Different organizations have varied forms of various compensation methods and benefit programs for their employees. The major determinant factor and force behind theses schemes are the need to attract qualified and experienced employees and also to enhance their retention rate and motivation as well as organizational loyalty. As a result, the employees are poised to work hard, identify with the company and its culture ultimately to improve the organizational performance.
Organizations therefore have different types of benefits programs aimed at offering incentives to employees. Such programs cover such areas as health, education, transport etc. there area also monetary rewards which are offered to employees after a performance appraisal. Several researchers and scholars have carried out studies aimed at establishing the underlying connection between employee satisfaction and work performance. In a study entitled “Human Resources Management, Corporate Performance and Employee Wellbeing: Building the Work into Human Resource Management”, Guest (2002) argues that there is a close relationship between employee satisfaction and job performance since workers’ “attitudes and behavior mediate the HRM-performance relationship” (p.1). At the same time, Guest (2002) establishes that organizations should take into account such HRM practices as job design, direct participation and sustained two way communication since these factors are directly associated with “higher work and life satisfaction” (p.1). Consequently, there exist diverse forms through which the employee compensation methods and benefit programs are articulated.
The welfare programs and how they enhance employee satisfaction and retention are discussed below.
Conventionally, the aim of the welfare programs is to motivate the employees. The subject of employee motivation is one of the elusive topics for managers. It is therefore understandable that the concept is badly practiced. The concept of employee motivation and its application in enhancing employee retention rates is very dynamic field that requires multi-disciplinary actions. In an elaborate study on employee motivation in the MinneapolisGas Company it was established that employees considered security, type of work, company and opportunity for advancement as the basic factors that determined employee motivation. It was surprising that popular factors like better working conditions and high compensation benefits received lower rating than expected.
To ensure that their employees are motivated, happy and retained, most companies have training and educational programs. For example, both Google and Microsoft have employee training and development programs. These programs are specially designed to promote skill and experience development, as well as job competency. The development of the employees’ hand job competency as well as their motivation have greatly contributed to the employees understanding of the organization’s work flow process, work culture and strategic plans. During the training programs, companies emphasize on team building and team leadership skills. The companies invest in team building and intra-team development to enhance creativity and participation in decision making. Apparently, the companies have clear policies on the involvement of staff in key decision making processes. Notably, most companies encourage their employee to seek continual education and training with the objective of adding value and enhancing loyalty. Training, educational and tuition reimbursement programs offer opportunities for development. HRM managers must therefore employ strategies based on the need to provide mentorship, training and other relevant employee development strategies. The companies provide more than training to its workforce. On the other hand, it is very clear that the companies are well aware of the benefits of creating opportunities for the staff.
Most organizations use competitive wages and salaries as the main processes for employee motivation and enhancement of work performance. Fontaine argues that employee compensation supports staffing and performance management, and as result, organizations are expected to offer competitive wages, design pay structures and incentives to reward performance accordingly and on merit (Fontaine, 2004). The major reasons behind these compensation modes are founded in the need to enhance employees’ welfare given the dynamism and organizational management which today is faced many challenges especially in terms of attracting more qualified clients, retaining market shares, and wise business practices.
Most often than not, employees thus seek to find employers who not only offer good compensation but also guarantee them a working environment in which ethics, integrity and recognition personal and group efforts are upheld. Certainly, this calls for implementation of sound Human Resource managerial practices that would not only enhance the performance but also ensure that the labor turnover is at irreducible minimum and that job satisfaction is upheld. Because of the fundamental importance of employee satisfaction, most HRM departments have not recognized this factor but gone ahead to combine the inherent factors which promote job satisfaction and implemented HRM practices associated with greater satisfaction at work and in life (Guest, 2002).
