The Employee Retention Practices in Manufacturing Industries

by: Faiza Tariq, Kamran Haider and Sehrish Ambreen

Students of Masters in Human Resource Management.

Supervisor: Dr. Muhammad Adnan Sial,

Institute of Administrative Science – University of the Punjab.

Abstract

The market value of any organization is depending on the loyal of committed and

talented skillful employees. Employees are back bones for any organizations in meeting

objectives and goals in organizations. So that, providing importance for employees

become a huge issue mostly in the private organization. These days employee retention

rate in manufacturing organizations is high rather than other organizations. Consuming

this in mind, the existing study is expected to find out the factors that are affecting

employee retention in manufacturing organizations. In this research we collected data

from manufacturing by adopting single population sample size calculation formula over

the 40-50 employees of 3 manufacturing organizations. In order to that collect primary

data, a self-completed questionnaire designed and administrative to selected employees

through simple random sampling method. Descriptive analysis was run on SPSS software

for finding the correlation of variables. However, Acquiring, Training and Compensation

& Benefits were found to have significant relationship with employee retention.

Keywords: Acquiring, Training, Compensation, and Employee Retention.

Table of Content
Table of Content.................................................................................................................2

Chapter 01: Introduction..................................................................................................4

Significant of Study......................................................................................................5

Research Objectives......................................................................................................5

Chapter 02: Literature Review.........................................................................................6

Acquiring......................................................................................................................6

Training.........................................................................................................................9

Compensations............................................................................................................10

Chapter 03: Theatricals Diagram...................................................................................13

Chapter 04: Materials and Methods..............................................................................14

Sample.........................................................................................................................14

Instrumentation...........................................................................................................15

Chapter 05: Data Analysis..............................................................................................16

Findings.......................................................................................................................16

Chapter 06: Conclusion...................................................................................................18

Chapter 07: Limitations and Suggestion.......................................................................19

References..........................................................................................................................20

APPENDIX........................................................................................................................24
 Chapter 01: Introduction

How can Human Resource professionals successfully manage the employee

retention in the organization? Now a days, the employees turnover rate is high, many of

the productive and valuable employees leaved their organization due to unfit for the job,

lack of training and less compensation and benefits. Retaining talent is a very important

to managers and organizations. The annual costs increment is associated with losing

productive employees along with acquiring, training and new employees retention.

Losing employees can also lead to work disturbances, loss of organizational retention

along with strategic knowledge, organizational productivity or customer satisfaction,

reduced diversity and retention ratio of employees, where other valuable or productive

employees follow the leavers and leave the organizations. Even when tough labor

markets prevent many employees from moving, there is the possibility of restrained

turnover. Furthermore, at that time of job markets improvement, many employees may

start looking for new opportunities. Employee retention is the biggest challenge for all

kind of organization. Organization could not control ratio of workers who leave an

organization and are replaced by new employees. Many Manager and Organizations will

make efforts for retaining employees, some of the Managers and organizations will try to

retain productive and valuable employees by offering healthy increment, promotions and

benefits along with job security.

According the Sial et al. (2011), compensation is a reward for employees in turn

of their services and the reward may be in the form of pay, promotion, benefits,

recognition and motivational factors. Compensation should be designed in a way that

reinforce the desired behavior compensation is believed to be an important concern for

employers and employees as it also affects employee commitment so that this cause were

play positive role in employee turnover. In this research, we analyze the employee

retention factors as per their perceptions and how the organization can retain their

employees by providing training, compensation and benefits.

Significant of Study

The purpose of this study is to review current literature and analyze previous

studies to evaluate whether or not employee Acquiring, training and compensations

practices are beneficial to an organization. Although it is not specific to a particular

company or industry, it is intended to give a general overview of the concept. Research

and practical evidence of employee retention practices already exists. This study will

motivate to the exciting employees and employer to adopt the best practices for getting

high employee retention. The body of knowledge of this study is that this research is

conducted on some manufacturing industries we will research on this study on all

industries of Pakistan or worldwide.

