Literature review
Employees are among the fundamental stakeholders in almost all organisations and their wellbeing is normally paramount if an organisation wants to succeed in the vibrant business world.
As the commerce world and its management grow towards a more complicated business and organisational environment, which has been a challenge to thrive through, a continuum of challenges is gradually becoming eminent. Hence, keeping employees on board is essential for corporate growth (McCooey, 173).
Organisational management together with its competence and its strategies towards managing human capital coupled with how it maintains the paramount rapport amongst workforces has been forming numerous global businesses controversies (Zingheim, Schuster, and Dertien 3).
A culminating number of researches like studies by Elton and Gostick (56-98), Gordon (84-112), and Kaye (106-139) have actively engaged on common approaches that organisations employ to recruit, retain, and retrench their employees with substantial evidence indicating that these factors have been invariable core controversies in numerous organisations.
The willingness of an employee to remain loyal and dedicated to his or her organisation depends on reasonably several factors and most of them have always remained underrated and miscalculated by organisations and governments.
On global synopsis, surveys and studies conducted within developed nations, especially the United States of America have indicated that despite the audacious unemployment rates that are constantly becoming pandemonium to economic growth, there is considerably an acute talent shortage in these countries.
The U.S. Bureau of Labour Statistics (BLS) “reports an increasing trend in voluntary terminations, and the rate of unemployment for people with college degrees is about half of the national unemployment rate and is decreasing” (Scott, Mullen, and Royal 2).
From this statement, one would then understand that retention of critical talents especially the skilled and experienced employees who are active performers is paramount during economic recoveries particularly in the recent decades where aggressive market competition is eminent.
As stated by Scott, Mullen, and Royal, key talent normally contributes to current and future organisational performance since they become reliable movers of firm success (2). A continuum of studies demonstrating a positive correlation between employee reward strategies and employee Retention is growing exponentially.
Employee retention and its status in ME
Any organisation determined towards achieving its mission, vision, and objectives or even gaining a competitive edge in the market, has to understand the imperativeness of respecting and bearing in mind the significance of having potential employees, customers and other stakeholders.
The quest to improve performance in organisations is driving the business world into understanding aspects concerning employee attraction and retention, and successive years may rip much from the current interventions (Philips and Connell 93).
In its most straightforward manner, employee retention may refer to management strategies placed by organisations to maintain their personnel, workforce, or labour force.
Naris and Ukpere assert, “Qualified employees are scares and therefore institutions should be proactive when developing retention strategies and that retention should start with the job descriptions, orientation program, recruitment and selection” (1078).
Human resources retained and respected by their organisations, while provided with diverse professional and economic expansion opportunities including empowerment and rewards on their substantial performance, feel motivated and in turn reward their firms through positive working (Hafisa, Shah, and Jamsheed 327).
Employers employ reward strategies for employee retention.
Employee retention in companies operating within the Middle East countries where market for both human capital and industrial products is growing significantly has been an affair of great socio-economic concern.
Drawing lessons from their counterparts in most developed nations including Germany, The United States, the United Kingdom, Japan, and China, companies in the Middle East have slightly began noticing the significance of utilising reward strategies in retaining their workforce. However, it is still a paradox.
According to a recently concluded 2012 survey conducted by Deloitte, “employee morale has been dwindling in Europe, Middle East and Africa (EMEA) as Europe struggles with debt crises, the future of the euro, and increased borrowing costs” (11).
In this same survey, of all industrial workforce, interviewed, approximately half of EMEA that accounts to 47 per cent reported decreased levels of morale for the past year, as contrasted to 38 per cent in American companies and only 33 per cent Asian Pacific zones (Deloitte 11). For the successful companies with these nations, reward strategies were eminent.
Common Forms of reward strategies
As a way of appreciating and recognising the imperativeness of rewarding key talents and skilled workforce that are core features of firm’s growth, some companies have been using a variety of rewards strategies.
Typically, two forms of reward strategies are employed by organisation in compensating their workforce and they include financial and non-financial rewards (Hafisa, Shah, and Jamsheed 332).
Financial rewards are monetary endowments that employers offer to their workforce depending on different organisational rewarding protocols principally to enhance motivation.
According to studies by Podmoroff (72-108) and Thomas (63-127), rewards that do not involve monetary payoffs form part of the critical reward strategies that employers use to motivate employees. This form of intrinsic motivation is the best form of motivation and it applies socio-psychological approaches.
Not surprisingly, “financial incentives help drive employee satisfaction, with nearly seven in ten (68 per cent) highly satisfied employees…reporting good pay package, but the quality of a company’s non-financial incentives s also a strong indicator of overall satisfaction” (Deloitte 5).
