Discuss about the Attraction and Retention of Talent Management.
Motivated employees are a critical factor for organisations to realise its goals and objectives. That is, motivated employees are usually engaged in their various tasks as well as having a high level of commitment towards to the organisation. As a result of this high level of commitment, organisations are able to realise high employee retention rate and stability which translate to better performance of these organisations (Ellingsen & Johannesson, 2008). In this regard, organisations have come up with several ways of ensuring that their employees remain motivated and committed to the organisation’s course. These motivation incentives include rewards, career development opportunities, recognition and a positive organisation culture (Bratton & Gold, 2000). For example, McDonald’s Australia uses leadership development schemes to motivate its employees while Spastic Centre uses salary packaging method to ensure employee commitment and retain talent. These two methods have been found to be effective in realizing these organisational goals. This paper examines these two methods of talent retention. Furthermore, the paper argues that salary packaging is one of the most effective methods of employees’ motivation and talent retention.
Generally, talent retention refers to the ability of the organisation to keep its employees committed and motivated for a long period of time thus leading to low employee turnover. Akhilesh (2014) highlighted that low employee turnover is important in ensuring that the organisation is stable and enhances the ability of the organisation to implement its strategies and achieve its goals and objectives. According to Bhatnagar (2007) low employee turnover also ensures effective and efficient implementation of change and programmes within the organisation. Organisations with low employee turnover such as McDonald’s Australia and Spastic Centre use various methods in order to retain talent. McDonald’s Australia has a strong culture that promotes talent development (Isukapally, 2005). This culture facilitates the career development from a junior level to executive levels. According to some studies, younger generations are usually less willing to remain with the same organisation and also have lower organisational commitment compared to older generations. However, these younger generations usually exhibit strong learning orientation (Hatum, 2010). As a result, organisations willing to keep young generations must also provide them with opportunities to learn and grow their leadership skills.
McDonald’s Australia prioritizes this method of talent development since they believe that promoting people within the organisation breeds leaders with a better understanding of its culture and business. The firm also has a recognition program that promotes teamwork within the organisation. These career development oriented programmes there help to attract and retain top talents within the organisation. Conversely, employees are motivated differently and sometimes organisations can struggle to find factors that lead to the minimization of employee turnover within an organisation (Mondy, Noe, & Gowan, 2005). Though research shows that in some cultures employees care a lot on how much the employer values them, in some cultures, tangible rewards are more valued by employees than intangible rewards such as recognition and talent development (Amabile, 1993). However, the success of talent retention techniques can also differ from one organisation to another. For example, McDonald’s Australia linked their decision to leave with the talent development and leadership opportunities availed by the firm. In this regard, a high number of employees were willing to continue working for McDonald’s Australia and exploit opportunities to rise within the organisation.
McDonald’s Australia’s recognition limits the influence of factors that can lead to talent loss. Some studies identified leadership problems, organisational culture and lack of employee equity as some of the reasons for talent loss (Samuel & Chipunza, 2009). Through employee recognition programme most of these factors are eliminated from the organisation. In this regard, teamwork and strong leadership will be important in ensuring the success of recognition programme towards talent retention.
Past studies and theories also support McDonald’s recognition programme as a way of enhancing organisation commitment and talent retention. Proponents of expectancy theory argue that job attractiveness depends on the desirability of the reward to the person, performance required to secure the reward and the belief of a person that his/her efforts will affect that performance (Mondy, Noe, & Gowan, 2005). This theory can be used to explain job satisfaction at various organisations and therefore can also be used to explain talent retention using recognition at McDonald’s Australia. Recognition is based on the perception of the employees that their actions are contributing positively to the ability of the organisation to realise its goals (Samuel & Chipunza, 2009). Ryan and Deci (2000) highlighted that this perception is therefore enhanced by the introduction of recognition programmes that will motivate the employees and help them achieve their desired reward i.e. leadership position. In this organisation, the leadership position is considered the necessary condition to ensure increase job satisfaction and thus higher rate of talent retention.
