Mental accounting is an economic concept whereby individuals separate their assets into non-transferable portions. Mental accounting suggests different compensation packages. It is prudent that McKinsey’s human resources manager understands its values and concepts for implementation. McKinsey can structure their compensation package in numerous ways without increasing salaries to its employees.
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Employees consider motivation as monetary reward or appreciation for the work well done (Kemp and Wall 138). Motivating employees makes them feel more valuable in their respective organizations. Through the implementation of the mental accounting concept, employees can perform their duties with much confidence. McKinsey should offer competitive remuneration to different posts in the organization.
Employee motivation also makes the employees increase their input in their assignments (Kemp and Wall 138). Appreciating employees for work well done goes a long way, and as a result, they can perform their duties with great confidence. The input of employees increases when their employers have confidence in them.
Human resource management is an administrative office in an organization tasked with the responsibility of maximizing the performance of the employee towards the goals and objectives of the company. Among other duties, the human resources office is responsible for recruiting employees, conducting interviews, and motivating employees. Human resources are also responsible for reviewing the performance of recruited employees, mediation, setting the remuneration of employees, and training staff members. Human resources are employee management that views employees as assets of the business (Kemp and Wall 132). Human resources should also ensure that employees in the organization are working in an environment that enables them to achieve their set objectives.
To retain its employees, McKinsey should embrace the concept of the modified utility function. Some employees are for the view that the utility function is only positive if the price offered is lower than the reference price. Mental accounting influences financial performance and money management (Kemp and Wall 141). In a scenario where total compensation is fixed, the company should enhance training and other incentives that positively contribute to employee satisfaction. McKinsey can participate in corporate social responsibility by having its employees play major roles. Through this practice, employees fell the organization values them.
With a fixed compensation, McKinsey can structure compensation in numerous ways in order to retain its employees. Employees normally seek better compensation package, but as a way of retaining them, McKinsey should mandate its employees with more responsibilities. In addition, the company should make their employees more authoritative when handling particular issues. There are several differences in mental accounting and money management practices (Kemp and Wall 143).
Employees should maximize their output while performing tasks assigned to them by emulating these concepts. As a way of retaining employees, McKinsey should ensure that its employees perform their duties in a well-structured environment.
Motivation and retention of employees is not only monetary compensation. To retain and attract more employees, they should feel valued by the organizations and that there is mutual respect. Employers should engage employees in most duties carried out by the organization, such as corporate social responsibility. Employees should be entitled to more roles to play on such occasions. Through this practice, employees feel they are valued and recognized (Kemp and Wall 124). Employers should also consider payment of remuneration in good time once tasks are accomplished. Through this practice, employees build confidence in organizations. As a form of retaining its employees and even attracting more, employers should always follow and implement the employment act and respect the rights of its staff members.
Kemp, Simon and Wall, Gabrielle. Economic Psychology and Experimental Economics. Abingdon: Routledge, 2013. Print.