This aspect means that both of these rewarding employee schemes have always been significant in ensuring employee job satisfaction, motivation and more importantly, organisational success or aims accomplishment.
Reward strategies and high employee turnover
While trying to understand the significance of reward strategies as approaches towards employee retention, one must understand the unforeseen challenges resulting from employee turnover.
Since employee turnover simply implies to the rate at which an organisation depending on its employment policies lose or acquire its workforce, a subject of interest from current research is rising from this angle (McCooey 172; Silverstein 84).
An auspicious relationship linking lack of reward strategies and the continually growing challenges regarding controlling high employee turnover is diverse and convincing.
Employer’s lack of commitment to improve their rapport with their workforce is raising questions about the high labour turnovers experienced recently within the contemporary global employment realm.
Rewarding dedicated, competent, and skilled critical professionals in a given organisation have associated with greater possibilities of reducing high employee turnover and enhancing productivity as well (Naris and Ukpere 1081).
With organisations blindfolded and incapable of seeing the direct cost relating to high turnover resulting from tyrannical leadership ignorance studies reveal that constant lose and gain of workforce results in organisational ineffectiveness since production becomes inconsistent.
High labour turnover influenced by highly qualified and experienced employees, coupled by poor management in organisations normally results to loss of morale among workers.
Reward strategies on retention
As prospective affirmative correlation exists between reward strategies and employee satisfaction, motivation, empowerment and finally retention, much has protracted on the levels of labour turnover that is becoming difficult to manage.
Labour turnover has been on regular debates in companies operating within Europe, Middle East, and Africa, with evidence revealing that high turn is becoming unmanageable due to lack of strategic management approaches that involve employee retention measures (Shields 130).
From the same investigation by Shields (130), failure to provide favourable working conditions, coupled with minimal or non-existence of employee motivation-centred initiatives is creating unimaginable paradox in maintaining human resources in organisations, as organisations are overwhelmed to succeed with high staff turnover than keeping miniature, but skilled workforce.
Most successful organisations have recorded paranormal perseverance in economic adversities by ensuring that they have engaged in employee comfort and motivation.
Both financial and non-financial rewards have been key actors on motivating employees across broad business spectrums, with researchers and philosophers linking firm’s success to comprehensive utilisation of reward strategies.
For employers to understand the significance of rewarding employees to maintain their rapport and retain them, one thing they have never noticed is that hiring momentary workers with skills and professionalism becomes much expensive as they bargain for soaring payments on unreasonable contracts.
Naris and Ukpere assert, “Implementing an innovative retention strategy will motivate staff members and commit them towards improving their qualifications” (1083).
To understand well how rewards can or have been movers towards employee recruitment, or most importantly employee retention, literature has provided numerous cases in which awards contribute to employee retention.
Prior literature from researchers has been crucial in explaining the correlation between reward strategies and employee retention.
Some of the probable ways through which individuals can understand this aspect is first by examining the prevailing association between reward strategies and motivation, reward strategies and employee-satisfaction reward strategies and cooperation as well as reward strategies and productivity.
The aforementioned elements, according to Breaugh and Starke (367), are pointers that underscore how rewards contribute to employee retention.
Reward strategies and motivation
Motivation comes from the word motive, which may refer to a force or intention that pushes individuals towards undertaking activities or performing certain duties.
Reward schemes or programs are essential since any form of compensation, incentive, or remuneration given to promote talent or as recognition towards job well done creates substantial employee motivation (Randall 45). Both financial and non-financial rewarding strategies have a significant impact on employee motivation.
Employees are normally willing to continue serving their organisations competently and diligently and dedicatedly, if they notice that there leaders trust them, respect them, and feel concerned about their wellbeing (Randall 41).
A motivated worker usually possesses a self-driven motive towards performing specific organisational duties including voluntary ones, feels secure, appreciated and in turn respects his or her employer, and hence a reciprocated relationship subsists.
It is only in organisations where workers have motivation, created through financial and non-financial incentives that constancy, trustworthiness and competence become part of organisational culture.
Labour turnover is becoming a controversial matter in numerous organisations and empowering a little, but competent workforce is paramount for success of an organisation.
According to Scott, McMullen, and Royal, labour turnover is always costly in its management and it usually affects business performance directly, especially during economic hardship moment (3).
Therefore, retention of key employees and skilled labour force becomes the most appropriate way of ensuring that organisations are in a position to control labour turnover, and subsequently enhances trustworthiness.
