Impact of Reward Management on Employment Retention

Background of the study

In Today`s time, 21st century, one of the greatest challenges for any organization is to ensure their sustaibabiliy for a longer period of time in the dynamic business environment. Therefore, the retention of ecmployees has become of paramount importance and a critical issue for an organization as there is extensive evidence regardlessly the organization facing retention challenges in today competitive labour market during the extreme economic downturn. The success and failure of every organization depends on the quality of people found in the organization. During the last few decades a lots of research has been taking place to find out the factors involved which can ensure their long time sucdess in this competitive business field. Most of the researchers are concerned about human resources management, particularly in the employee retention which is the best hands ensures improved sales, customer satisfaction and can maintained balanced relationship between staff and management to generate overall growth of the organization. Recent research reveals that labour turnover rate has increased alarming rate over the last decade at 1.3% per months by Ramlall (2004) and even if, when unemployment rate is high, more 86% of employers were facing difficult challenges to attract employees and more than 58% organization were failing to retain their employees by Hale (1998 cited in Ramlall, 2004)

The factors of reward management have a great correlation with employee retention. Reward management is term related to factors that can satisfy and motivate the employees to deploye themselves towards an organization to achieve organizational goal, building up trust and being committed toward the organization, which can induce them to be retained long term in the organization . Most of the rganizations in public and private sectors rely on employement retention by the reward system which has been on going research since long time. Recently, research revealed that employee retention is inhance by the compensation and reward system, Rashid and Zhao (2009).

A research report by Metcalf et al (2005) found that in 2001-2002 approximately 87% of academic staffs were working in the same institution those who worked in the previous year and recruitment rate was thirteen percent and this figure is include a high percentage who were new to the institution.

It was recorded that nearly 7% of academic staffs has left. At the same time the number of staffs recruited has greater than the number leaving. This figures indicate that the degree of disparity between these two figures under-recording of leavers and that leaving would be closer to the level of new recruitment. Therefore, the turnover rate in academic jobs in UK was similar or slightly higher than that for all professional employees in the economy which was 13% in 2001. CIPD (2002 cited in Metcalf et al., 2005).

A comparison study hass been found that between the period of 1994-1995 and 1998-1999 the turnover rate was between 2.8% and 5.3% per annum. PREST (2000 cited in Metcalf et al., 2005).

Another evidence of a growth in academic staffs turnover comes form the findings of the Independent Review of Higher Education Pay and Conditions, which was in 1998 at 6.4%. Bett (1999 cited in Metcalf et al., 2005)

The Academics in the UK were situated about in the middle of the developed countries in term of academic salaries in pounds sterling. Compare to the Japan, Denmark and the US, UK academics were earning less but compare to Sweden, Australia, New Zealand, Canada and France they were earning more. Metcalf et al. (2005)

A study by the Dolton and vander Klaauw (1994, 1999 cited in Metcalf et al., 2005) found that “the higher the teachers’ salaries the less likely they were to leave and the higher the expected wage elsewhere 37, the more likely they were to leave. However, expected wages only affected the propensity to leave teaching for a non-teaching job, they had no influence on the exit probability into non-employment“.

The retention of the academic staffs in the higher Institute has recently been extended by Chevalier et al. (2002 cited in Metcalf et al., 2005) to examine these effects in five cross-sections of university graduates covering the period 1960 to 1996. it show how a time-series approach is a particularly powerful way to identify the effects of relative pay. According to this study it has been found cyclical differences in relative pay for teachers and that the wage effects of alternative employment were stronger in periods when they were higher relative to teachers’ salaries.

After making U.S entry clearance difficult of students, many of the foreign students coming to UK for their further study and enhance their knowledge. During the last few decades based on the foreign students a lots of private colleges has been established across the United Kingdom which were being monitoring by the British Accrediation Council (BAC), now those colleges are fully being monitoried by the United Kingdom Border Agency (UKBA). During the last few years, in the volatile situation a lot of private colleges has been shut down by the UKBA`s due to a lack of proper record keeping, resporting and compliance which are the major obligation for the private colleges which can be only possible by the experience, devotee and loyal workforce.

A lot of research has been done in the UK into the public and private sectors on the employee retention by the reward management. However, from a UK perspective little research has been done on the employement retention particularly on the private colleges in the UK. Therefore, scope has been arised to examine the factors of reward management can attract to retain expert, devoted, committed and loylity employee within the private colleges in the UK.