Research Objectives

 To investigate the relationship between Acquiring practices and employee

retention.

 To find out the relationship between training practices and employee

retention.

 To probe the relationship between high compensations and employee

retention.
 Chapter 02: Literature Review

Acquiring

Now a days it is widely believed that the most important factor is the way in which

an organization and their HR department administers its talent management program.

Awareness of exactly how important these programs are to an organization and an

understanding of how the various aspects of talent (Oladapo, 2014).

According to Noida (2012), Now ad days attracting good candidates towards your

company is just click away. Internet based acquiring facilitates just-in-time hiring by

simply logging onto the Internet, recruiters can access the database of job portals and find

thousands of resumes of the qualified candidates for jobs at every level. Screening could

be done within minutes, and the potential shortlisted candidates can be contacted

immediately by sending a mass mail. Candidates ate shortlisted based on knowledge,

skills, location preference, salary expectations and their availability and further, move on

to the interview stage (Noida, 2012).

According to Branham (2005), effective retention practices start with good hiring

practices qualified and motivated people will stay longer, poor hiring practices increase

turnover newly hired employees that are mismatched and disoriented leave the

organization quickly the most of organizations select or hired the right talent by keeping

employees well matched with their jobs.

According to Noida (2012), Acquiring the best talent, planning, sourcing, assessing,

hiring and on-boarding of top talent and retention, this is the challenging work for every

manager and organization.

 Acquiring is the process of locating individuals who might join and encouraging

them to apply for existing or anticipated job openings and choosing individuals who have

relevant qualification to fill existing or projected job openings (Dessler, 2007).

According to Vlachos (2008), have identified that there is a positive and significant

relationship among human resource management practices and staff acquiring (Acquiring

source, pre selection test, IQ test, structured interview and biographical information blank

of the organization) for improving financial or profit performance, As result

organizations are encouraged to attract qualified candidate for survival and growth thus

for improving financial or profit performance.

Acquiring is the process of choosing a candidate from a group of applicants who

best meets the selection criteria for a particular position, In this process the right person

chosen for the requisite qualifications and knowledge is placed in the appropriate job

position to decrease the costs and maximum the profits by means of their merit and talent

(Vlachos, 2008).

Attracting, selecting, engaging, developing and retaining employees are the five

main focuses of talent retention (Perrin, 2003). Although pay and benefits initially attract

employees, top-tier leadership organizations focus on retaining and developing talent

(Lockwood, 2006). The talent acquiring process is used to control certain events that each

employee experiences in the work place (Perrine, 2005).

Organizational strategies and talent acquiring strategies will continue to be driven

by workforce trends such as an increasingly global and virtual workforce, different

generations working together, longer life expectancies and an empowered and

autonomous workforce that have forever changed the workplace (Tucker, Kao, & Verna,
2005). Demographic changes have also caused the workforce to continue to diversify

from age, gender and ethnicity to lifestyles, migration patterns and cultural norms

(Johnson, 2007).

According to Temkin (2008), companies are now faced with the problem of how to

address talent acquisition and retention strategies especially in today’s global economy

where every organizational leader must continually invest in human capital to combat the

talent shortage.

Acquiring the best talent involves the planning, sourcing, assessing, hiring and on-

boarding of top talent. Automating the acquiring processes helps companies in

implementing the Best Practices of acquiring and hiring the best talent available in the

market. This leads to a better employment opportunity through career websites and also

provides more effective recruiting tools for selecting suitable candidates (Noida, 2012).

According to Garibaldi (2006), Human resource management practices influence

employee skills through the acquisition and development of a firm’s human capital and

Human capital corresponds to any stock of knowledge or that contributes to his or her

productivity. Acquiring procedures that provide a large pool of qualified applicants will

have a substantial influence over the quality and type of skills that new employees

possess. Providing formal and informal training experiences, such as basic skill training,

on the job experience, coaching, mentoring and management development, can further

influence employee development (Oluoch, 2013).

