and benefits which provides to the employees.

 

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 who offers high compensation package that is being compared to others would 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 (Irshad & Afridi, 2007). 30Khan et al. (2011) further mentioned that, low satisfaction from the job and increased absenteeism rate are the consequences arising from the insufficient and inadequate benefits. Among the 4 M’s i.e. Men, Money, Machine and Material, men are the most important. Employees working in any organization are the building blocks of that organization. To keep them happy, satisfied and to retain them in the organization, money given to them in the form of wages should essentially be adequate. An effective management is that which makes a comparison of its compensation plans with the other jobs in the industry or with the established benchmark. Compensation and benefits is one of the major tools that have an impact towards the employee retention in any organization. It is directly affects the employees daily workload and to identify the commitment that they have towards the company. As it is shown in above, the wages / salary

/ medical reimbursements / travelling allowances / commissions / fuel allowances and many more affects in retaining of staff. Those compensation or benefits can be monetary or non-monetary.

 

Further, the wage or the salary has to be competitive according to the other organizations in the same industry. In other words, if an employee feels that they are receiving a good compensation and benefits package from a company, they are more likely to work harder. Most people are driven by the money and benefits they receive at a job. Thus, it is finally observed that the interrelationship between Career Growth, Training & Development and Compensation & Benefits are some of the factors which decide the retention of an employee in an organization.