Literature review

Human capital and motivation embided together which can developed experience, also skill and knowledge, that can be economic value to the organization. As we have assumed that reward, management has correlation with employee retention and motivation, which is the driving force of job satisfaction. Therefore, logically it calling on the content theories of motiavation. A lot of motivational theory has been developed by management guru Maslow`s hierarchy of needs, Herzberg`s motivation-hygiene and many of them theory long tome ago. Even if, It might be developed long time before but, implication of some factors of these theories still yet existing in this dynamic competitive business filled to ensure organizations sustainability.

Several new models of work motivation emerged by the 1950s which collectively referred to content theories. Their capital aim was to identify factors associated with motivation since several models has been emerged which were developed previously, but some factors of their theories still yet existing. Therefore, many resrearchers have been researching on their old theory to discover a correlation in the current situation and apply these theories to ensure their application.

According to the defferients research over the period, it has been approved that content theories focus on the interal factors to the individual. In order to explain why people are motivated in different ways and by the different work settings which most of the representative examples of this strand of theory are the needs-based theories such as the theories of Maslow, Alderfer, or McClelland assume that people have a inclination, which may be innate or acquired, to seek or avoid certain stimuli.

Other content theories that have been widely accepted and gainded stronger empirical support are those that consider the content of the work and a person does such as, Herzberg`s theory and Hackman & Oldham suggest that particular features of a job may motivate or demotivate an employee, Finally, the self-concept of the people`s which defined as who they are, their values has alos been studied as an important factor in content theories. Moverover, Shamir argues that even if a task leads to no reward whatsoever, it may still motivate a person if it has a meaning for that person; if it tied with his/her values regarding what needs to be done. Anon.

According to the Maslow’s (1954 cited in Streers, 2004, pp379-384) hierarchy of need theory, suggested that development of individual with the period of time they work up their way hierarchy based on the fulfillment ofa series of prioritized needs which include physiological, safety and security, belonging, esteem, and self-actualization. According to his argument of prioritization, the first three needs on the list represent deficiency needs that people must master before they can develop into a healthy personality. On the other hand, the last two represent growth needs that relate to individual achievement and the development of human potential.

After develping Maslow`s theory, Alderfer (1972 cited in Streers, 2004, pp379-384) later on adapted Maslow`s hierarchy of need model to cover the just three needs such as existence, relatedness and growth. His theory is also known by ERG theory, which is the first three name of the first letter of the needs. According to his theory only existence needs to correspond to Maslow`s physiological and safety needs and relatedness needs refer actually to Maslow`s belongingness needs and Growth needs correspond to Malsow`s esteem and self-actualizaiton needs.

Based on Alderfer`s three needs with Maslow`s three needs which are, existence needs contains person`s physiological and physically related safety needs which include food need, shelter, and safe working conditions. A person`s need to interact with other people, receive public recognition, and feel secure around people is contains in Relatedness needs and need of growth consist of a person`s self-esteem by personal achievement as well as the concept of self-actualizaiton presented in Maslow`s model.

The second content theory of motivation has been developed by Murray (1938 cited in Streers, 2004, pp379-384), he also developed a theory of personality that was organized in terms of presses, motives, and needs as he has described a needs as a, potentiality or readiness to respond in a certain way under certain given circumastances. According to theories of personality based upon needs and motives suggetested that our personalities area reflection of behaviors controlled byneeds. While some needs are more deep seated, other needs are temporary and chaning in our nature. He defined two types of needs in the theory of personality such as primary needs, which is based upon biological demand such as the need for oxygen, food and water and secondary needs, which are generally psychological, such as the need for nurturing, independence, and achievement. In the psychological needs he included Ambition needs, Materialistic needs, Power needs, Affection needs, Information needs.

But later on McClelland (1961, 1971 cited in Streers, 2004, pp379-384) completely modified the theory of personality by ongoning the concept of hierarchy and focused instead on the motivational potency of an array of distinct and clearly defined needs, including achievement, affiliation, power, and autonomy. McClelland suggested that, individuals possess several often-competing needs at any given time that serve to motivate behavior when activated. Since he developed this model he tried to focused on the needs fo achievement which is defined as behavior directed toward competition with a standard of excellence and power which is defined as a need to have control over one`s environment. This concept contrasts with Maslow`s notion of a steady progression over the time up a hypothetical hierarchy as individuals grow and mature.