Training

According to Fheili (2007), Competitive advantage companies are struggling hard

to desire a most appropriate strategy that could enhance the retention rate and pulls the

turnover rate downward. believes that organizations were not interested in providing

trainings that were generalized in nature, the results shown that when organizations want

to retain their employees that was important to pay attention to the learning of employees,

Letting people do more and learn more of what they were good at will encourage them to

stay with the organization (Govaerts, 2011).

According to the Scott Brum (2007), highlighted that when the employees were

introduced to more training, they showed higher level of commitment as compared to

others. The organizations were focusing on specialized trainings which was relevant to a

specific task and make the employees unfit for competitors use. They were limiting

employees ability to switch to another job in an industry (Fheli, 2007).

Organizations were finding ways to make the employees specialized rather than a

generalized one, which rest of the organizations consider training as an investment on

employees and expect a return in the form of commitment and retention. (Kabir, et al.,

2012).

According to Anvari, et al. (2010), It was possible only with the help of planning

training programs that were totally based on needs valuation to achieve commitment and

retention.

Training had a potential to change the turnover thoughts and was an important

factor that helped in originating the intentions of turnover, those employees who were

highly committed to the organizations had lower turnover thoughts and the trainings

basically brought association between commitment and retention (Kyndt, et al., 2009).
 According to the Golden (2002), the prominence of training was twofold from an

institutional perspective, employee training was important for both organizational

operations and organizational advancement and absence of trained and skilled employees

had prompted organizations to inquire methods of retraining their educated and skilled

employees. However, that is why most organizations thinking was focused of their

training and development initiatives and investment.

According to the Kellie (1999), he’s noted that the corporate sector experienced

productivity enhancement through application of training and development. Training

practices act as a vital channel to enhance realization of desired service performance

standards in the public sector space (Brannick, et al., 2002).

Compensations

According to Hong, et al. (2012), Compensation which included something

typically money, compensation of injury, loss, or money from an employer as a reward. It

is stated Kadiresan, et al. (2012), that compensation was not only money but also known

cash form Pension, life and health Insurance, retirement plans and different allowances

like company cars, Subsidized transportation presented as benefits (Kadiresan, et al.,

2012)

According to Lee, et al. (2015), expenditure on fringe benefits contributed to

employee retention. More fringe benefits induced more job retention. The purpose of

fringe benefits was to retain the talent (Lee, et al., 2015).

According to the Sial, et al. (2011), Compensation has positive and strong

relationship between compensation practices and organizational commitment.

Compensation is a reward for employees in turn of their services, the reward may be in

the form of pay, promotion, benefits, recognition and motivational factors for retaining

employee because the compensation is most important concern for employers and

employees as it also affects employee commitment. (Sial, et al., 2011).

According to Bryant (2013), he generally speaking, he likes his job, but lately

he’s been feeling like his boss doesn’t appreciate him, and he is worried about his

opportunities for advancement, he decides to start looking for another job because of his

current earning is low, and his job search targets only opportunities that make more than

current.

According to Kelley (1997), the four different approaches to compensation that

could be used in the context of an overall organizational design to reinforce other

organizational goals and structures, by selecting a different mix of approaches,

compensation may be designed to reinforce and reward desirable behaviors, and to

attract, retain, and motivate the workforce.

According to Gerhart, et al. (1995), Compensation systems differ according to

their impact on these motivational components, generally speaking, pay systems differ

most in their impact on instrumentality the perceived link between behaviors and pay,

also referred to expectancy perceptions often have more to do with job design and

training than pay systems.

Compensations for behaviors or outcomes are usually offered as bonuses for high

or improved performance & employee retention. They may have added value to base

salary or provided as bonuses, but bonuses provide a stronger incentive for continuous

improvement in performance and employee high retention (Lawler, 1990).

