Solution
Selected Topic: Evaluating the Impact of Total Reward System in Improving Employee Retention
Table of Contents
2.0 HR Area Selected and Reason of Choice. 4
3.0 Critical Review of Information Sources. 6
4.0 Research Process and Methods. 13
4.1 Summary of Key Stages of the Research Process. 13
4.1 Different Research Methods. 13
5.0 Conclusion and Recommendations. 14
Executive Summary
In the modern business environment, the total reward system (TRS) has had an increased focus in available studies, business reports, and organisations internal meetings. This is since for any organisation to meet goals, motivating, and ensuring their workforce is committed essential. Any failure to motivate employees would be a precursor of intention of leaving, which leads to incurring costs and wasting time, which eventually leads to significantly reduced productivity. In majority of the contemporary organisations, they only offer financial resources with minimal non-monetary aspects of remuneration being considered. This means that they lack TRS as part of their operations. Nevertheless, there are organisations which have already put in place TRS to promote satisfaction of employees, motivate them and increase their loyalty to an organisation hence retained. In this report, an evaluation of TRS components and their applicability in increasing employee retention to promote an organisation performance has been evaluated.
From the review of different secondary sources, the findings of this report indicate that TRS positively harness employee retention by reducing their intention of leaving. There is a need for all organisations operating in competitive business environment to set financial and non-financial rewards to improve retention rates. From the findings, recommendations have been suggested with an action plan identified for enhancing level of employee satisfaction from the provided rewards. The recommendations include best strategies of implementing TRS and ensuring it is fully aligned to an organisation set goals and objectives.
1.0 Introduction
In the modern labour market, the tight and loose markets lead to different challenges in sourcing human assets and retaining them in an organisation. According to CIPD (2019a), employee retention refers to the extent to which an employer retains its employees and can be measured as a factor of the employees with a specified length of service (approximately one year or more), which is calculated as a percentage of overall workforce numbers. Through successfully setting measures of enhancing employee retention, employers can reduce high turnover, which is only possible if their employees are satisfied, happy, and maintaining their productivity. According to CIPD (2019b) report, individuals are attracted, retained, and engaged by the use of Total Reward System (TRS), including both financial and non-financial rewards, which are constantly changing based on individual circumstances. Hence, the importance of reference in TRS in this report is informed by its effective contribution to enhancing the employee’s retention through a reward strategy that articulates reward elements aim and their integration. Informed by this background, this report intends to provide an evaluation of the impact of TRS in enhancing employee retention in modern labour markets.
2.0 HR Area Selected and Reason of Choice
As aforementioned, the HR area of interest in this report is TRS and its relevance in enhancing employee retention in an organisation. TRS is noted by CIPD (2019) to include all aspects of work of high value to employees, both tangible and intangible, and including the entire reward strategy. As illustrated in figure 1, World at Work (2020) identified a benchmark of acceptable TRS components apart from the pay and benefits, which are common in most organisations (see figure 1). Therefore, incorporating the identified factors in figure 1 with the pay and benefits/remuneration, a total reward system is achieved. These financial and non-financial rewards have a positive impact on enhancing improved employee satisfaction, and motivation hence retained more in an organisation.
Figure 1: Components of Total Reward System
Source: Summarised from World at Work (2020)
The reason for selecting the area of HR is informed by the fact that modern organisations have to grapple with employee retention due to the high turnover that influences their operations. This is primarily caused by a lack of a fair and transparent remuneration scheme as part of organisation operations. To affirm this, Terera and Ngirande (2014) argued that the TRS has a positive impact on ensuring that employees are motivated with the remuneration packages being identified as an implicit used by different entities in improving the extent of commitment by their employees. In particular, turnover rates have been noted to be more prevalent among the employees who value high monetary rewards as part of their compensation package. Hence, successfully introducing the TRS in an organisation has a positive implication in increasing the lives of employees. CIPD (2019a) note that the trends in employee retention are that retention is a significant change in retailing, hotels, catering and leisure, call centers, and among the lower-paid private sector service groups. The capacity of retaining employees is varying in different regions, with the most common being in organisations which have lowest level of unemployment and areas with relatively easy for securing desirable alternative employment.
To achieve the set report, aim, objectives to be pursued include;
- To establish common TRS components applicable in contemporary labour markets
- To identify TRS impact in enhancing employee retention through mitigating of high employee turnover in contemporary organisations
- To provide recommendations on the most effective TRS that is applicable in the modern labour market to improve retention rates of employees
In this report, the stakeholders that would be put into account in the recommendations include;
Table 1: Stakeholders Identification
In the recommendation section, the stakeholders would play a role or affected by the recommendations. This is informed by the fact that the TRS affect how the employee’s retention and their intention to leave an organisation which then affects employers’ earnings and HR practitioners’ roles in their implementation. Therefore, from the selected HR area, the different stakeholders directly influence the process of delivery and knowledge dissemination.
3.0 Critical Review of Information Sources
One of the information sources that can be reviewed is Terera and Ngirande (2014) that have evaluated the impact of rewards on job satisfaction and employee retention by the nurses. The focus of the study was to evaluate the impact of rewards on employee retention and if there existed any relationship between the rewards and satisfaction and employee retention. The findings of the study generated recommendations to different policymakers in the organisation on potential strategies to be implemented in improving employee retention based on the sourced findings. The study has used a quantitative research design, with 180 nurses being used as respondents selected randomly with self-administered questionnaires being administered. The analysis of data was through the Statistical Package for Social Sciences (SPSS). The respondents were asked if they were prepared to remain in an organisation as a result of the compensation/rewards offered in an organisation. The findings are as shown in figure 2;
Figure 2: Total Rewards System and Employee Retention
The findings from the study concluded that
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