Discuss about the Impact of Compensation and Benefits on Job Satisfaction and Employee Retention.
Compensation is the best tool for improving the enhancing the employee motivation and commitment towards the organizational goals and objectives. It is an evident fact that the employees are the main resources of an organization through which companies are able to survive in tough competitive advantages (Popoola and Ayeni, 2007). But recent studies have highlighted that the compensation is recommended mostly for executives while ignoring the employees or the subordinates. The impact of compensation is evident upon the aspects of job satisfaction and employee retention as the sense of hard work and determination to meet organizational objectives could be achieved among employees (Sinclair, 2002). Thus, the issues related to employee dissatisfaction and core reason behind the lack of human capital in organizations could be evaluated through the concept of compensation and its benefits as well.
The scope of the research related to the impact of compensation and its benefits in relation to acquiring satisfaction and employee retention could be stated in terms of evaluating the needs that remain unattended so far. But it is realized that in the last few decades the face ways in which the organizational scenario has changed and due to the increasing competition the employee retention has become one of the burning issues (Smith & Smith, 2007). Thus, the scope of this study is to evaluate the chances of employee retention and job satisfaction as well. On the other hand, another scope is to understand the required measures in relation to increasing job satisfaction and retention through compensation among employees.
The aim of this study is to provide a clear insight regarding the practices of an organization in relation to ensure job satisfaction and employee retention through compensation. Along with this, it also manifests the association between compensation and job satisfaction in the industrial scenario (Chhabra, 2001). Thus, the study would be conducting the evaluation of all the relevant aspect in order to justify the concept.
The study is significant as it attempted in explaining the aspects that remain untouched from quite a long time. But this study would be concentrating upon the evaluation of how employees especially subordinates are devoid of compensation as it has been believed that executives are the main source of organizational performances and also awarded with compensation while the subordinates are the main carrier of performances. Thus, the significance of the study could be realized in terms of highlighting the importance of employee compensation and how it influences employee retention and job satisfaction.
The compensation has a great influence on job satisfaction and employee retention, as these aspects are interrelated to each other. On the other hand, compensation has the influence upon productivity and job performance as well, as employees in an organization can be motivated through providing good compensation (E.Deepa & Dr.S.Kuppusamy, 2011). The research problem could be stated in terms of poor compensation or lack of proper compensation to the employees instead of good organisational performance and organizations in the contemporary business scenario is concentrating more on executive compensation rather than the employees working under that executive. Apart from this, the subordinates are the base of organisational performance as they work hard and help the entire organisation to meet its objectives and very few studies have been conducted in relation to highlight this part of the managerial issues so far (Makena Muguongo, 2015). Thus, this study would help in evaluating the importance of compensation and its benefits for employees or subordinates which can ensure quality performance and increased productivity as well. In this regard, the research gaps could be stated in terms of the concentration of the previous researches on one part of the organization that is the executives. Many previous types of research have manifested the benefits of compensation in relation to the executives and how it has helped in enhancing organizational performances (M.O, & Oluwaseun, 2014). But the main research gap shows that not only executives but compensation to employees could evidently increase organizational productivity and possibilities of employee retention as well.
The research questions are significant in the research study as it would help in conducting the research in a right direction and with relevant information. Thus, the research questions are stated in the following manner.
What is the significance of compensation in an organization?
What is the association between compensation and job satisfaction and employee retention?
How could employee retention be ensured through providing compensation?
What are the benefits of compensation in delivering job satisfaction to employees?
The objective of the study could be stated in the following manner.
To assess the significance of compensation in an organization.
To discuss the ways in which compensation is related to employee satisfaction and retention.
To state the aspects that help in ensuring employee retention through compensation.
To evaluate the benefits of compensation in an organization.
Compensation plays the most important and vital role in the organizational setting and in accordance with the four Ms that involve men, material, machines and money, men have been considered as the most important part of organizational development and retaining and maintaining the required amount of human capital is also significant to conduct business activities in an effective manner (Adler & Ghiselli, 2015). In order to state the role or importance of compensation in an organization it could be asserted that the primary aim of compensation is to enhance the motivation f the existing employees and to execute quality performances in this regard. Thus, the significance could be stated in the following manner.
To enhance the commitment level of the existing employees and extracting quality performance from them.
To retain the services of the employees the for longer period of time and utilize most of the part of their corporate dedication.
To deliver a sense of trust and worthiness to the employees over executive compensation.
On the other hand, compensation also plays an important role in the context of attracting new talents and makes them retain for a longer period of time (Ahrne & Brunsson, 2010).
Thus, compensation and its related practices could ensure the increase in organizational productivity, quality and efficiency among employees, while, it is also important in motivating the employees who are observed to be demotivated due to extreme organizational pressure (Terera & Ngirande, 2014). Thus, compensation is important for job satisfaction and employee retention with the organization.
Similarly, high job satisfaction among employees will promote high-end job satisfaction among employees that work in the subordinated groups and other employees (Bhattacharyya, 2015). Thus, it is realized that delivering a handsome amount of compensation would increase job satisfaction as employees are getting paid for their hard work and commitment. Therefore, the association between compensation and job satisfaction could be evaluated through expectancy theory. In accordance with the expectancy theory, the aspects of motivation could be defined in terms of valence, instrumentality and expectancy. On the other hand, the compensation system in the organisational scenario helps in ensuring employee motivation and it has been realised that with relevant reward system the employees manifest a change in behaviours as a result of compensation and rewards for their performed works. The employee job satisfaction directly could be related to the aspects of compensation that involves pay, interaction with supervisors, positive words from the supervisor and so on (Biddle & Emmett, 2013). In accordance with the expectancy theory, each and every employee inculcates few expectation at the time of joining a job. This theory has also recommended the definition of compensation in terms of a set of tangible and intangible assets which employees get in the form of monetary expenses.
