Associations consider their employees to be their most important asset, but they still count them as an expense in the accounting report. (Ahmed, Kolachi, 2013, 2013). Employees, in associations, are the most crucial resource for achieving all goals and objectives. Compensation and Benefits play a crucial role in determining the retention of employees. Compensation can be a powerful tool in the hands of an administration, allowing them to increase their authority and influence the behavior and profitability of employees.
Employers are now focusing on employee retention and wellbeing over customer satisfaction in order to maintain low turnover rates. Compensation is a key factor in motivating, attracting and retaining talented employees. Ibrahim and Boerhaneoddin believe that compensation encourages highly-effective employees to stay with their employers for a longer period of time. Ibrahim and Boerhaneoddin also suggested that rewarding employees with generous incentives would lead to employee retention and, ultimately, job satisfaction, loyalty, and commitment. Implementing an organized retention strategy will not only help to reduce turnover, but it will also encourage employees to keep up their productivity (Scott).
Adam (1963), equity theory, explains there’s a direct link between a fair or unjust distribution of resources and the performance of employees. In the past, studies have shown that compensation plays a significant role in employee retention. Before we proceed, it is important to understand that compensation has three components: financial (pay, commissions, overtime), non-financial benefits (training and development), and health care.
Human Resources department did not exist prior to 1970. It was mostly occupied with picnics and ceremonies. As time passed, the theories and practices of managing human resource also changed. William, McDaniel & Ford (2007) recommend that organisations should raise their benefits to satisfy their employees if they are unable to increase their salary. Compensation can directly influence employee retention.
This study focuses on the design of the analysis to determine the impact on retention. Most studies/researches have shown that benefits and compensations can affect employee motivation, performance, and staff satisfaction. in different industries. Now we will analyze which types of compensation and benefit elements are most effective in retaining employees within the banking industry, as it appears that the majority of banking employees switch jobs because of better benefits and packages.
This study can be used for all industries, but the banking industry is our focus because banking employees are much more likely to change jobs than other workers in comparison to other sectors. The study can help HR departments create policies regarding compensation and benefits. Benefits and compensation.
Retaining refers to an administrative skill and ability that begins with the creation, use and holding of assets for current and future uses (Hausknecht and al. 2008). Employers are becoming a valuable resource to their firms. They adopt a variety of strategies in order retain highly skilled and competent employees.
This study will be of significant value to HR departments working in the Banking Industry. HR will determine which compensation elements and benefits are most important in retaining employees. HR can design policies based on the satisfaction of the employees to retain the most efficient employees and achieve organizational goals. Zin et al. (2012) suggest that it is cheaper to retain and attract employees than to hire new employees.
Rodriguez (2008; cited in Kyndt et.al. The 2009 report claims that “If employees do not feel they’re learning and developing, they don’t believe they can compete with peers within their industry for career advancement and promotion opportunities. Once top-level employees feel like they’re not growing anymore, they start to search for external job openings.