CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter discuss several related literature and studies that will be
useful to the researchers for the development of the study.

A. Related Literature

Benefits are offered to employees because they promote job satisfaction

and increase organizational commitment. They are generally defined as forms of
indirect or non-wage compensation, conceptualizations that are principally useful
for accounting and tax purposes. A definition of benefits from a managerial
perspective can help to clarify how they can be used to achieve employee
satisfaction and commitment. [ CITATION rog16 \l 1033 ]

Employees’ benefits represent “all forms of consideration given by an

entity in exchange for the employee’s rendered service or for employment
contract cease. The increasing interest for an efficient wage policy is based on
convincing experts that remuneration is both a consequence and a prerequisite
of an efficient social and economic activity. [ CITATION Săl13 \l 1033 ]

Offering health insurance as an employee benefit is generally one of the

simplest but most effective steps you can take to reward and attract talent.
Health benefits can also deliver a range of benefits, such as increasing
productivity, boosting morale, and helping shape a positive company culture.
[ CITATION lut18 \l 1033 ]

Fringe benefits are additions to compensation that companies give their

employees. Some fringe benefits are given universally to all employees of a
company while others may be offered only to those at executive levels. Some
benefits are awarded to compensate employees for costs related to their work
while others are geared to general job satisfaction. [ CITATION jul20 \l 1033 ]

An employee reward and recognition program is a special program

developed by companies to recognize employees for their contributions to the
success of a business. Effective employee recognition programs help to attract
and retain top talent, and ensure that employees feel valued, appreciated, and
motivated to achieve company goals. [ CITATION emp20 \l 1033 ]

The employees need leadership to show them direction, motivate and

inspire them to perform at their best and control or discourage any actions which
may be damaging to the business as a whole. Leadership is also important in
ensuring the smooth running of the organization as a whole – to ensure that
employees are financially compensated in a fair and timely manner and that
stockholders are satisfied with their investment. The workplace is a team
environment and nowhere else is leadership so important. Note, however, that
leaders do not necessarily have to be the person with formal authority – many of
those in an official position of authority are simply managing and not leading.
[ CITATION Hsi20 \l 1033 ]

Employee retention is a phenomenon where employees choose to stay on

with their current company and don’t actively seek other job prospects. The
opposite of retention is turnover, where employees leave the company for a
variety of reasons. Retention is defined as the process by which a company
ensures that its employees don’t quit their jobs. Every company and industry has
a varying retention rate, which indicates the percentage of employees who
remained with the organization during a fixed period. [ CITATION chi20 \l 1033 ]

Employee retention strategy include various measures to ensure an

employee’s stays in an organization for the maximum period of time and feeling
themselves as a part of organization and refers to policies and practices use to
prevent valuable employees from leaving their jobs. The study explores to
identify the main factors of retention management strategies in organizations.
The data was collected with the help of well-structured questionnaire from
employees working in an organization. This study has recognized that some of
the factors do affect the employee retention. These factors have substantial role
to play in making employee stay i.e. salary, rewards and recognition,
compensation, retirement benefits plan, promotion, involvement in decision
making and in designing retention strategies. In order to rectify the above
shortcoming allowing employees to participate in decision making and in
designing retention strategies can be one of the non-financial incentives.
[ CITATION Ama17 \l 1033 ]

The U.S. job market continues to grow. These new metrics have led many
economists to speculate that the economy is nearing “full employment,” meaning
everyone who wants a job in the United States has one. This mark is a significant
one, particularly for small businesses. With no spare workers, they need to boost
their offerings to hire and keep their employees. Benefits are one of the surest
ways to improve employee satisfaction. Nearly 60 percent of employees say
benefits are “very important” to how they feel about their job and their company,
and employees who are satisfied with benefits are almost four times as likely to
be satisfied with their jobs. [ CITATION cai17 \l 1033 ]