Personal achievement theories suggest that a person`s motivation and performance vary according to the strenths of one`s need for achievement, Kreitner (1998 cited in Ramlall, 2004)

Kreitner & Kenicki (1998) suggest that the some needs for achievement as mastering, manipulating, or organizing physical objects, human beings, or ideas.

The need theories for the affiliation proposed that people have the desire to spend time in social relationships and activities. Even if people with a high need for affiliation prefer to spend more time maintaining social relationships, joining groups and wanting to be appreciated rather than spending time in workplace those who is not envolved in the important role in organization. But this individual high need not for managers and leaders of organization as they have a challenging time making difficult dicisions without worrying about being disliked. On the other hand, power has a important role, as a manager power has to be positively influence on other to achieve their desire. McClelland suggested that manager should possess high power with a lower need for affiliation, Kreitner (1998 cited in Ramlall, 2004)

Since Herzberg developed the two factore theory, which is also know as Herzberg hygiene factors theory, suggested that those factors involved in job satisfaction or dissatisfaction are different then they are not simply opposites, and therefore the opposite of job satisfaction, rather then being job dissatisfaction; similarly, the opposite of job dissatisfaction in not job satisfaction but no job dissatisfaction. On the other hand, in the job context, factors that contribute to growth – motivators – are intrinsic to the job, and include achievement, recognition, the work itself, or opportunities for advancement. Factors that contribute to dissatisfaction – hygiene factors – are extrinsic to the job and include salary, working conditions, supervision, interpersonal relationships, or job security Herzberg (1959 cited in Jeans, 2009)

According to his theory, factors that were intrinsic to the content of the jobs are referred as motivators and included such variables as achievement, recognition, the work itself, responsibility, advancement, and growth. In contrast, the factors that were involved with dissatisfaction are referred as bygiene, Herzberg (1959 cited in in Ramlall, 2004)

Hackman and Oldham (1980, cited in Hall, 2009) developed a comprehensive model of job enrichment featuring which included five core job dimensions succh as skill variety; task identity; task significance; autonomy and feedback.

Smith (2001) also saw job satisfaction as “an effective response of the worker to his job. It was viewed as a result or consequence of the worker’s experience on the job in relation to his own values, that was to what he wanted or expected from it. Satisfaction can be viewed as similar to pleasure”.

The source of job satisfaction or dissatisfaction varies from person to person. Sources thought to be important for employees include the challenge of the job, the degree of interest the worker holds for the job, the extent of required physical activity, working conditions, reward available from the organization, the nature of co-workers and so on. Brown (2008).

Research question and objectives

Aims and Objectives

The major aim of the study is to examine the impact of reward management on employee retention in the private education sector especially private colleges in the UK. The major objectives of the research are to:

1. Identify the role of reward management (RM) in employee retention
2. Investigate the impact of Reward Management (RM) on employee retention within private education sector in the UK
3. Identify the antecedents of employees retention

Research Questions

The sheer volume of studies suggests that effective reward management has a profound effect on employee retention. However, thre is less evidence and research on its implication and effect in businesses within private education sector such as Private Colleges in UK perspective. This proposed study intends to address this need and thus the study aims to provide answer to the following key questions:

1. What are the key drivers of employer choice amongst employees of private Colleges and how can such sector build strong and lasting loyalty amongst their employees which will lead to employee retention?
2. What makes an employee loyal to a particular organization?
3. What are the antecedents of employee retention and how reward management affect employee retention?
4. What are the main factors associated with employee dissatisfaction and the role of reward management in employee retention.

Methodology

Research Methodology

In order to meet the researcher`s information needs and achieve the research objectives two types of research methodology will be combined-Primary and Secondary. Due to budget and time constraints the type of methodology to be employed is restricted.

Secondary Research

The primary stage will consist of secondary analysis of already existing data.Literature on reward management and its relation to employee relation and other relevant key literature will be reviewed in order to investigate the underlying relationship between reward management and employee retention. The sources of secondary research are mainly academic source

(Journal article, conference proceedings, working papers and relevant books etc.), company source( as the research is based on one particular organisation, information on organisation will be gathered through organisational literature, brochure, website etc), and also some contemporary sources. The secondary data will be used to get basic understanding of the problem and make frame of reference. Although there are some problems with the secondary research such as compatibility and trustworthiness,cautionary attention to be given by the researcher. Information to be taken from internet and other sources will be dealt with in a very conscious manner.

