Compensation as

Retention Strategy
 Introduction

‘Employee retention is a process in which the employees

are encouraged to remain with the organization for the
maximum period of time or until the completion of the
project. Employee retention is beneficial for the
organization as well as the employee’.
 Retention

Fundamental changes are taking place in the work force

and the workplace that promise to radically alter the way
companies relate to their employees

Hiring and retaining good employees have become the

chief concerns of nearly every company in every industry.

Retention is all the more important because of the severe

competition among employers for qualified workers.
The fierce competition for qualified
workers results from a number of
workplace trends, including-
A robust economy
Shift in how people view their careers
Changes in theunspoken
"contract“ between employer and
employee”.
A new generation of workers
Changes in social mores
Life balance
 Retention tools for Changing times:

1. Maintain Equity and fairness in organization

- Internal Equity
- External Equity
- Individual Equity

2. Offer Compensation – Attractive And Competitive.

Fair compensation alone does not guarantee employee loyalty, but offering
below-market salaries makes it much more likely that employees will look
for greener pastures. Go for Employee Engagement Surveys / ESS, to find
out what perks, benefits and forms of compensation other than money will
help keep them motivated.
 Retention tools for Changing times:
3.Benefits Need To Be Quantified And Qualitative.

Although benefits are not a key reason why employees stick with a company,
the benefits you offer can't be markedly worse than those offered by your
competitors and like minded industries. Eg Medical insurances, Corporate
Credit cards and Discount Coupons
4. Offer retention bonus.
Employee longevity typically is rewarded with an annual raise and mandatory
vacation time after three, five or ten years. But why not offer other
seniority- based rewards such as a paid membership in the employee's
professional association after one year, a paid membership to a local etc.
 Retention tools for Changing times:

5. Enhancement, Advancement And Progression Opportunities.

To foster employee loyalty, implement a career ladder and make sure

employees know what they must do to earn and go in for progression. A
clear professional development plan gives employees an incentive to stick
around. Do away with you Performance Management System if it has turned
to NOVA (Non Value Added Activity) and go in for instant performance
rewards. Think out of the box!
6.Transparency in communication.

Employees are more loyal to a company when they believe management or

those at the helm of affairs keep them informed about key issues. That
means that you regularly keep our people up to date with important events
affecting the company. If November was good, let them know, and while
you're at it, tell them what you expect to happen in December.
 Retention tools for Changing times:

7. Design the rewards and incentives smartly.

The incentives / rewards which are designed for the individuals should not only
drive superior performance but also at the same time it should also engage
employees to the organization.

8. Design Long term benefits for employees.

8. Value the employees.

Recognize outstanding achievements promptly and publicly, but also

take time to commend on the many small contributions your staff
makes every day to the organization's vision, mission and growth.
 Conclusion
•As they say, happiness can be contagious. So make sure the work place is a
happy one, which every employee would love to spend time. Human resources
department along with senior management must take steps to make sure of
this.

•Effective human resource management must be practiced at both strategic

and day-to-day levels. HR management practices must reflect company policy
as to how it will manage and relate to its employees.
•The HR strategy should evolve from a transactional support role to partnering
in the organizations business strategy. HR must take steps to be aware of
employee problems and try to solve them, creatively.
CASE STUDY

Failure of employee
retention strategies
of Baytech Plastics
General introduction of
organization
 Baytech engineers, manufactures,
finishes and assembles high-
quality, custom-molded plastic
components for domestic and
international markets. Located in
Midland, Ontario, Baytech operates
in the midst of the largest plastic
producing area of North America
 Customers of the Baytech
Plastics Ltd.
•  Baytech’s customers include
manufacturers of household
appliances, telecommunications
equipment, electrical and electronic
equipment, business machines and
automotive components, and many
others. Baytech ships throughout North
America and the world.
 Sucess story of Bytech
Plastics
•  Baytech Plastics has experienced
considerable success since it was founded
in 1953, and has responded well to
changing market conditions. About four
years ago, Baytech went through a major
crisis when it lost about 30% of their
business due to a customer bankruptcy.
In the last several years however, sales
have doubled, and they have completely
recovered from the loss.
 work force in Baytech
plastics
 Baytech employs 260 people and
manufactures from two facilities in
Midland, Ontario. Baytech’s hourly
employees are unionized with the
Union of Needletrades, Industrial and
Textile Employees (UNITE).
 Baytech employs a high ratio of
engineering support staff relative to
its competition. In fact, Baytech’s
emphasis on centralization aspect of
decision making.
 work force in Baytech
plastics
 On the salary side, Baytech’s sales
group consists of technical-sales
people, such as mechanical
engineering technologists from college.
Their engineering group consists of
process, tool and program
technologists.
General office staff, human resources,
and supervisory staff complete the
salary group. The hourly group consists
of moulders and technicians, set up
 Work Force In Baytech
Plastics
•  Taking advantage of seasonal contract
opportunities, Baytech has also, for the
past two years, added 50 employees
who work between July and
December
Decision making in Baytech
Plastics
 Policiesare determined by top level
managers, which causes
dissatisfaction among employees
although it has given profitable
results to the organization for a
long time.
 Employee Retention is
 For Baytechcrucial.
owner/president Anton
Mudde, the rationale for their
particular approach is obvious-It just
makes sense. I don’t think we could
live with turnover. If you have high
turnover, you can’t have consistency
of product quality and customer
service. And in this day and age, that’s
a must. Part of our success has been
picking up programs where
people/companies haven’t done that.
They haven’t been successful in
maintaining customer service, delivery
and quality.
 Turnover is a major issue

•  Baytech’s turnover runs at a rate of

around 35 to 40 percent, and is a
serious problem for the company.
• Management attributes this turnover
performance to many factors in
which the centralization and least
opportunity to employees in
decision making are main reasons.
 Programs and Initiatives
Affecting Employee Retention
 Baytech’s HR group monitors
compensation levels in the area, and in the
plastics sector specifically through CPIA
surveys, to benchmark and offer
competitive and better than average wages.
The company also has a pension plan,
health and dental benefits.
 Baytech has also introduced an innovative
type of pay-for-performance bonus system
it calls “rewards for success”.
Corporate values
 Baytech’scommitment to
communications is at the centre of its
approach to employee retention. For
Anton Mudde, there are three words
that sum up that approach: “fairness,
communication and recognition”.
Baytech may not have a formalized
employee retention strategy, but its
human resource practices are always
guided by these principles.
Questions-
1. What is/are the reason/reasons of
high employee turnover of this
organization?
2. What are the suggestions you would
give to improve the retention rate of
the organization?
Thank You