Impact of Rewards on Employee Turnover - Case of Mannai Corporation

Chapter 1: Introduction

This paper is concerned with the understanding the reward system that is influencing the employee turnover in a particular organization.

1.1 Company Background

Mannai Corporation is a famous information technology organization of Qatar. It is considered as the largest system integrator in the Middle East. It provides end-to-end solutions throughout the whole technology stack. Functioning of the Mannai organization has been divided into two key activities which are Trade and Services. The main motive of the Mannai Corporation behind its establishment is to create such environment which will attract and retain a committed team of skilled professionals.

1.2 Background of Study

The reward system of Mannai Corporation influences the employee turnover in a significant manner. Availability of large competition in the marketplace brings a big problem in front of many International technology organizations in Qatar. Due to the high competition, it becomes difficult for the Mannai Corporation to retain the human resources for a long time. This has resulted in a large employee turnover rate in the organization. Employee turnover of organization happens due to a shortage of experienced IT workers. The retention of employees now becomes a major concern for the organization. The only thing that can prove successful for the organization in retaining the employees is a reward system. Due to the proper reward system, employees feels motivated, and they want to become the member of the organization for a long time. It enhances job satisfaction among employees that enforces them to retain and serve for the profit of the organization (Lu, 2016). Generally, it can be said that retaining employees for a long time is a very challenging task for the management of IT industry. If the management of organizations is not able to manage turnover, they will not be able to utilize their human assets in an effective manner. Thus, it can be said that poor reward system influences the overall profitability and reputation of Mannai Corporation in its potential markets.

1.3 Statement of Problem

The problem faced by Mannai Corporation is employee turnover. According to PayScale report of current employees turnover, the employee turnover rate in the Mannai Corporation is highest than the other IT organizations in Qatar. During 2015, the organization has approximate 2500 employees who significantly decreased due to non-satisfied reward and employee development system. After a high turnover, the organization has currently 1800 employees. Understanding the impacts of reward system in Mannai Corporation can help management in taking appropriate action. This will be helpful in improving the employee turnover rate in Mannai Corporation.

1.4 Research Rationale

Firstly, the conducted research should determine the relationship between reward system and employee turnover. Thousands of studies have been conducted by different authors to study various aspects of employee turnover and reward system (Shields, 2015). Moreover, new studies can conduct to analyze the relationship between employee turnover and reward system. Alternatively, the impacts of reward system on employee turnover can be studies in an in-depth manner.

1.5 Industry Background

Information technology sector of Qatar is characterized by a large number of employment opportunities. IT service market of the Qatar is growing at a CAGR rate of 11.7% for the next 5 years in Qatar.

It is growing day by day. IT hardware market of Qatar undergoes a medium-term growth after a small contraction in 2015 especially in the markets of Tablets. Thus, it can be said that IT services of the Qatar industries are expected to perform well in their market due to the high demand for smart systems, cloud computing, and security services.

1.6 Research Aim

The aim of this research is to understand that where there exists any relationship between the reward system and employee turnover. Moreover, the paper also considered the significance of reward system in prevention of employee turnover.

1.7 Objective of Study

The objective of the study is following:

• To make recommendations to the management of IT industry in Qatar on possible ways and strategies to minimize employee turnover based on the findings of the research.
• To study the reason behind employee turnover in Mannai Corporation
• Measure the relationship between rewards and employee turnover.

1.8 Research Question

The below mentioned are research questions of the research paper:

• What is the impact of reward system on employee turnover in Mannai Corporation?
• How job satisfactions influence the employee turnover?
• What is the relationship between the job satisfaction and reward system?

Chapter 2: Literature Review

2.1 Importance of Reward

Alias (2014) said that compensation and reward play an important role in the management of human resources. The compensation that is offered by organizations to their employees forms employee commitment towards the organizations and their retention. Bambacas (2013) argues that reward is an important issue in keeping and attracting talent in organizations. The main reason behind it is that money affects the employee behavior and shapes their attitude towards the organization.

2.2 Impact of Reward System on Employee Turnover

Bonenberger (2014) conclude that reward affects the retention and attraction of the employees. The lucrative compensation package is considered the main factor behind employee turnover and their retentions in the organizations. Lucrative package not only fulfills their financial requirements but also fulfill the material requirements of employees which ultimately play an important role in building their position and social status in society. According to a study by Davis (2013), employees have to differentiate themselves from their competitors through their reward system in order to attract and retain quality and skilled workers. The researcher follows the primary research method for presenting his viewpoint. Thus, it can be said that the organizations should have suitable reward policies to attract a large number of talented people and retain them for a long time (Gerhart, 2014).