Additionally, recognition helps employees to realise their social needs thus increasing their motivation towards their work and other tasks within the organisation. According to Maslow’s need theory, recognition is one of the social needs of an employee. Mondy, Noe and Gowan (2005) indicated that recognition or appreciation confirms to the employees that their work is valued and appreciated thus improving their satisfaction and productivity. At the workplace, leadership actions that make employees feel unappreciated can be very detrimental to their engagement thus increasing the chances of leaving. Therefore, appreciation of employees’ efforts will positively impact on the ability of the organisation to attract and retain top talents. Furthermore, employee recognition will enhance the competitiveness of the organisation by impacting on some of the key organisational success factors. In the case of McDonald’s Australia, the employee recognition programme had led to a reduction in the employee turnover, improved team culture and enhanced performance of the employees and the organisation as a whole.
Alternatively, some organisations prioritises rewarding employee performance as a way of motivating employees. For instance, these organisations believe that increasing the rewards available to employees will increase their motivation and commitment. Rewards are an important incentive in enhancing the performance of employees as well as ensuring talent retention. As highlighted in the case of McDonald’s Australia intangible reward such as recognition can have a huge impact on employees’ motivation and thus talent retention. However, some organisations such as Spastic Center use tangible rewards to enhance employee motivation (Steel, & Konig, 2006). External rewards such as bonuses, salaries, and allowances also lead to increased talent retention in several organisations. Here, people or employees are committed to the course of the organisation due to the promise of a higher external reward for better performance. In some cases, people are not entirely motivated by the internal desires and wishes but by the promise of certain external rewards. According to incentive theory, organisations which re-enforce these external rewards can achieve greater employee commitment and motivation (Laffont & Mortimort, 2001; Steel, & Konig, 2006). This type of motivation is called extrinsic motivation. It can also be described as a type of motivation driven by external stimuli. Some of the examples of external stimuli that lead to extrinsic motivation include an employee of the month awards, benefit packages, bonuses and organisational activities.
Several organisations in Australia use salary packaging as one of the ways to inspire extrinsic motivation among employees and ensure talent retention (Benabou & Tirole, 2003). According to Kramar et al. (2014) salary packaging refers to a motivational incentive that combines an employee salary with other fringe benefits in exchange for a certain part of the monetary salary. These types of arrangements in most cases result in benefits for the employee or employer in terms of tax obligations. Some of the items which are commonly used in salary packaging include vehicles, mobile phones, and laptop computers and so on. In Australia, some companies allow their employees to include household utility bills and other items in the salary package. Charities and public organisations exploit the salary packaging option in order to benefit from the Fringe Benefits Tax exempt items such as mobile phones and laptops for work purposes (Kramar et al., 2014).
Spastic Centre is a non-governmental organisation that uses a tangible reward incentive like salary packaging to enhance talent retention. According to this organisation, the salary packaging is one of the ways of making employees’ salary tax efficient. In this regard, the organisation regards this system as an important part of the organisation’s employee attraction and retention policy. This method allows employees to exert and exploit their power over their salaries and other employment rewards. Some of the most common items that Spastic Center had included in the salary package include benefit vehicles, laptop computers, and employer superannuation contributions among others. On the other hand, Optus allows for salary packaging for employees to purchase food products. According to Australian legislations, sacrifice for sustenance is allowed. In the Optus programme, employees are expected to pay $1 weekly to access the scheme. This scheme was introduced since food provision was seen as one of the most important benefits for employees and salary packaging could be used to realise this goal (Sule, Amuni, Obasan, & Banjo, 2015).
This salary packaging concept is however not widespread in many organisations and industries. In order to ensure motivation and commitment of employees from this scheme, managers should ensure that whatever is included in the salary package leads to an improvement in the employees’ commitment hence talent retention (Kerr-Phillips & Thomas, 2009). Just like in the case of the McDonald’s Australia recognition scheme, organisation managers and leaders plays a crucial role in the coordination of groups, skills and rewards to individuals in a way that will enhance the ability to realise organisation goals. Salary packaging reduces tax obligations of the employees thus indirectly avails more money for these employees. As a result, employees will feel motivated, inspired and empowered by the organisation (Rani & Reddy, 2014). Furthermore, it will facilitate productivity and commitment of the employees as a result of increased external incentives.
