Solution/Answer
Report Title: Evaluation of Importance Total Reward System of Improving Employee Retention
Table of Contents
2.0 Identifying an Area and Reason of Selection. 4
3.0 Selected Sources Critical Review.. 7
5.0 Summary of Research Process. 12
5.1 Key Stages in Research Process. 12
5.2 Research Methods- Advantages and Disadvantages. 13
6.0 Conclusion and Recommendations. 13
Executive Summary
In this report, employee retention as a common phenomenon in the contemporary highly competitive United Kingdom (UK) organisations has been evaluated. The different strategies used in mitigating the prevalent of employee turnover to harness retention have been grouped into Total Reward System. This is informed by the view that employee retention is an aspect of motivation and commitment levels. Any failure to have motivated staff in a UK organisation leads to the development of intention to leave. The negative implication of a failure to promote employee retention includes increased costs of operations, time wastages leading to reduced productivity hence profitability.
In this report, a secondary method of analysis has been used. Through this approach, different sources have been critiqued with their strengths and weaknesses in terms of presentation of the issue of focus being identified. The reviewed secondary sources noted that most of the contemporary organisations prefer the use of monetary resources with less non-financial resources in motivating their staff. Despite the criticality of financial resources to employees’ performance, they are insufficient in terms of harnessing high-level employee retention. However, there are organisations already embracing total reward system in ensuring that employees are satisfied and motivated hence ready to remain in an organisation for long.
The findings from the analysis demonstrate that the total reward system is a combination of different aspects that are applicable to mitigating employee turnover, which promotes retention rates. The findings have informed on the need for modern organisations that operate in the competitive business environment to put in place both monetary and non-monetary rewards to promote employee retention.
Lastly, regarding recommendations to UK organisations, an action plan has been provided that can be used to promote employee satisfaction and motivation from total rewards provided. All the provided recommendations include relevant strategies applicable to implement total rewards system and to guarantee employers the commitment of an employee to their purpose.
1.0 Introduction
In the modern business environment, employee retention is a critical challenge affecting organisations ability to leverage competitive advantage and to be successful in their business environment. According to CIPD (2019a), employee retention identifies the level in which an employer retains its employees. In specific, a survey by CIPD (2009) on organisation employee retention noted that 60% of organisations in UK in 2019 faced a significant challenge in retaining managers and other professionals. The report notes that the strategies adopted in most organisations in improving employee retention include; increasing L&D opportunities (47%), improving induction process (45%), increasing pay (42%), and improving selection techniques (42%). These approaches are linked to promoting the satisfaction of employees, happiness, and intention to remain in an organisation. The criteria have been identified by E-reward (2020) as a reward strategy of introducing additional components, which include L&D together with aspects of the work environment into the entire benefits package. Hence, taking into account the importance of retention effectiveness to organisation sustainability and the influence of total rewards system on sustainable organisation development, this report focuses on evaluating both variables relationships in the modern business environment.
2.0 Identifying an Area and Reason of Selection
The selected area of focus is the impact of total reward system in improving employee retention. Adopting the definition of CIPD (2019b), total reward system is as both the financial and non-financial rewards. The report further identified the total reward system to be inclusive of different components (see figure 1), which can be adopted in modern organisations. Hence, in a contemporary business environment context, integrating the non-financial rewards and financial benefits leads to improved employee retention. This is since these components are identified as precursors of employee motivation, satisfaction, boosting their morale hence reducing their intention of leaving.
Figure 1: Total reward system components
Source: CIPD (2019b)
Apart from organisation context, as an HR practitioner working in the UK labour market, employee retention is a significant challenge. In 80% of the organisations directly engaged in the past, they suffered from immense turnover issues affecting their operations. In these organisations, they entirely relied on financial remuneration, which is often non-transparent, unfair, and un-aligned to their purpose. This is affirmed by Terera and Ngirande (2014) study that hypothesized that total reward system positively impacts employee’s motivation. This is since they consistently evolve to reflect on the organisation needs changes, workforce expectations, demographics and a profession. Specifically, turnover rates are more prevalent in UK organisations with employers that prefer monetary rewards as the only reward package. In an event non-monetary rewards are introduced in such an organisation set-up; it would improve the employee’s satisfaction in such an organisation hence their willingness to stay long in an organisation. According to a recent report in Work Institute (2019), it notes that more than 3 out of 4 individuals resigning from their roles could have successfully been retained. The report indicates that the total costs linked with turnover range from 90% to 200% of annual salary to an employee. The report had recommended an opportunity for learning and development (62%), resolving work-related issues (62%), and having an elaborate link between work and organisation strategic objectives (58%). All these are factors of total reward system identified earlier which will be evaluated in this report. To achieve the intended aim of this report, this report objectives include;
- To identify the most appropriate total reward components that fit in modern organisations operations
- To determine how total reward systems influence successful employee retention in modern organisations
- To offer actionable recommendations for implementing a successful total reward system in modern organisations to improve the level of employee retention.
In this report, different stakeholders that would be impacted by this project. To identify the stakeholders, a stakeholder analysis matrix can be used (see figure 2);
Figure 2: Stakeholder Analysis
In the recommendation, the identified stakeholders would play a significant role in the implementation of the recommendations. The keep informed stakeholders have a huge implication to the implementation of the total rewards as their interests need to be included in the process. Total reward system has a direct implication on the retention strategies of employees which later influence earnings of the employers and HR practitioners’ roles. In the identified HR area, the identified stakeholders would play an important role in delivering and disseminating knowledge.
3.0 Selected Sources Critical Review
Terera and Ngirande (2020) (Google Scholar) evaluate
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