Compensation Policy as Means of Attracting and Retaining Employee
Chapter One
OBJECTIVES OF THE STUDY
- The objective of the study is to provide a conceptual and analytical study of compensation policy.
- To determine the compensation policy required to attract and retain employees
- To determine types of compensation plans and their effectiveness towards attracting and retaining employees
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
This chapter gives an insight into various studies conducted by outstanding researchers, as well as explained terminologies with regards to compensation policy as means of attracting and retaining employees. The chapter also gives a resume of the history and present status of the problem delineated by a concise review of previous studies into closely related problems.
CONCEPTUAL FRAMEWORK
Compensation
Compensation is the human resource management function that deals with every type of reward individuals receive in exchange for performing organizational tasks, with a desired outcome of an employee who is attracted to the work, satisfied, and motivated to do a good job for the employer. A double input-output exchange between an employee and an employer. According to the American Compensation Association’s (1995) definition, “compensation is the cash and non-cash remuneration provided by an employer for services rendered” (ACA). It could be financial rewards which refer to any monetary rewards that go above and beyond basic pay. These rewards are separate and not added into basic salary. Examples of these include financial incentives, bonuses, and recognition. Compensation can be described as direct and indirect compensation received by employees in an organization that serves to achieve employee satisfaction and retention as well as improve performance. Direct compensation includes wages, salaries, bonuses or commission. Indirect compensation includes incentives, medical benefits, housing allowance, annual leave allowances and training opportunities. Compensation is the reward employees receive in exchange for performing organizational tasks. Compensation is direct and indirect wages. Direct compensation includes wages, salaries, bonuses or commission based on performances, overtime work, holiday premium, while indirect compensation is paid as medical benefits, housing allowance, meal allowance, utility allowances, incentive bonus, shift allowances, hospitalization expenses, out of station allowance, vehicle loan benefits, annual leave allowances, car basic allowances, etc.
Designing compensation program is significant in personnel management because of its direct influence on employees’ satisfaction and performance in the company. Compensation impacts everyone in the organization to an extent and can prove to be a very valuable and powerful tool – either intentionally or unintentionally. This compensation tool has the ability to achieve employee satisfaction and employee retention, as it comprises of financial and non-financial rewards that attract, motivate and satisfy valuable human capital, retaining effective performers as the compensation system recognizes desired behaviour towards aiding competitive advantage of the organization. Salary is the fixed or guaranteed regular monthly or annual gross payment made to employees; it varies between hierarchy of job positions, employees to employees and companies to companies. Wage on the other hand is a regular, usually weekly or daily payment made for work or services usually to manual workers. A person’s paycheck is a way to communicate the value and importance of teamwork as the Instrumentality theory explains that remuneration is a source of power, and a means of employee acquiring necessities and luxuries, and ensures the employees willingness and commitment to excel on the job, thereby ensuring employees’ retention.
CHAPTER THREE
RESEARCH METHODOLOGY
This chapter is designed to describe the procedures adopted in this research. The procedures involve the following: research design, population of the study, sample and sampling techniques, instrumentation, validation of the instrument, administration of the instrument and data analysis techniques.
Research Design
This study will be employ survey research design to evaluate the nature and impact of business ethics on organizational performance. According to Nworgu (2006), survey research design insurance that a group of people or items is studied by collecting analyzing data from only a few people or items considered to be representative of the entire group. It uses a questionnaire to determine the opinions, preferences, attitudes and perceptions of people about issues that concern them. A survey design is suitable for this research because it is going to make use of a questionnaire to elicit information from the respondents.
Population of the Study
The population of the study consists of about 100 respondents were selected based on their knowledge on compensation policy as a means of attracting and retaining employee.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
This chapter is devoted to the presentation, analysis and interpretation of the data gathered in the course of this study. The data are based on the number of copies of the questionnaire completed and returned by the respondents. The data are presented in tables and the analysis is done using t-Test. The chi-square test and Pearson correlation method were used in the validation of the hypothesis.
CHAPTER FIVE
SUMMARY OF FINDINGS AND CONCLUSION
SUMMARY OF FINDINGS
The objectives of this study were;
- The objective of the study is to provide a conceptual and analytical study in compensation policy.
- To determine compensation policy required to attract and retain employees
- To determine types of compensation plan and their effectiveness towards attracting and retaining employees.
Findings from the study revealed that majority of the respondents were of the opinion that the impact of compensation policy in employee attraction and retention is low and that direct and indirect salary has significant impact on the implementation of compensation policy.
CONCLUSION
Human resources are complex and not easy to understand. These are the assets which can make as well as break an organization. Retaining them will help in the long-term growth of an organization and will also add to their goodwill. But the most difficult task faced by an organization today is retaining as well as satisfying these resources. Although the research paper tried its level best to reveal the various research works done and the contributions forwarded by various researchers in the area of employee retention and job satisfaction, but still much scope remains for more exploration in the field of employee retention and it by taking into consideration the factors like compensation practices, leadership and supervision, career planning and development, alternative work schedule, working conditions, flexible working hours etc. Needless to say that these efforts should be conducted by HR professionals.
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