Compensation as a

Retention Strategy
by: Adrianne Cinto
Michy Marie De Leon
Employee Retention
- refers to the number or percentage of employees
your organization retains.
- The term retention is often used in discussions about
employee turnover.

Turnover, is inevitable
Retention is more about within any organization.
improving satisfaction of Turnover occurs both
current employees. involuntarily and
voluntarily for a number of
reasons.
 Components of
Overall Retention
Strategy
 “Strategies for Staff Retention”
1. A retention strategy is pragmatic.

2. The culture and values of an organization are expressed primarily

by its actions, and through the actions of management and
employees.

3. Leadership and management’s responsibilities include motivating

employees and encouraging commitment.

4. Communication should reflect the culture and value of the

organization.
5. A performance management system that compensates
employees fairly leads to trust and commitment by
employees.

6. Managing poor performance is just as important as

recognizing good performance. Non-performers can be a
factor that demotivates good employees.

7. Terms and conditions are not key to a retention strategy as

long as they are perceived as competitive with the market
and equitable among employees.
8. Effective resourcing strategies and policies provide a
competitive advantage.

9. Promotions provide employees with a motivating factor to

remain at an organization and to be productive.

10. Career development motivates employees and also allows

them to build skills for promotion.

11. Talent management provides a channel to monitor and

maintain morale and motivation.
 Function
Companies concerned with employee retention will make concessions to
ensure employees are satisfied and that morale is high.

Strategies
Some companies may offer employees attractive benefits. Some
employees may find flexibility in the workplace a greater benefit than
money, which may influence the employee to stay with a company when
times get tough.

Reason for Employees Switch Over

Employees have an intrinsic need for respect, motivation and challenging
work, which are compelling reasons for seeking employment elsewhere.
Potential Reasons for Leaving the Organization
1. Salary
2. Lack of challenge and opportunity
3. Lack of career advancement opportunities
4.Lack of recognition
5. Ineffective leadership
6. Emphasis on Inadequate teamwork
7. Not having the opportunity for a flexible work schedule.
8.Too long of a commute
9. Lack of trust in senior management
10. Inadequate opportunities for training & development
11. Low overall job satisfaction
 Tying Compensation to Retention
Compensation can have a positive impact on employee retention, it depends in
what type or kind of compensation the company will give to its employee. Also, the
benefits which falls in the indirect component of compensation like insurance plans
and such. Employee rewards represent an important factor in keeping employees
engaged, loyal and productive. Even small organizations can compete against larger
companies by focusing on those rewards that are most valued by their employees.

Successful Human Resource Retention Strategies

Employee retention is a critical goal for any organization. The successful retention
of employees is always a business priority, even during tough economic times when
there are more employees available for open positions. Strategies to improve
retention include understanding what motivates employees, providing open
channels of communication, maintaining competitive pay and benefits packages
and providing employees opportunities for making decisions that impact them.
 Understanding What Motivates Employees
Understanding what motivates employees is the first step toward developing
pay, benefits and policies that increase motivation and, ultimately, retention.
This can be done formally through quantitative surveys and it can also be done
through ongoing communication between supervisors/managers and employees
and through a culture of open communication where employees feel free to share
their thoughts and concerns.

Providing Open Channels of Communication

Open channels of communication are an important means of ensuring that the
organization is getting input on issues that matter to employees on an ongoing
basis. It starts at the employee/supervisor level, but that should not be the only
opportunity employees have to give or receive feedback, because receiving
feedbacks is one of the reasons an employee tries their best to overcome that
hurdle and become one of the best employees in their company.
 Maintaining Competitive Pay and Benefits Packages
Ensuring that pay and benefits packages are competitive is a key part of this
process. HR professionals should be constantly monitoring the external pay and
benefits around their environment, paying particular attention to the
organizations that they compete directly with for employees, generally those
within the same geographical area or industry where staff members are being
recruited. As we discussed earlier in tying compensation to retention, we can
apply it here in this process.

Understanding the Competitive Landscape

Employers need to have a solid understanding of their competition relative to
employee recruitment and retention, including an understanding of the pay and
benefit packages offered by other organizations. Competition may be local,
regional or even national depending on the position and the availability of
candidates.
 Recognizing the Impact of Non-Monetary Incentives
Employees are motivated by many things a company and by no means it should be a
monetary-incentives it can also be non-monetary. Non-monetary incentives can have
a major impact on employee satisfaction, engagement and retention. Non-monetary
incentives include such things as recognition, the opportunity to be involved in
decisions that impact their daily work, opportunities for learning and development.

Ongoing Assessment and Modifications

The effectiveness of reward packages is impacted by internal and external factors and
it is important for employers to continually monitor, evaluate and adjust their
rewards and benefits packages to ensure that they continue to meet employees’
needs. Changes in the competitive landscape, in the economy, in employee needs and
in demographics can all impact how effectively existing packages meet employee
needs. Ongoing assessment of both internal drivers and external environmental
impacts can help ensure that companies’ reward packages serve to drive retention in
a positive way.
 Encourage Work-Life Balance
Offer flexible working arrangements, such as telecommuting. Even
allowing telecommuting one day a week goes a long way in promoting
positive retention rates. However, make sure that whatever options
for flexibility you provide are distributed fairly among employees.

Benefits and Perks

Offer competitive benefits packages which best fit the needs of the
employee. Think about a specific type of pension plan that is
competitive with what other similar companies are offering. Also
consider health and life insurance premiums that are reasonable. And
perks such as discounted gym membership and clothes and gift
cards/vouchers.
 7 Effective Steps to Retain the Employees
1. Recruit with integrity.
2. Develop a hiring process that explains your company
value proposition.
3. Implement an orientation process for employees with
the end goal of retention.
4. Create training programs that place the new employee
in key meetings, in interactions with key
players, and that provides her with the tools necessary to
do the job.
5. Provide mentorship for your new employee.
6. Engage in fair evaluation processes.
7. Manage the employee departure process well.
Thank you very much!