A survey undertaken by Scott, McMullen, and Royal reveal that major issues that lead to employees having a sense of job insecurity is lack of organisational appreciation, towards employees, lack of motivation and unawareness of their performance abilities (5).
When reward strategies, policies and programs are in place, organisational workforce remains loyal to its company even when there is a significant downturn in the economy.
In their study, Naris and Ukpere noticed that financial rewards, job contentment, and short of career opportunities motivate employees to relinquish (1082).
Reward strategies and employee satisfaction
Job satisfaction has been a critical matter in the contemporary organisation management paradigm and its pursuit is rising.
Akin to issues pertaining motivation at work, rewards are focal in determining employee satisfaction in the sense that material and psychological wellbeing are crucial in employee performance and subsistence in a company as noted by research (Brown 211; Brown and Armstrong 90).
After having a deep sense of motivation, which is brought about by recognition where organisations compensate workers efforts through reward schemes, job satisfaction thereby becomes evident (Zingheim et al. 10).
Poor working environment, unconcerned employers, coupled with challenging socio-economic issues in persistence, motivate workers to turn down their jobs.
A substantial number of studies have revealed a significant correlation between availability of reward strategies in organisations and job satisfaction, which in turn results to high employee retention (Hafisa, Shah, and Jamsheed 329).
By organisations dedicated their resources to improve employee’s welfare by offering rewards as employee compensation techniques, cases of misconduct especially relating to material and financial swindling, impunity and cheat reduce and thereby enhancing trustworthiness.
Human satisfaction depends on material wellbeing and psychological comfort, and the two are paramount to social success and potency in undertaking duties.
Drawing empirical evidence from studies undertaken by Hafisa, Shah, and Jamsheed, external or extrinsic rewards including good pay package or simply comfortable salary, incentives, bonuses, job security, fringe benefits and job promotions are part of job satisfaction which results to employee’s willingness to stay in an organisation (327).
Reward strategies that involve the provision of bonuses, fringe benefits, and incentives by organisations normally enhance the employee’s commitment and dedication towards their job and subsequently increase their possibility of staying within their organisations.
Every employee seeks for jobs that provide favourable working atmosphere including excellent salaries, bonuses and other incentives (Zingheim et al. 8).
Rewards involving on-job promotion gives an employee a sense of greater job security, confidence, and comfortability knowing very well that their organisation trusts them. Given the vibrantly growing competitive markets, managers in HR must consider rewards to improve workforce retention.
Reward strategies and Cooperation
Reward strategies have been much imperative in developing and maintaining cohesion and teamwork among workers, with research insisting that collaboration results in a positive working environment and changed attitude among workers, hence high possibilities of employee retention (Scott, McMullen, and Royal 9).
Employees usually are willing to continue offering their services to an organisation where aspects of cooperation, teamwork, collaboration, assistance and mutual aid prevail that allows them to share ideas, engage in decision making and interactively build working alliances in an organisation.
Using a contingency model of pay system design, Boyd and Salamin (780) noted that, coupled with high levels of motivation that rewards provide to workers, psychological and physical comfort, employees create positive feelings about their work and working environment and thereby enhancing retention.
Employees manage to share their skills and talents when they engage in autonomous groups that result from cooperation and any feeling of misused abilities may lead to resignations.
A company survey by Deloitte revealed that a “majority (42 per cent) of respondents seek new employment for their organisations make diminutive use of their skills and abilities” (12).
Moreover, in the same survey, “a considerable number of respondents (employees) cited their willingness to switch jobs and companies following lack of career progress (37 per cent) and insufficient job challenges (27 per cent)” (Deloitte 17).
These are core factors that generally influence their career decisions, whereby if maximum cooperation triggered by rewards and motivation are capable of minimising their influence.
Drawing lessons from a survey undertaken by Scott, McMullen, and Royal, who surveyed finance, insurance, real estate, manufacturing, utilities, oil and gas companies among others, the aspect of interactive working in relation to employee retention eminently appears (9).
Of all the respondents interviewed in this study (approximating to 38 per cent in total) strongly agreed and agreed that lack of organisation cultures such as trust, work cohesion, teamwork, and collaboration are core motivators of employee acquiescence from their jobs.
A strong intuition is that the existence of reward strategies increases competence, especially with the presence of teamwork and this aspect makes employees become competitive and focus on their present jobs.
Reward strategies and productivity
The primary objective of any organisation is to prove productive within its market share (Boyd and Salamin 780). The gradual development of the above-mentioned factors fuelled by rewarding employees in an organisation is what brings about the achievement of company’s stated targets, aims, missions and its anticipations.