Competitive wages and salaries compensation process, the main techniques employed are offering of competitive pay package in relation to the prevailing market conditions and industry averages. To effectively use the comparative analysis, organization arrive at the figures through use of such tools as employee pay analysis and job satisfaction surveys in which a comparative studies are carried out and documented from which the adjustments are made, and adoption benchmarked pay rates where a given set of employees’ earnings are of a certain minimum figure, and lastly construction of employee wage curve to establish the suitable pay compensations. It has been established that through employee satisfaction surveys managements are capable to obtain highly detailed data regarding employees’ job satisfaction/ performance levels (Bassi & McMurrer, 2006). Schneider (1994), on the other hand, suggests that by attempting to improve the services to customers, most organizations, especially those in the service industry have deployed a customer focused HRM approach. This seemingly improves the services to customers in most organizations, especially in the service industry. Moreover, research has shown that such empowerment strategies have a positive impact job performance and meaningfulness which enhances long term “commitment and reduce the intent to quit because of the significant positive correlation between them” (Ugboro, 2006, p.14).
To ensure success of such techniques, it is of profound importance that organizations be objective and professionally create a non controversial compensation system which is based on marginalization, subjective or discriminative. Consequently, there is need for sound Human Resource management policies and regularly evaluated human resource managerial practices. This however requires multi-departmental cooperation and collaboration among all the stakeholders. Significantly, it is an HR function and requirement of the responsible department to work “hand in hand with executives, managers, supervisors, and other employees to maximize their productivity, prepare them for positions of greater authority and responsibility, provide them with maximum job satisfaction, and enhance their employability” (Tracy, 1994, p.1).
Under the employee wages and salaries compensation schemes, most organizations use certain pay structures or graduated and self adjusting salary increment and benefits. According to Fontaine (2004), the most common tools used under the pay structure techniques include pay grades, broad banding, cost-of-living adjustments, lump-sum increases and compensation ratios (p.8).
Additionally, there is use of the employee incentive pay techniques purposefully to motivate employees and enhance organizational commitment and performance. Under this technique, organizations may use the variable employee pay schemes which is based on performances realized over a predetermined period in time or pay the employees on commission basis based on thee attaining a given target. At the same time, organizations do use the bonus-pay system, incentives to teams and payments through stocks to perpetuate the employees’ performance and reward good achievements.
Most organizations employ various forms of employee benefits administration purposefully to enhance employee satisfaction and organizational performance. First, there is use of ‘base line coverage’ techniques to motivate employees and ensure that their work within deadlines satisfactorily. These employee benefit schemes are normally compulsory and thus mandated. Some of the tools used in this technique include employer’s contribution to the social security schemes, provision of leave with pay and insurance of employees. Because of them being mandated the organizations in question need to comply with the governments’/state’s requirements and laws relating to employment so as to reduce possible areas of labor conflicts. Business-wise, decreasing chances of labor disputes increase employee job satisfaction and organizational performance (Tracy, 1994). Secondly, there is use of non mandated employee benefits administration techniques. These techniques include ‘medical and dental, vision care, prescription drug coverage, life insurance, wellness programs, disability insurance, credit unions, and educational assistance’ (Fontaine, 2004, p.8). Some organizations also offer their employees free lunches, transport programs and contributions to non compulsory pension schemes. These non mandated Voluntary benefits/ non mandated benefits are very critical in the process of augmentation of employee satisfaction and motivation. Emphatically, they serve to give an organization a competitive edge as a leading employer which is concerned with employees’ welfare more such with options such as dependent care, pension plans, flexible spending accounts and educational assistance (Fontaine, 2004).
Continuous training and education also act as away of providing employee with the tools to enhance performance and productivity. One of the most important strategies employed by the two companies is that they invest in equipping the employee. In this case the employee is enabled to offer the customers with the best service. This system has led to improved competitiveness of both companies. Experts agree that the ability of an organization to provide the tools and systems to its workforce is very critical in enhancing performance and productivity (Ulrich, 1996).
Investment in employees’ welfare is another form of employee retention strategy that is used by the company. Through well structured employee incentive plans, the companies have been able to motivate and retain their staff as they feel appreciated and recognized. The forms of employee welfare schemes used by the companies include monetary rewards, health care and medical benefits programs, pension plan and cash rewards. At the same time, the organizations have a rather stable career progression plan. Most companies normally give their existing employees chances to take part in a job recruitment process, while at the same time promoting the hard working and committed employees. By so doing, the two companies apply the theory of internal marketing to ensure that their employees are retained. Significantly, the theory of internal marketing stipulates that the management and the employees identify themselves with the organization, while the employees are taken as internal customers whose needs must met by the management. According to Tasi (2007), the theory of internal marketing requires that the HRM principles of a company are designed in away that the management always ‘sell’ the corporate plans and strategies to every employee, ostensibly to win them over. Specifically, the internal marketing theory seeks to ‘motivate, develop and retain’ the qualified and competitive employee, by developing job satisfying products (Kale, 2008, p.3).
