The Increase in Turnover Rates and De-motivated due to Low Compensation
Name(s): Sukhraj Bhangoo, Nida Aamir, Warda Shafiq,
Date: Novemeber 12, 2010
Compensation is a form of pay and rewards received by employees on the basis of their performance. Compensation divides into two parts: direct and indirect compensation. Direct compensation includes employee wages and salaries, incentives, bonuses, and commission. Indirect compensation includes employee recognition programs, rewarding jobs, organizational support, work environment and flexible work hours to accommodate personal needs (Belcourt et.al, 370). “Wal-Mart” is the biggest retail and grocery chain in the world. Currently, Wal-Mart is an organization with revenue of $408 billion in 2010, and operates in 8,416 stores worldwide in fifteen counties with different names (http://www.wakeupwalmart.com/facts/index_alt3.html, 11/01/10). This paper analyzes compensation in Wal-Mart and, how Wal-Mart’s failure to compensate its employees, has lead to unmotivated workers, which ultimately increased the turn-over rate. According to our research, Wal-Mart has relatively weak compensation strategies in terms of how it allocates bonuses and the uneven distribution of bonus funds between executives and regular employees. Also, health insurance plans are not provided by Wal-Mart for the hourly-wage employees but executives’ health insurance plans are fully paid for. If Wal-Mart does provide regular employees with health insurance plans, employees are required to contribute some money into their own health coverage. Wal-Mart is unable to accommodate employees’ needs by providing flexible work hours, and promotions are seldom rewarded to women. These issues will be further elaborated upon in this paper.
According to The effects of performance measure and compensation on motivation and empirical study, there is a positive relationship between employees’...