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How Can Human Resource Departments Retain Talent?

3162 words (13 pages) Business Assignment

2nd Nov 2020 Business Assignment Reference this

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Introduction

Employee retention can be defined as the ability and process of an organisation to retain its workforce which involves performing strategic management and employment relations management to increase job satisfaction. Furthermore, organisation need to diagnose the causes of retention, explore range of solutions, match solution to needs, forecast value of retention solutions and adjust solutions to maintain low turnover rate (Phillips, & Connell, 2003, p.91). So, in this essay, we will discover range of solutions in responding common concerns from long-term employee in two aspect: remuneration and organisational support.

Remuneration

The connection between remuneration and staff turnover is very significant as most of the employee believe they worth more than their current pay. Also, this is one of the main motivations for employee to perform better as it acknowledges the worth and value of their contribution. (Phillips, & Connell, 2003, p.176). According to a poll performed by Investors in People in 2018 and Rubenstein et al. (2017),  support pay disputes is crucial in causing job dissatisfaction. Despite that, there is no absolute positive relation between higher salary and long-term employee’s commitment where research studies showed intrinsic rewards are as powerful as pay rewards (Taylor, S., 2018, p.336). Distributive and procedural justice, which means fairness of pay distribution and decision procedures, are vital in pay satisfaction. (Phillips, & Connell, 2003, p.179). In any case, organisation need an appeal mechanism as to achieve equity. Usually, these two goals can be responded by improving pay; reward system, benefits and compensations as well as job fulfilment and employment engagement.

Reward Management

In terms of reward management, Gainsharing plan, a measurement of employees’ performance by using a fixed formula (comparing baseline performance to actual performance) to share bonus with all. (Armstrong, & Murlis, 2007, p. 354). It boosts morale towards the organisation, level of teamwork, and continuous improvement etc., but it will be unfair when there is free rider thus it discourages individual merit which cause disputes towards management decisions (Masternak, 2015, para 2). Such method can only be effective in companies that performance level can be easily quantified or have a trust work environment. Performance related pay (PRP), which links an employee’s performance to their salary progression in different forms: bonus, increment, merit or objective. (Taylor, S., 2019, slide 5). Suff, Reilly & Cox, (2007) researched that PRP provides direct incentives where it recognises one’s achievement more significantly which leads to increase of productivity and quality of work. Nonetheless, the goal might be too hard to achieve which may further demotivate employees and undermine problem of teamworking building and co-workers’ relation. This method works in the public sector as well as among white collars. Retention bonus, where employees are rewarded for staying with the organisation, is another attempt in retaining talents. Case study conducted by Kiger (2000) finds out that companies can retain 90 percent of supervisory and technical employees by offering retention bonus. Yet, it is only effective during period of transition and organisational changes (David G. Allen, 2017, p.24) and it will widen the gaps between senior and junior employees that would induce voluntary turnover (Bryant, & Allen, 2013, p. 171).

Benefits and Compensations

In terms of benefits and compensations, organisation can offer a range of benefits such as paid holiday, health insurance, maternity leave etc., and compensations such as pay raises, retirement saving plans, overwork pay etc. to retain talent. A study on the relation between compensation and job satisfaction supported that individualised compensation can motivate employees in a fixed pay rise which linked with individual efforts of exempt employees. In which, they will feel they are treated more reasonable comparing to other organisations (Roussel, P., & Igalens, J., 2000, p.1018). Beyond pay raise and cash bonuses, employee stock option can reduce executive turnover (Dunford et al., 2008, p.688), while better insurance and retirement benefits reduces turnover as well (Bryant, & Allen, 2013, p. 172). In addition, evaluating competitor’s compensation and benefits package will be constructive in diagnosing own weakness in attracting new talent and retain high performing employee (Tetrick, Weathington, Da silva, & Hutcheson, 2010, p.196). However, Employee Value Proposition (EVP) must be considered to monitor the value of benefits and rewards in returning for an employee’s performance in the workplace. As offering more benefits and rewards will increase organisation’s operating costs, EVP should take the role to balance both stakeholders’ profit. Nonetheless, Corporate Leadership Council proved that EVP is effective in helping to recruit and compete top talent for organisations.

Pay Structure

In terms of pay structure, pay progression systems should be reviewed in order to retain talent as the intention of it is to provide flexibility, fairness and transparency in pay. This system is a graded salary structure where there are minimum and maximum salary according to employees’ performance, years of service, market, contribution etc. Case studies carried out by Institute for Employment Studies shows that improvements can be done in different form of progression system. For example, CABI, who had changed their system from individual performance and service based into market rates and individual performance based because of large number of redundancies. By renewing progression system, old top graders now have more chance to progress while highest performer can be awarded more than before (Rickard et al., pp.18-19, pp.40-44). This positively increase incentives for well performing employees to stay within the organisation. Nevertheless, large and hierarchical organisation can adopt broadbanding payment which involves grouping employees who perform similar function into a smaller number of pay bands. From flattening hierarchies, the new structure creates a wider latitude in terms of pay increases and career growth without promotion. This also benefits highly skilled employee from non-managerial roles as they will be paid in competency-based structure (Phillips, & Connell, 2003, p.179).