Monetary and non monetary rewards are vital factors used in to motivate employees. However there has been a huge misconception on what really motivates employees. Experts urge careful considerations and planning when implementing reward schemes. Most companies have established the significance of recognizing and encouraging quality performance. The companies have inculcated a culture of creativity, teamwork and quality of perforce thorough a reward system that supports individual creativity while encouraging teamwork.
Designing of welfare programs that recognize the need for Work-family balance is also used as a job satisfaction driver. The conflict between work and life is one of the key areas that affect the effectiveness of an employee. Although some studies indicate that most employee today are unlikely to strike any balance between work and family, has the potential to contribute to low employee retention rates. It is therefore imperative that organizations need to employ strategists aimed at helping the work force to strike such a balance. Most of the organizations concur that work/life balance is one of the key areas they focus on to attract and retain skilled personnel.
Communication is one of the most under rated factors that enhance employee retention. Most organizations have recognized the benefits of enhancing communication systems within the organization. Communication in this case refers to the interactions between management and the employee as well as the communication among the employee. Internal communications have the ability to influence employee relationships. Communication has a role in motivation, defining shared values and helps to promote trust in the organization. Companies like Microsoft Corporation employ the theory of social capital and internal organizational communication. Under the theory of social capital and internal organizational communication, companies are able to create a desired outcome by employing certain communication strategies. In this case, social capital involves the benefits associated with the outcomes like increased employee satisfaction, increased productivity, efficiency and the overall impact on retention rates. Microsoft and Google have employed effective communication systems to aid the interaction among employees, customers and the management. The companies seam to have employed strategies that enhance effective internal communications. Some of these include providing timeliness and content delivery to individual’s employees and between employees and the management. On the other side Google employs appropriate management skills to manage its diverse workforce. The ability to manage this workforce de from cross cultural background is one of the key strengths of the company that enables it to keep employee retention very high. Another function of internal communication is encouraging employee to participate in decision making process.
Diversity management is another employee welfare management program that should be encouraged. Doing away with blatant imbalances in an organization should serve a strong management practice /concept. Imbalances in terms of gender, age, race (for multicultural organizations) among other factors can be successfully addressed through well designed and intended policies that encourage diversity. For example, a company can come up with policies that outlaw discriminations and appointments or promotions based on age. At the same time, it can be universally agreed that a particular gender or age group should not dominate a given department or unit/ branch. Even though such policies may be difficult to implement, by all organizations, a kind of formula that allows for diversity in work place need to be adopted. In instances where a particular group dominates the board room, the minority age group may feel discriminated against especially if their views are either not considered or voted down by the majority. The effect of age difference can also be looked at in terms of the composition of a team or a group within an organization. Naturally, younger people would feel odd and uncomfortable when in a group that is dominated by older people. Similar feelings are the same about the older population. However, research findings by Shore et al shows that the degree of being disadvantage is not uniform for the two age groups. Instead, older employees feel more exposed and valuable when they constitute a minority number among younger counterparts (Shore et al, 121).
Employee Referral Program, aimed at providing incentive award to organization’s employees who bring candidates by referring applicants who are consequently selected and employed in hard to fill positions, is another effective welfare program. Employees receive significant amount of reward as an incentive for referring a family members, peer or friend to available job opportunities to be filled. This program is designed to offer financial incentives to employees whose referrals apply and get placement at the company. At the JHG employees are eligible for the referral incentives apart from the HRM manager and the departments’ staff, employees on leave, and staff members undergoing a disciplinary process. Not all jobs are eligible for the reward. The positions included in this scheme are ones where highly qualified and experienced candidates are required. These are jobs which are typically hard to hard to attract potential candidates and also hard to fill. These jobs include Lathe operator, CNC Machinist, the executive officer and Human Resource Administrator. However, fresh graduates, current JHG employees, and former JHG employees are not legible for inclusion in the employee referral program.