There is a negative kind of employee retention which is the employee

turnover refers to the number or percentage of workers who leave an
organization and are replaced by new employees. Measuring employee
turnover can be helpful to employers that want to examine reasons for turnover
or estimate the cost-to-hire for budget purposes. Blanket references to turnover
can be confusing; therefore, specific definitions and calculations for employee
turnover may be useful to human resources practitioners. [ CITATION rut19 \l 1033 ]

B. Related Studies

Local Studies
 As per Catindig et al. (2018), respondents did not have any issues with the
factors that affect their job retention (work climate, working hours, pay, and
benefits), since they strongly agree that they feel belonged, healthy, and
comfortable, and that they can work with flexible working schedules.
Furthermore, their pay, benefits (such as training and medical care), and certain
bonuses encourage them to work hard and stay loyal to the organization. The
researchers discovered that any seafarer has a high probability of being retained
if they believe they are an important member of the group. This is relevant to the
current study since one of the variables discussed was the factors influencing job
retention. This research, on the other hand, was conducted in the northern part of
the Philippines, specifically in Manila, and it used cruise seafarers from three
major cruise fleets in Manila as respondents.
Furthermore, according to Tacdera et al. (2017), the compensation
package has a moderate effect on employee loyalty to their company,
organizational commitment does not entirely affect employee efficiency or
productivity in terms of their tasks, and benefits have a much greater impact on
employee job performance. As a result, this study provides vital information to
businesses by emphasizing the significance of each aspect included in HR
decision-making for hiring. This is important to the current study because it
sought to determine the impact of compensation packages on employee
commitment and job performance in the company. However, this research
concentrated solely on compensation package, excluding health benefits,
recognition, and leadership.
In addition, the study of Villanueva (2017) concludes that the motivational
practices employed by the BPO companies toward their employees considered
to be millennial in Dumaguete City have an impact on employee retention in the
company and have a significant relationship between the extent of company
effort and extent of impact on employee retention in terms of organizational
strategies, organizational cultures, organizational benefits, and overall variables
has been established. As a recommendation, an effective formulation of
engagement and retention strategies be done to reduce attrition common to
Generation Y employees in the BPO Industry. This is significant in light of the
current study's goal of determining employee engagement motivational practices.
This research, however, was conducted in the Business Processing Outsourcing
(BPO) industry in Dumaguete City, Philippines, and included BPO respondents.
In the study of Nava-Macali, Josephine, Nava-de Jesus, Catherine, and
Almari, Emma P. (2019), that employees are happy with their jobs because they
can learn and develop with the company, and employees are likely to remain with
the company because of good prospects and career development, according to
the report. The more effective the company's development program is perceived
to be, the happier employees are with their training and development; the higher
the degree of satisfaction, the more employees agree with the factors influencing
employee retention; and the more effective their company's career development
program is perceived to be, the more they agree with career preparation and
training and development. This study is relevant to current research since it
addresses the impact of employee satisfaction on employee retention. However,
this study was carried out at a few private universities in the Country. These
respondents of the research are non-teaching personnel.
The study of Santos entitled “The Effects of Employee Benefits on the
Performance of Employees” suggests that organizations must devise different
methods to keep workers satisfied and include various benefits for them to
benefit from to achieve corporate objectives, thus adding value to themselves
and the organizational success. Employees that are dissatisfied with their job or
work environment are more likely to put in little effort at work or to seek
employment with companies that provide better benefits. This can be extremely
costly to a company, particularly if they are losing a key and highly skilled
employee to a competitor. Similarly, to resolve these limitations, workers and