Salary packaging also acts as an additional benefit to the employees. In this case, employers of small and large organisations use salary packaging as a recruitment and retention tool. It is a tax efficient mechanism that will ensure employees employ less tax (Sule, Amuni, Obasan, & Banjo, 2015). That means that salary packaging effectively reduces the gross pay of employees. That is, it reduces the amount which is exposed to PAYE and National Insurance. On the other hand, salary packaging presents an exciting opportunity for companies to extend their benefits to their employees. This type of benefit can be available to the entire members of the organisation leading to motivational benefits on the entire organisation. For example, one a company uses a scheme such as availing a company to all employees, all employees will hugely benefit. According to Birt, Wallis and Winternitz (2004), this type of motivation is more effective in areas where group culture is highly embraced. In these types of cultures, rewards which are attached to individual performance have been found to be relatively ineffective. In this case, companies must come up with reward schemes which will benefit the entire workforce like salary packaging.
Consequently, salary packaging has been found to enhance the effectiveness of financial incentives as a motivating tool. For example, a study on UK employees found that only 13% of employees were motivated by purely financial incentives. However, this figure rose to 46% when these financial incentives were mixed with other bonuses in the form of a salary package (D’Amato & Herzfeldt, 2008). This study, therefore, revealed a clear split between salary and performance bonuses in motivating employees. That is, most employees did not draw much motivation from purely financial tools (Samuel & Chipunza, 2009). In the case of Spastic Centre, a salary package that included other non-financial benefits was very effective. This affirms the findings of the UK study on the effectiveness of a mixed motivational approach (Sule, Amuni, Obasan, & Banjo, 2015). Spastic Center had therefore registered a high level of employee retention as a result of their salary packaging motivation approach.
Despite Spastic Center relying hugely on salary packaging, recognition strategy can also be used by NGOs to enhance motivation of employees and ability of the organisations to retain talent. In order for these organisations to motivate their employees, they rely on cost effective and non-financial motivation (Meyer, Stanley, Herscovitch, & Topolnytsky, 2002). In this case, intrinsic motivation is essential in ensuring that employees are motivated and committed. Most NGOs deals with social and community problems. In some of these cases, employees draw their motivation from their contribution to the improvement of livelihoods and welfare of the entire society. In this case, McDonald’s Australia’s recognition is expected to be effective in talent retention for most NGOs (Chirkov, Ryan, Kim, & Kaplan, 2003). However, the success of any motivational tool (salary packaging or recognition) depends on the specific characteristics of the employees and jobs. Firms and organisations must be able to adjust to these motivational variations among employees. Furthermore, quit decisions of the employees is also dependent on other factors such as the job offer and the previous firing decisions within the organisation. According to past studies, these factors impact on the job security of the employee thus influencing his/her motivation, commitment and the organisation’s ability to retain talents (Behery, Patton, & Hussain, 2012).
Meanwhile, NGOs can achieve maximum commitment and motivation of their employees by use a combination of both intrinsic and extrinsic motivation tools (Benabou & Tirole, 2003). Studies have shown that organisations like Spastic Center can use the salary package scheme as well as the recognition programme as used by McDonald’s Australia. The findings of various studies have found that motivation of employees are individually determined and therefore organisations should have more than a single technique to motivate its employees and enhance talent retention (Gagné & Meyer, 2014). First, there are employees who are significantly motivated by financial rewards. This type of employees need will be retained in the organisation if the salary and wages are adequate and fair. Second, some employees are more motivated by intrinsic factors such as achievement and recognition (Breaugh & Starke, 2000). Another group of employees would prefer to be rewarded adequately financially while at the same time the organisation must show that they appreciate his/her efforts.
Conclusion
Talent retention is one of the essential factors if an organisation is to realise its long-term objectives. This paper evaluates the talent retention tactics of McDonald’s Australia and Spastic Centre. The researcher argued that salary packaging is one of the most important tools of ensuring talent retention within an organisation. Past studies revealed that talent retention was directly related to the motivation and commitment of the employees. In this case, intrinsic and extrinsic motivation factors were found to be critical in realizing high employee retention rates. McDonald’s Australia was found to use an employee recognition programme that depended on the promotion of team culture, development of talent and leadership within the organisation. On the other hand, Spastic Centre adopted a salary packaging scheme that reduced tax and national insurance obligations among employees. These two strategies were effective in the case of the two companies as they both recorded a high talent retention rate. However, the researcher found that employee recognition approach used by McDonald’s Australia could also effectively apply in the case of NGOs.
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