Another way through which the organizations can reduce employee turnover is improving compensation package of employees. An organization can only get success in retaining employees if it offers market related and competitive pay or benefits to its employees (Mas-Herrero, 2014). The researcher follows the qualitative research methods to conduct their analysis. It is because better compensation motivates the employees to become committed to the organization. Furthermore, Hofmans (2013) concludes that employees want to remain in the organization if they are properly rewarded and recognized and also they may leave if they are not rewarded adequately. Most of the workers want to be the member of that organization where their efforts, contributions, and capabilities are appreciated fully. On the other hand, Kehoe (2013) stated that internal and external equity should be determined by the organization while fixing remuneration and compensation for their employees. This will help the organizations in minimizing the level of employee turnover and saving the hiring cost. All previous researchers of this topic utilize qualitative and primary research to give their viewpoints. They can significantly make their research more attractive by using recent trendy research methods like brainstorming, social media research, etc.

2.3 Role of Monetary and Non-Monetary Reward in Employee Retention

On the other hand, Karatepe (2014) stated that non- monetary and monetary rewards are significant in order to enhance employee retention. Both rewards give a large level of job satisfaction which encourages them to be the member of the organization for a long time. Monetary rewards mainly contain reasonable salaries, bonuses, performance benefits, and remuneration for rare skills. Monetary rewards satisfy the social needs and luxury needs of employees with which they feel motivated (Lu, 2016). On the other hand, non-monetary rewards contain recognition, achievement, promotions, recreation facilities, extended leave and child care facilities. It is also said that engineers and analysts view salary as the main reason for their dissatisfaction because it does not give them an opportunity to develop their career which will result in high-level employee turnover. Most of the engineers who migrated overseas also cited financial causes as their main reason behind their decision to leave the organization. It is because the only salary does not satisfy the employees (Mowday, 2013). They want more with which they can spend their life enjoy fully such as promotion, recognition, and status.

Furthermore, Michel (2013) said that current development towards benchmarking brings a big challenge of establishing themselves apart from their competitors by means of remuneration hence the influence of financial rewards on employee retention is reduced. Apart of this, most of the studies conclude that financial reward system is not an efficient tool for motivation. Compensation package still remains as a tactic employed by a different organization to improve the level of worker commitment. Furthermore, Poole (2013) concludes that compensation practices still one of an important employee retention strategy who plays an important role in reducing the employee turnover level. On the other hand, Ramamoorthy (2014) said that volunteer turnover is greater among those who value large monetary rewards as part of their own compensation package. In addition, Shahin (2014) conclude that reward system influences the employee turnover in a greater manner. It is because reward work as a biggest motivational factor which encourages employees to be the member of the organization for a long time. Due to the adequate reward system and attachment, employees feel like the part of the organization, and they want to develop their career with the success of the organization. Snelgar (2013) found that the different aspects of the reward system contained many key variables that influence the turnover intention of employees in greatest manner. Adequate reward system provides employees with good work environment as well as different career development opportunities. This will significantly enhance the retention and productivity rate of employees (Mascarenhas, 2013). On the other hand, Terera (2014) said that there are mainly five important influencing aspects of turnover intentions of employees which are promotion, work content, subjective perception about the chosen jobs, salary, and affective commitment. For most of the employee’s welfare, remuneration and performance show the personal value and success. In case the employee is not satisfied with current and increase income, they will have the intent to depart and leave the organization. In addition, Tangthong(2014) said that the job with high autonomy could lead workers to emerge endogenous satisfaction. This will enable the employee to take challenging work and show their hidden talent. It can be said that employee turnover can be two types involuntary and voluntary. The main aspects that influence the employee intention of turnover are personal factors such as salary, development space, and lack of appropriate incentive. On the other hand, employee turnover intention also influences by improper recruitment, inadequate training, employment mechanism and incentive system (Shields, 2015). Thus, it can be said that organizations need to apply proper reward system to motivate their employees and retain them for a long time.

Chapter 3: Research Methodology

The research report mainly using the qualitative method for conducting further research. It is because qualitative research makes it easy to collect necessary data required for conducting further analysis.