Primary Research

In terms of primary researchdata will be collected through face to face interview and indepth interview. The research will be based on selecting an organisation which is London College of Management Studies, my work place, located in Harrow, London.

* In depth –open ended interview: This is based upon a widespread review of literature. 4 senior member of management and academic board will be selected from London College of Management Studies. In depth interview will focus on the following areas:

1. Process of recruitment and selection
2. Organisational attitude towards human intellectual capital
3. Employee retention strategies
4. Employee feedback and suggestions mechanism
5. Employee appraisal and reward system
6. Major aims of organisational reward systems
7. Training and development provision to increase employee performance
8. Other related issues

The in-depth interview encourages responded to share as much as information as possible in an unconstrained environment. Cooper & Schindler (2001). The advantage of this method as suggested by Saunders et al (1997) is the interviewee is given the opportunity to talk freely about events, behaviour and beliefs in relation to the topic.

Face to face interview: Face to face data will be collected by using a stratified random sampling based at London College of Management Studies. A sample of 10 employees will be selected across various department. It is logical that the larger the size of the sample, the greater is the precision or reliability when research is replicated (Saunders et al, 1997).

Data Analysis

Data will be collected over two weeks period. Face to face and in depth interview will be conducted by the researcher. The length of face to face interviewes will be a maximum of 12 minutes. Dates of appointment will be fixed for in depth interviewes with the relevant members of the management in order to avoid any last moments cancellation. All in depth interviewes will be audio-recorded which according to Saunders et al (1997) will ensure that data is not lost. By taking this dual approach the moderator will be able to assess various non-verbal reactions of the respondent.

Questionnaire

When designing the questionnaire, a lot of effort will be place into the use of language so that special terminology is not transferred into the questionnaire. The use of terminology would confuse respondents.

Respondents also will be offered the opportunity to remain anonymous. This into make respondents feel more relaxed and at ease as well. This will make them feel more confident is giving information solely because they are going to be treated as anonymous. It is really critical to mention that questions will be developed and carefully put in a sequence to reduce time of answering and retain interest of respondents.

Variable measurement

The Statistical Program for the Social Science (SPSS) version 11 will be used to identify factors relavant to reward management and employee retention, employee motivation and satisfaction. SPSS is a widely distributed system of computer programs for data management and statistical analysis. One way ANOVA will be used to test a relationship between reward management and employee retention.

Budget for resources

As the research will be conducted from the private source of finance, therefore there are some budget and resources constraints. Following budget and resources to be allocated for the purpose of this research:

Budget: £500

(audio-recorder, lap top, printing and binding costs etc)

Desk top

Internet access

Papers

Ethical Issues

The consistent definition and maintenance of ethical standards are of obvious importance in this study as human subject are involved. By understanding the full risks and benefits, all procedures will be taken to respect privacy and ensure and maintain full confidentiality of all individuals. The main ethical issues in this study are concerned with balancing the needs of consent, confidentiality and openness in respect of the study findings. Therefore, special attention has been and will continue to be given to ethical issues at all stages of this research. In this regards, all codes of ethis of Anglia Ruskin University will be maintained.

TIME PLAN FOR THE RESEARCH

Period: 1st week of September-second week of December 2010

Proper division of time is the most important for every research as it has to finished within cetain amount of time. A good dissertation depends on the specific time management for particular topics.

Resources

As the research will be conducted from the private source of finance, therefore there are some budget and resources constraints. Following budget and resources to be allocated for the purpose of this research:

I have computer hardware and software access as I have to my research purpose with internet facility. In My university has a huge digital library wich can access from home. As long as any person can get library access barcoding card who has internet access its easy to use . For questionnaires I have printer access which I need to have printer then I can design questionnaires and print it out for collect information.

For primary and secondary data collection purpose I have permission to access LCMS`s annual report and another documents which will help me to do my project.

Access to study population

The case study to be employed based on an organisation which is London College of Management Studies where I have been working for the past 18 months. I have already discussed about my project with the senior member of the organisation who has given me the verbal confirmation that all necessary assistance to be given in order to satisfy the project requirements. As the population of the study is based on that organisation, therefore, there is no such constraints in relation to access to the population.

This dissertation proposal has been written by a student and is published as an example. See our guide on How to Write a Dissertation Proposal for guidance on writing your own proposal.