Thus, there is an evident relationship between compensation and job satisfaction along with employee retention (Mishra & Farooqi, 2013). Two reasons behind it could be realised such as the importance of money in order to fulfil one’s needs and secondly, the management’s concern regarding the employees. As employee expect to have a systematic pay in each organisation, it is quite evident that fulfilment of the desired pay and other treatments delivered by the management would obviously result in satisfaction. Thus, the increasing organisational settings and the demand of talented employees have compelled the organisations in adopting relevant pay programmes and compensation system (Gelard & Rezaei, 2016).
Apart from this, employees always wanted to be getting paid in order to satisfy their self-esteem and personal needs as well. Therefore, the importance of compensation relies upon the type and work nature of the industry in which employees are usually performing. If an employee is being rewarded with relevant salaries in the industry it is quite evident that the employee would retain for a longer time in the same working place as all his or her for a longer time. Some of the disadvantages in this regard are that if an employee does not retain for a longer time, the employers have to carry a cost of recruiting and in this period the productivity of the organisation may decrease (Giancola, 2010). Thus, it is quite evident that the compensation has the severe influence upon the employee retention.
Along with such aspect, it is quite evident that compensation does have certain benefits which also satisfy the employees and make them retain their present job for a longer period of time (Makena Muguongo, 2015). The compensation delivered to the employees normally addresses social security, and no financial benefits to the employees that include disability payment, day care, and retirement benefits and tuition reimbursement and so on. Therefore, the particular reason behind job dissatisfaction and lack of proper talent in the organisations have been realised in terms of ignorance of employee performances while highlighting the executive performance and contribution (Khan et al. 2011). Apart from this, the subordinates are the base of organisational performance as they work hard and help the entire organisation to meet its objectives and very few studies have been conducted in relation to highlight this part of the managerial issues so far. It is being observed in the past several years that management and board of directors have focused on executive compensation in order to enhance employee performances and productivity in an organisation. But, due to the traditional thinking of management employee dissatisfaction and change of job have been recorded among the employees or the subordinates. Thus, the organisations and managements have shifted its concentration upon the well being of the employees as well as they are at the core of organisational performances and quality of services. With a concluding note, it could be asserted that the compensation mainly works as the driving force for relevant working capital (Krukoff, 2006). It is also evident that is employees are compensated in a well-structured manner that eventually contributes to developing job satisfaction in the contemporary organisations. Thus, practices should be adopted by the organisations in terms of revised pay of the employees in relation to compensation. Hence, it could be stated that the concept and aspect of compensation would help in ensuring consumer retention and job satisfaction.
The methodology part is an essential aspect in the context of a research proposal as it depicts the relevant and required techniques and methods in relation to accomplish the research work and accumulate data in this regard. With the incorporation of positivism philosophy in relation the study and to evaluate and accumulate data for explaining the impact and benefits of compensation upon the aspects of employee retention and job satisfaction positivism philosophy would help in assessing the data depending upon the practical ground (Fletcher, 2016). On the other hand, the descriptive design of the study would also help in evaluating the factors in a more systematic manner. Therefore, both primary and secondary data would be used in this regard as the both the manners of data collection could ensure reliability and validity in the context of the study. Under the primary data, two types of data collections could be ensured such as quantitative and qualitative data collection. In the quantitative data collection, the data will be gathers from the employee perspective and the qualitative data will be derived from the managerial perspectives. Thus, a set of survey questionnaire would be prepared by the researcher in order to gather information from the employees and record their perspectives regarding compensation and its benefits (Jha, 2008). The questionnaire would be prepared in accordance with the Likert scale and would be surveyed in the survey money. 120 samples of employees would be interviewed and surveyed with multiple choice questions in an ethical manner.
On the other hand, in the case of the qualitative data collection, the researcher would be conducting a face to face interview in order to accumulate information regarding the research topic from the managers of some industries (Usman & Danush, 2010). The sample of 10 managers from five different industries would be taken for assessing and realizing the impact of compensation in the respective industries. Here, the main variables are compensation, job satisfaction, and employee retention, and benefits. Along with this, in the case of secondary data five scholarly journals could be included in order to accumulate empirical information presented by previous researchers. Thus, it could be realized that the respective and mentioned methodology would be able to accumulate valid and reliable data from the selected respondents and deliver relevant and acute implication to the topic of the research.
Conclusion
In conclusion, it could be stated that a little amount of research has been done in the context of evaluating and explaining the impact of compensation on job satisfaction and employee retention. It is being observed in the above explanation that compensation has a great impact on the employee retention and satisfaction towards their jobs. In accordance with the expectancy theory, the aspects of motivation could be defined in terms of valence, instrumentality and expectancy which explain the effectiveness of expectancy theory. The impact of compensation is evident upon the aspects of job satisfaction and employee retention as the sense of hard work and determination to meet organizational objectives could be achieved among employees. The aim of this research has been realized in terms of evaluating the impact of compensation and its benefits for employees in the organizational settings. Therefore, the association between compensation and job satisfaction could be evaluated through expectancy theory. Thus, through involving both qualitative and quantitative data collection in order to collect reliable and valid implications could be developed. On the other hand, in a case of secondary data, a detailed evaluation of the scholarly sources could be stated in order to generate empirical information. Thus, it could be concluded that compensation has the severe influence upon the aspects of job satisfaction and employee retention irrespective of any industry.
References
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