their organizations should develop and sustain a strong and constructive
relationship. Employees should be encouraged to put in their best effort by
offering attractive job benefits such as performance incentives, Christmas
bonuses, research allowances, leave allowances, and so on, to strengthen this
good and constructive relationship. Employees, or human resources, are the
most important component of any company, so they must be influenced and
persuaded to complete tasks. This study is relevant to the current research since
its variable focuses on the impact of employee benefits on employee
performance. On the other hand, this study does not address employee
retention, and it was performed in Nigeria.
Foreign Studies
The study of Lin et al. (2014) finds that that a combined employee benefit
scheme has substantial correlations with overall firm success, and that the
strength of the relationship is mediated by attitudinal and behavioral effects,
which are the product of employees' psychological reactions. This paper adds to
our understanding of the importance of employee benefits and has significant
consequences for business practices. This research is important to the current
study since it investigates the impact of employee compensation on firm - level
performance. However, this review did not include employee retention, which is a
component in the current study. This study was also carried out in another
region, China.
Furthermore, according to Hong et al. (2014), employee benefit
programs have a greater impact on work motivation than on productivity;
monetary benefit programs are most highly valued by both executives and
workers; there is a cognitive gap between management and workers about the
importance of employee benefit programs; different genders have different
benefit demands; and unmarried employees have different benefit demands.
Employee benefit effects are often viewed differently by employees with different
levels of experience and roles, and employee benefit packages have a greater
impact on the job performance of younger employees. This is related to the
present study for the reason of it includes the monetary benefit as one of the
employee benefits and how it valued the workers. Nevertheless, the study of
Hong excluded the other employee benefits and added in his study the genders
and civil status as the factors that varies the employee’s demand.
Employees, on the other hand, are a company's most valuable
asset. They cannot be overstated in terms of how important they are to a
company's success. As a result, these particular assets must be prepared by
successful planning in order to maximize job performance. They will also be
better equipped to face the challenges of today's fast-paced industry. Although
there has been a lot of research in the field of human research management, the
same cannot be said for employee training, especially in developing countries
(Nassazi, 2013). This study has a relevance to the current study since it is all
about the employee’s welfare in a company however, the study of Nassazi, only
focuses on the importance of employees in the company’s success.
Kumar (2013) found that an organization's employee retention
policy is very important. When developing new strategies, organizations should
think about the impact they would have. Employee development and corporate
performance are also taken into account, allowing employees to better align their
goals with the organizations. Recruitment and selection, employee engagement,
organizational culture and rewards, scheduling, and induction will all be done
ahead of time, saving the company money that would otherwise be wasted on
high employee turnover and a lack of retention strategies. This is related to the
study about the relationship between employee benefits to employee retention of
KFC in KCC Mall at General Santos City as it discussed the development of the
employee the performance of the corporate world and how the lack of retention
strategies affect the employees. Nonetheless, the study of Kumar pointed out
more the importance.
According to Mauludin (2018), economic employee benefits have a
negative but not significant impact on employee morale, while facilitative
employee benefits have a positive and significant impact on employee morale,
services employee benefits have a positive and significant impact on employee
morale, and employee morale has a positive and significant impact on employee
morale, and employee morale has a positive and significant impact on employee
morale. This is relevant to the present study since it researched about the
positive and significant impact on employee morale however this study included
the negative impact and excluded the other employee benefits.
 BIBLIOGRAPHY

