Roles of the People Manager and the Project Manager in Contemporary Organizations
The Difference between a People Manager and a Project Manager In recent times, there has been a trend in multinational companies to have a people manager apart from the project manager for employees in teams and units. This division of responsibilities between the people manager and the project manager has been necessitated because of the […]
Summer Internships in Business Schools: How to Choose Them
The typical business school course is structured in such a manner that students get the chance to intern in companies during the break between the first and the second years. These summer internships provide valuable on the job experience though the typical duration of a summer internship is two or three months. The point here […]
What Hiring Managers Look Out For During the Recruitment and Selection Process?
How Hiring Managers and Organizations Detect Fake Resumes and Spot Lies The recruitment and selection process is an important aspect of any organization’s overall Human Resources (HR) and for that matter, even org wide policies. Indeed, considering the fact that recruitment and selection often determines whether the right person for the right job has been […]
Using HR Scorecard with Analytics to Actualize Next Generation Performance
How the Combination of the HR Scorecard and Analytics can be a Game Changer Analytics of all types is the wave of the future. Right from Data Analytics that uses advanced forms of data analysis using large datasets and other pools of data to find patterns in the same to the Business Analytics tools that […]
Diversity in Organizations
Introduction In recent years, organizations in all sectors have been aggressively working towards a concept called diversity of workforce. When you see a job posting that talks about equal opportunity, you might be wondering what it is all about. To put it simply, diversity in employment means that the employer is actively pursuing what can […]
Many studies have found that there is a direct causal linkage between the levels of compensation that a firm pays and the rate of attrition that it has.
Attrition can be voluntary and involuntary, where the former is the employee quitting the company out of his or her own volition and the latter is the company asking the employee to quit for a number of reasons ranging from non-performance to violation of rules and regulations.
In this article, we consider the voluntary attrition and the linkage between inadequate compensation and attrition.
The exit interviews conducted by the HR professionals to ascertain the reasons behind an employee’s exit usually reveal that low compensation is a major factor behind the employee’s decision to quit the company.
Research into the phenomenon of attrition has found that many employees (particularly at the entry and the middle management levels) leave companies because they have been offered better compensation at another company.
On the other hand, the senior management personnel quit to take up challenging roles that pay well as well as provide self actualizing drives to them.
Hence, it can be construed that compensation is a major factor behind an employee’s desire to quit a particular company and join another company.
Hertzberg’s theory of motivation lists hygiene factors as those conditions when absent cause an employee to be dissatisfied. The point about this theory is that factors like adequate compensation, a congenial working environment and additional benefits are necessary to motivate the employee and they ought to be present to keep the employee happy. The absence of such factors makes the employee lose focus and drive and hence the lack of “hygiene” makes it difficult for the employee to continue.
The appraisal time or the time of the year when employees are graded on their performance is usually the time when employees put forth their aspirations and expectations regarding the compensation and other aspects of their job.
Hence, the line managers and the HR managers must make it a point to “manage” the expectations of the employees during this period.
The attrition is usually the highest when employees are handed their raise letters that specify how much their compensation is increased. This is because the employees might expect more than what they have been awarded which leads to dissatisfaction.
Though compensation in recent years has ceased to be the “be all” of employee satisfaction with the nature of work and the responsibilities that an employee has becoming more important in determining job satisfaction, it still is one of the most important factors behind an employee’s decision to quit a company.
Hence, it is incumbent upon HR professionals and the senior management that they devise compensation plans keeping in mind the various factors that drive an employee’s psyche.
Only when an employee is satisfied with his or her condition in a company can they perform at the desired levels.
Your email address will not be published. Required fields are marked *
Corporate Strategies to beat the Downturn: Cutting Slack and Layoffs
February 12, 2025
