Employee Retention – Part 3


Relationship between Employee Benefits Management and Employee Retention

There are enough sources of evidence to justify the positive relationship between Employee Benefits Management and Employee Retention. Irshad [11] carries out a literature study on factors affecting employee retention.

He summarized the findings of many researchers and highlighted their suggestions regarding the management practices that can be helpful in improving absenteeism, employee retention, and better quality of work.

Employees Benefit Management includes in the study are compensation & rewards, job security, training and development, supervisor support culture, work environment, and organization justice (Meyer & Allen, 1991; Solomon, 1992; Snell & Dean, 1992; Arthur, 1994; Snell & Youndt, 1995; MacDuffie, 1995; Delaney & Huselid, 1996; Ichniowski, Shaw & Prennushi, 1997, cited in [11] & [12]). Cappelli (2000, cited in [11]) uses similar factors whilst Cole (2000, cited in [11]) suggests that employees are loyal to organizations when they see the value, and a sense of pride and thus work to their fullest potential.

The similar findings are being reported by Van Knippenberg (2000, cited in [11]). Retention and turnover are two sides of a coin. The factors leading to employee retention are the opposite of the factors on turnover.

This demonstrates the importance of employee retention and turnover in an organization. If an employee is happy about their organization his or her tendency to stay is more, allowing the organization to achieve a competitive advantage.

According to Moore (2002, cited in [13]), lack of job satisfaction might be the cause of employee turnover, and Boundrias et al. (2009, cited in [13]) suggested that the causative factor for employee turnover might be the low-level of empowerment.

Hatton and Emerson (1998, cited in [13] mention that a low level of support for superiors might lead to employee turnover as found by Salman, Igbal, and Chandran (2010, cited in [13]).

Human Resource Management

From the early US models of HRM emerged the concept of best practices. where the adoption of certain HR practices would result in improved organizational performance. This can be achieved by retaining the potential employees for a longer period in the organization.

According to Stavrou-Costea (2005, cited in [9], p. 61), the main factor for the success of an organization is the effectiveness of HRM practices. This can be visible in organizations that own good employee benefits management and retain the employee base for longer periods.

Therefore, employee benefits management and employee retention have a significant relationship directly and indirectly.

The Reward

The reward is one of the key leading employee benefits management as established by many authors. If the employees are attached to an attractive reward system their stay in the organization will be longer.

Similarly, if the employees are rewarded according to their performance, they tend to stick to their organization (Sutherland, 2004; Shoaib et al.,2009, cited in [20]).


Salary is also another key leading practice that influences employee retention. According to Grace [23] employees are working for money.

If the organizations are able to provide good pay in terms of salary and other incentives to their employees, they will feel the organizations appreciate their work. Thus employees’ intention to stay in the organizations will be higher.


Compensation is also one of the key leading employee benefits management. Hong et al [9] found that compensation has a positive relationship with the retention of employees.

Similarly, Mittar, Saini, and Agarwal [5] and Williams et al. (2007, cited in [28]) conclude that an effective compensation system has a positive effect on employee retention.

Training and Development

Training and development are investing in employees to build and develop their skills.

It is another key employee benefits management that influences on employee retention at any age. Huselid (1995 cited in [13]) as supported by Bamberger (2009, cited in [13]) suggests that training is an important determinant of employee retention.

Career Development

Career development is also a key employee benefits management.

Allen, Shore, and Griffeth (2003, cited in [14]) have mentioned that the employees’ intention to leave organizations is reduced based on the opportunities provided by the organizations for employee development, lack of training and promotional opportunities are the main reasons for high-performers to leave the organization.

Employee Recognition

Employee Recognition is acknowledging the performance of an individual employee. Yazinski (2009, cited in [30]) states that recognition of skills related to individual job accomplishments is an effective retention strategy for an employee at any age.

In addition, there are studies indicating a positive impact on employees’ long stay in the organization by acknowledging individual work accomplishments related to the job and the organization (Redington, 2007, cited in [30]).

Therefore, based on the findings from the literature the following employee benefits management are used to develop the study model;

  1. Reward
  2. Salary
  3. Compensation
  4. Training and Development
  5. Career Development
  6. Recognition

It is a combination of most of the prominent employee benefits management used by most of the researchers. They have used a combination.

Relationship between Employee Benefits Management and Employee Retention – Part 1

Relationship between Employee Benefits Management and Employee Retention – Part 4

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