TOPIC: COMPENSATION STRATEGIES FOR RETAINING EMPLOYEES
Employee Retention refers to the efforts by which employers attempt to retain employees in their workforce. Background
Key employee relation is critical to long-term health and success of the business. Managers readily agree that retaining employees ensures customer satisfaction, product sales, satisfied co-works and reporting staff, effective succession planning and deeply imbedded organizational knowledge and learning. Employee retention is one of the primary measures of the health of the organization. If a manager/ employer is losing critical staff members, it is more than obvious that other people are looking as well. Therefore to retain employees, as well as reduce turnover, managers must learn to align their goals with the end goals of their employees.
According to Strategic Planning Consultants, Leigh Branham (SPHR), 88% of employees leave their jobs for reasons other than pay: However, 70% of the managers think employees leave mainly for pay-related reasons. Leigh Branham argues of seven main reasons why employees leave their company, which include: * Employee feeling the job or the work place is not what they expected. * A mismatch between the job and the employee
* There is too little coaching and feedback
* There are too few growth and advancement opportunities
* Employees feel devalued and unrecognized
* Stress from overwork and a life/ work imbalance
* Loss of trust and confidence in senior leaders
Turnover is very costly. According to Right Management, a talent and career management consulting firm, it costs nearly three times an employee’s salary to replace someone, which include: 1) Recruitment
2) Severance pay
3) Lost productivity
4) Lost opportunities
Understanding Why Employees Leave
Herman believes that employees leave jobs for five main reasons:
"It doesn't feel good around here." This can include any number of issues having to do with the corporate culture and the physical working environment. "They wouldn't miss me if I were gone." Many people don't feel personally valued. When people don't feel engaged or appreciated, all the money in the world can't hold them. "I don't get the support I need to get my job done." People want to do a good job; they want to excel. At the same time, most feel like their boss won't let them do a good job. When frustrations exceed the employee's threshold, they leave. Lack of opportunity for advancement. "Advancement doesn't necessarily mean promotion," advises Herman. "More often it means personal and professional growth. People want to be better tomorrow than they are today. Personal growth constitutes a very strong driver in today's work force, particularly with the younger generation. People coming out of college often identify training as the primary criteria for choosing their first company. Companies that gutted their training departments during the early '90s have a lot of catching up to do in order to attract good people." Inadequate compensation. People want fair compensation but—contrary to most managers' beliefs, money rarely comes first when deciding whether to stay or go. A certain percentage of people will always chase more income, but the majority of workers look at non-monetary reasons first. "Many executives still cling to the outdated notion that people 'go for the gold,' that salary dictates all their employment decisions," explains Herman. "But for the most part, people want opportunities to grow and learn, to advance in their careers and to work on challenging and interesting projects. They want to be recognized and appreciated for their efforts. They want to feel a part of something that adds value to their community." 1) Compensation Strategies for employee retention
This is in terms of salary, benefits, bonuses and training.
The management should be ready and willing to discuss the salary package and ensure that...
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