A. Internet
Basumallick, c. (2020, may 27). What Is Employee Retention? Definition,
Strategies, and Ideas, With Examples. Retrieved november 16, 2020, from
toolbox.com: https://www.toolbox.com/hr/engagement-retention/articles/what-is-
employee-retention/?fbclid=IwAR2_IfaM9kKxnSs4aP1Lu-
UGYD0SHamFXqXm9gpjyIFRQhkMg0XE5PojCAM

Bronson, c. (2017, august 8). Which Benefits Have the Best Effect on
Employee Retention and Recruiting? Retrieved november 16, 2020, from
peoplekeep.com: https://www.peoplekeep.com/blog/which-benefits-have-the-
best-effect-on-employee-retention-and-recruiting

Catindig, S. M., Condino, P. G. & Olivares, E. S. (2018). Factors that

Influence Seafarers’ Job Retention as Perceived by Cruise Seafarers from Three
Major Cruise Fleets in Manila. LPU - Laguna Journal of International Journal of
Tourism and Hospitality Management, 4(2). Retrieved from
http://ejournals.ph/form/cite.php?id=15083.

Cohen, H.-Y. (2020, april 29). benefits of leadership. Retrieved november

16, 2020, from http://www.leadershipexpert.co.uk/benefits-leadership.html

Hong, Jon-Chao, Yang, Sung-De, Wang, Li-Jung, Chiou, En-Fu, Su,

Fan-Yin and Huang, Sui-Lan (2014), “Impact of employee benefits on work
motivation and productivity”
https://www.emerald.com/insight/content/doi/10.1108/09556219510098064/full/ht
ml
 Kagan, J. (2020, July 19). fringe benefits. Retrieved november 16, 2020,
from investopedia.com: https://www.investopedia.com/terms/f/fringe-benefits.asp

Kumar, Sonal (2013) “The impact of employee benefits as retention

strategy in a concept dining restaurant chain in India”
http://norma.ncirl.ie/901/1/sonalkumar.pdf

Lin, Zhaohong, Yao, Xing and Zhao, Zhe (2014), “The direct and
indirect impact of employee benefits on firm performance in China”
https://onlinelibrary.wiley.com/doi/abs/10.1111/1744-7941.12037

Luther. (2018, May 16). employee medical insurance. Retrieved

november 16, 2020, from https://www.pacificprime.com/blog/employee-medical-
insurance-why.html#:~:text=Offering%20health%20insurance%20as
%20an,shape%20a%20positive%20company%20culture.

Mauludin, Hanif (2018), “The Influence Of Employee Benefits

Programson Employee Morale And Employee Performance In PT. CJI
Pasuruan”.
https://www.researchgate.net/publication/326877043_The_Influence_Of_Employ
ee_Benefits_Programs_on_Employee_Morale_And_Employee_Performance_In
_PT_CJI_Pasuruan

Mayhew, R. (2019, fehruary 5). employee turnoover definition and

calculation. Retrieved november 16, 2020, from
https://smallbusiness.chron.com/employee-turnover-definitions-calculations-
11611.html

Nassazi, Aidah (2013), “EFFECTS OF TRAINING ON EMPLOYEE

PERFORMANCE” https://core.ac.uk/download/pdf/38098025.pdf

Nava-Macali, Josephine, Nava-de Jesus, Catherine, and Almari,

Emma P. (2019) “Effectiveness of Career Development Program on Job
Satisfaction and Retention of Employees in a Private University in the
Philippines.”
https://journals.scholarpublishing.org/index.php/ABR/article/view/6730

Resources, H. (2020, july 21). employee reward and recognition

program. Retrieved november 16, 2020, from betterteam:
https://www.betterteam.com/employee-reward-and-recognition-program

Santos, Melisa “THE EFFECTS OF EMPLOYEE BENEFITS ON THE

PERFORMANCE OF EMPLOYEES” https://www.projecttopics.org/the-effects-of-
employee-benefits-on-the-performance-of-employees.html

Tacdera, A. Y., Rosalejos, M. J. & Martcio, R. . . (2017). EMPLOYEE

PRESPECTIVE: A STUDY ON THE EFFECT OF BENEFITS PACKAGE ON
ORGANIZATIONAL COMMITMENT AND JOB PERFORMANCE. ANTORCHA,
4(2 and 3). Retrieved from http://ejournals.ph/form/cite.php?id=11729

Villanueva, I. T. (2017). Motivational Practices Towards Employees

Retention in the Business Processing Outsourcing (BPO) Industry.
Interdisciplinary Research Journal, 7(1). Retrieved from
http://ejournals.ph/form/cite.php?id=15343

B. Journal

Amandeep Kaur, P. K. (2017). A Study to Identify the Factors Affecting

Employee Retention. international journal of science and research , 6 (5), 1827-
1831.

Klonoski, r. (2016). Defining Employee Benefits: A Managerial

perspective. International Journal of Human Resource Studies , 6.

Sălceanu, A. (2013). EMPLOYEES’ BENEFITS, BETWEEN THEORY

AND PRACTICE. academia branch , 191.