Given the growing number of empirical evidences from studies that are constantly culminating on these issues, denoting a greater positive correlation between rewards and high employee retention, productivity is what concludes the entire argument.
Employee’s willingness to make decisions to continue offering services to an organisation principally hinges on the levels of personal productivity and organisational reputation.
According to Ramlall, all organisations normally like affiliating with highly productive workforce and workers, in turn, feel attracted to organisations with a good public reputation that may be high productivity, good corporate social responsibility, among other related issues (66).
It is with no concession or any compromise whatsoever, that very few managers would prefer hiring unproductive workers (Schuster 183). On the same note, as noted by Smith (119), the productivity of any given workforce hinges on the administrative techniques that the management team adopts.
Numerous prior studies have concluded that the chances of managers frustrating or disbanding an industrious workforce are minimal and the mutual understanding between management and workers is what determines the productivity of an organisation and retention of workers.
It is only through rewarding and appreciation strategies aimed at motivating workers that make them to feel safe and trusted by their management.
A study conducted by Ramlall noted that a good number of the respondents, accounting to 22 per cent believe that employees feel motivated, rejuvenated and advanced when they associate with competitive organisations, something which improves their productivity as they reciprocate through hard work and thus increase their chances of continuity with an organisation (66).
Deloitte argues, “Rewards can reap the benefits of greater employee productivity and engagement by improving their talent strategies, developing leadership opportunities, and tailoring their retention practices” (14).
Therefore, reward strategies as postulated earlier are possible movers to successful organisations as they enhance employee productivity that in return triggers corporate efficiency.
Research Methodology
In a bid to examine the effects of reward strategies on employee retention, this study will employ a first study to ascertain the presumptions protracting from different prior studies over this topic.
The primary purpose of this study is to examine the effects of reward strategies in employee retention, employee turnover and its impact in Air Arabia international Company. Certain principles and approaches will lead this study into achieving desirable finding over the argument inherent in this research.
Reward strategies and employee retention are two distinct and independent variables in this study. This research will be a case study research design where only Air Arabia international Company will be the primary respondent to this study, with a large number of employees involved in enriching data to this argument.
The study will utilise a triangulation method to collect data pertaining to the status of reward strategies and retention from different working departments in Air Arabia international Company.
Research design
In this case study research design, the study will include both qualitative and quantitative approaches to ensure that all the necessary information is in place for a thorough analysis to yield data that will result in knowledgeable conclusions.
There will be a review of available literature on reward systems backed by the findings of this study.
Research has revealed that much of the industrial and organisational research studies have always been successful when researchers employ a combination of qualitative and quantitative approaches (Borrego, Douglas, and Amelink 54).
A combination of qualitative and quantitative research design as postulated by researchers and as per the aim of this study will aid in enriching the argument since descriptive data and prescriptive data are always imperative in industrial research.
The study will combine figures and facts achieved from the collected data to solidity its argument in relation to the two variables identified in this case.
Targeted Respondents and selection technique
In determining the effects of rewards on employee retention in Air Arabia international Company, identifying specific respondents to participate in the study will be significant since perception may differ from different levels of working in this company.
There is a possibility that a manager may provide information in favour of their justification towards the related subject, and employees likewise.
To avoid capriciousness of data collected from the study, the study will involve all employees in Air Arabia international Company, especially lower management and subordinates who may have no personal interests in the company, since top management may fail to confide essential data.
In selecting respondents, this study will use random selecting method where any employee may be capable of providing substantial facts about the prevailing situation. Purposive selection will only apply in managers since there are normally few and distinctive managers in organisations.
Stratified sampling will be useful in assisting workers to discuss important responses before coming up with informed data. About 150 respondents from Air Arabia international Company will participate.
Variables, data instruments, and collection methods
Reward strategies and employee retention are the two main variables that will remain significant in gathering information in this study. Self-designed questionnaires and interactive face-to-face verbal interview will be so useful in ensuring achievement of reliable data to comprehend this argument.
Questionnaires have been the most common utilisable data instruments that are simple to design, easy to interpret and undemanding in analysis data incorporated using simple questions (Lietz 250).
The study will administer questionnaires to all respondents targeted in this study acquire quantitative data while face-to-face interviews will yield qualitative data.
The study will conduct a piloting study in some few departments in Air Arabia international Company, which is always an essential approach in familiarising with the study area and useful in validating the reliability of research instruments.
Before the collection of data from the company, the researcher will avoid breaching valuable company and intuitional regulations by ensuring that both sides provide convincing permission.
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