3.1 Introduction

Primary Research

The research report of the project is mainly utilizing the primary or secondary research method. Primary study is conducted to know the viewpoint of different IT industry employees regarding reward system in their organizations. All these will be analyzed by primary research. For getting the answers of different research questions, I shall use different methods of primary research which are following:

• Questionnaire and Surveys: It is very efficient and trustworthy method of collecting the responses of employees (Ohgaki, 2013). This is helpful for collecting the required data so that further steps can be taken to implementation the desired project.
• Observations: It can be of two types; observation through communication and interaction or observation through no interaction or communication. In the research project, direct observation method is applied to measure the employee’s behavior on the spot.

Secondary Research

Secondary research is also utilized for collecting the data in the desired manner. Secondary research is conducted because it is easy to access and free to use. We mainly utilized literature review method for carrying out the study.

• Literature Review: It helps us in reviewing the assemble articles and the original research conducted by the writers in the selected field (Smith, 2015). This utilized to study the past research regarding the subject of the research.

3.2 Research Method

The research report mainly utilizes the qualitative research methods such as observation, survey, and questionnaire (Mascarenhas, 2013). The qualitative method helps us in collecting the needed data in an efficient manner. The qualitative research method is chosen for following reasons:

• Employee’s behavior in organizations can identify accurately.
• The expectation of employees from organizations can measure appropriately.
• Data about the feedback of employees towards reward systems in the organizations can immediately collect so that improvement can be made on a timely basis.

Limitations

• Rigor is very difficult to measure, maintain and demonstrate.
• Availability of a large number of data makes interpretation and analysis very difficult.
• Sometimes it is not accepted and understood as quantitative research within the scientific community (Bambacas, 2013)
• Availability of various issues such as confidentiality and anonymity.

3.3 Research Strategy

The study is conducting by using inductive research strategy. An inductive research strategy is considered the strategy that starts with the final stages of the scientific research like observation, hypotheses, etc. This strategy is utilized to generate necessary meanings from the data set collected in order to detect relationship and identify patterns.

3.4 Research Design

The study is conducted by selecting the appropriate population. The population of the study contains both male and female employees of IT industry in Qatar. The total size of the population was 100. By utilizing the RaoSoft sample size calculator, a sample size of 80 respondents was obtained. In the study, the respondents selected on the basis of the random sampling method. Each individual is selected randomly and entirely by chance, such that each individual has the same probability of being chosen at any stage during the sampling process.

3.5 Ethical Consideration

According to Mascarenhas (2013), Ethical norms also serve the objectives and goals of research and apply to people who conduct scholarly or creative activities or scientific research. There is even a research ethics, specialized discipline, which studies these norms. On the other hand, the important ethical guidelines following in this study are; Confidentiality, making up or editing data and failing to report negative findings, respect for the participant, and using inappropriate sample sizes.

3.6 Research Schedule

As it is mentioned before that, the research is being carried out through primary research. We identified the population for carried out our further research. The population is required to analyze their responses towards the reward system in their organizations. With primary research, secondary research is also conducted by reviewing the available literature reviews of different authors. Articles of different authors are accessed through internet sources such as Google scholar, or Google. The project is started from 1 December. After this various meetings and interviews are conducted so that project can succeed in the desired manner. The project schedule of the research project is following:

3.7 Justification

From the review, it can be said that research methodologies in the previous studies employed did not give the adequate explanation of the phenomenon. In this research, new methodology uses to contradict the existing knowledge about the phenomenon and provide fresh insight into the research topic.

REFERENCES

Alias, N., Noor, N. and Hassan, R., 2014. Examining the Mediating Effect of Employee Engagement on the Relationship between Talent Management Practices and Employee Retention in the Information and Technology Organizations in Malaysia. Journal of Human Resources Management and Labor Studies, 2(2), pp.227-242.

Bambacas, M. and Kulik, T.C., 2013. Job embeddedness in China: How HR practices impact turnover intentions. The International Journal of Human Resource Management, 24(10), pp.1933-1952.

Bonenberger, M., Aikins, M., Akweongo, P. and Wyss, K., 2014. The effects of health worker motivation and job satisfaction on turnover intention in Ghana: a cross-sectional study. Human resources for health, 12(1), p.1.

Davis, T.L., 2013. A Qualitative Study of the Effects of Employee Retention on the Organization. Insights to a Changing World Journal, 2013(2).

Gerhart, B. and Fang, M., 2014. Pay for (individual) performance: Issues, claims, evidence and the role of sorting effects. Human Resource Management Review, 24(1), pp.41-52.

Hofmans, J., De Gieter, S. and Pepermans, R., 2013. Individual differences in the relationship between satisfaction with job rewards and job satisfaction. Journal of Vocational Behavior, 82(1), pp.1-9.