Organisational Support

There are employees who are satisfied with their pay packages yet struggle to find motivations because of insufficient organisational support that lead to job dissatisfaction. McClelland propose a theory of motivational constructs in implicit motives, which is unconscious behaviour influenced by activities, and in explicit goals, which is conscious objective towards goals and duties (Langens, & McClelland, 2000, p.1). Kehr used this as a model in evaluating its validity on work motivation, where it proved different motives affect employees’ attitude and behaviour towards job satisfaction (Kehr, 2004, pp.480-482). Although every individual differs, there are common solution to fulfil most needs. Report stated that engaged employees are more willing to stay as they feel more fulfilled in achieving goal and purpose within the workplace (GALLUP, 2016, para 6), in which support like development opportunities, culture and recognition contributes to improve employee engagement (Wigston, 2018, para 4). Thus, we will discuss how the three methods mentioned above can retain talent in detailed.

Developmental Opportunities

Developmental opportunities can be meant by giving promotions and trainings in different context. Allen and Bryant (2012) stated that giving training, development and career advancement opportunities can increase employee engagement. For instance, in the IT industry, constant training is useful to employee as technology advances rapidly nowadays. Soft skills can also be introduced to show interest in employee’s personal growth, which can enhance human capital management and employee’s skill in concurrent. However, this encourage job hopping as employees’ worth increased plus training failure can cause career-minded employees to look for alternative jobs (Taylor, S., 2018, p.339). To tackle some of the problems, it also suggests organisation should pay for the training and that it is not “generally recognised” to prevent job hopping. Meanwhile, seeking alternative opportunities like promotion in human resources development. Promotion can be used to give a clear career path that give aspire and space to develop without resignation. A research showed a minority female working in academic medicine was about to leave as she was not given a chance to get promoted (Price, E.G. et al., 2005, p.568). This showed the importance of career advancement in relation to job satisfaction. However, promotion cannot be adopted frequently as it increases operation costs while the decision may not be fair all the time as well. For example, some people may get promoted even, they accomplish less than others (Price, E.G. et al., 2005, p.568).

Culture

Ghapanchi and Aurum (2011), Walker, J.W. (2001) and many researchers emphasis that work culture is essential in improving employee engagement to achieve retention. In order to develop a well-rounded working culture, consultative bodies like mentoring and coaching should be implemented to give opportunities for employees to express their view, needs and difficulties in which influences retention as well. (Ellinger, & Hamlin, 2016, p.474). As an example, it is important to build an equity working environment where equal opportunities should be given despite there are diversities in different form. Having a diversified workforce can bring new perspective, knowledge and experiences that open new markets (Foster et al., 1988, p.36). In contrast, discrimination harms an organisation’s reputation and induce voluntary turnover as well. Besides, absence will take place in response to discrimination, in which is explained by few researchers, such action is to minimize the loss (McShane, 1984; Scott and Taylor, 1985; Withey and Cooper, 1989). Moreover, organisation should develop a culture in concerning employee well-being, suggested by CIPD. (CIPD, 2019, para 6). Working condition and environment can causes mental health issue, where 1 in 6.8 people have such problem in 2008 according to Mental Health Foundation. Google is a successful example in developing this culture as they implemented a long-term study research, named gDNA. It helps in identifying people who struggles to maintain work-life balance. In response, Google launched 20% time where employee can work on desired projects in 20% of their week time. This is to prevent burnout with overloading of work and keep them engaged and passionate about their job.

Recognition

A recent Achiever’s survey discovers that recognition influences employees’ decision on resignation or stay with the original organisation. Meanwhile, recognition also directly affect how employee value themselves within the workplace where SHRM suggests, manager should give positive feedback and recognition in response to employees’ contribution. A certain extent of recognition should be given regarding to Human Resources Development (HRD) so that employee build advance skills and continue to improve. In addition, allowing autonomy in different context, such as involving employees in decision making and planning, is one of the methods in acknowledge the importance of employees, especially from nonmanagerial roles (Horwitz et al., 2003, p.28). Such method gives larger freedom that allow flexibility in time management and method of employees’ tasks, which increases motivation and happiness. A research carried out by Noah, (2008) proved autonomy increases belongingness among employees that also builds a better work environment as well as employment relations. Yet too much autonomy may result in loss of direction and disorganisation. A case study is carried out by Yvonne and Rod in 2004 to study autonomy among nurse with their job satisfaction. Senior nurse managers agreed with the improvement on efficiency as the management tool is being refined, but it reduces their resources and results in increase of workloads for nurses. Meanwhile, Spotify, a very successful music streaming service in the market, grant team autonomy to employees, where the team were only given with guidelines and coaches on how to build the product without micromanagement (Mankins, & Garton, 2017, para 2). Such autonomy must be built on communication and trust, which might not fit every organisation’s culture, yet undeniably relative autonomy energises employees.

Conclusion

In conclusion, retaining talent involves a complex variety of solutions in which this essay focuses on remuneration and organisational support towards long-term employees. In terms of remuneration, it gives financial incentives for employee to gain motivation, which results in gaining more satisfaction from their job. In terms of organisational support, it gives psychological support and development opportunities, which add human capital and HRD in context that adds value to the employee. These incentives will decrease the turnover rate to certain extent . Yet, the above solutions are not the only possible approaches, line management is essential in evaluating employee’s dissatisfaction towards the company specifically.

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