 According to the Msengeti and Obwogi (2015), The pay consists of cash

compensations which are directly provided by employers for the work performed by the

employees which is divided into two main elements i.e. the base pay which is

compensation given on the basis of some pre-defined rates e.g. amount of time spent on

the job by the employee such as hourly weekly rates and pay contingent on the

employee’s performance e.g. merit increases, incentive pay, bonus pay etc. of this two,

base pay forms the largest component of the total reward package for most employees.

According to Gerhart, et al. (1995), employee compensation plays such a key role

because it is at the heart of the employment relationship, being of critical importance to

both employees and employers, employees typically depend on wages, salaries, and so

forth to provide a large share of their income and on benefits to provide income and

health security. For employers, compensation decisions influence their cost of doing

business and thus, their ability to sell at a competitive price in the product market. In

addition, compensation decisions influence the employer's ability to compete for

employees in the labor market (attract and retain), as well as their attitudes and behaviors

while with the employer.

The finding results of the regression analysis of pay element indicate a positive

relationship with employee retention at the findings seem to concur with those of a case

study research which aimed at assessing the impact of employee turnover on customer

service of organizations (Msengeti, & Obwogi, 2015).

Based on the above all the discussion the hypothesis of this study are as follows:

H1 The right acquiring or hiring will result of high employee retention.

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E H2 The positive training will leads to high employee retention.

H3 The higher amount of the compensation will lead to higher employee

retention

Chapter 03: Theatricals Diagram

The finding of the acquiring relationship with employee retention by Branham

(2005), effective retention practices start with good hiring practices qualified and

motivated people will stay longer, poor hiring practices increase turnover newly hired

employees. The findings of training relationship with employee retention of Brum

(2007), highlighted that when the employees were introduced to more training, they

showed higher level of commitment as compared to others. The organizations were

focusing on specialized trainings which was relevant to a specific task and make the

employees unfit for competitors use. The findings of Sial et al. (2011), Compensation has

positive and strong relationship between compensation practices and organizational

commitment and employee retention.

 Chapter 04: Materials and Methods

In our research we will do formal study, because we identify out problem as to

retain the employee in organization for a long period. Secondly, we cannot control the

variables and environments because organization would not allow us to write anything

about their organization so in our research, we will use ex post factor. From the third

category we will use communication study design because we will use questionnaire and

interview method to collect the information. In our research, we are using descriptive

method because we are describing our variables in details (Acquiring, Training &

Compensation). Our research based on cross Sectional method because we will collect

data once and then find out the result. In our research we use statistical method because

we collect data, can run SPSS Software. We collect data from actual environment such as

(Practically collect information through questionnaire from people). This is why in our

research we use field setting method.

Sample

A random selection of 03 manufacturing organizations, (02 Foods and 01

Pharmaceutical manufacturing). A random sample of 50 members from faculties of

various organizations was selected. The sample included respondents from both genders

of different age / experience categories working at various designations. The sample

therefore can be declared as representative of the population.The population for this

paper comprised of skilled staff members of manufacturing organization of Lahore

Pakistan.

Instrumentation

A questionnaire comprising 34 items was prepared. It was divided into five

sections. The first section is related to demographic data about the respondents (5 items).

The two, three, four and five sections were aimed at collecting data about four variables

that is Acquiring practices (9 items) were taken from Gadson (2010), Training practices

(6 items) were taken from Dereje (2017), Compensations practices (6 items) were taken

from Sial, et al. (2011), and employee retention (8 items) were taken from Dereje (2017).

Each respondent was personally briefed by the surveyors to ensure accuracy of data and

removal of any unknown fears related to privacy. To measure all variables, we used the

five points scale, ranging from “Strongly Disagree=1” to “Strongly Agree=5” to measure

the response. The demographic section of the questionnaire consisted of 5 items which

revolve around various demographic dimensions e.g. gender, age, occupation,

qualification and work experience.

 Chapter 05: Data Analysis

Table 1: Demographics Statistics (N = 50)

Frequency Percentage
Gender Male 38 76.0
Female 12 24.0
Age Between 20 to 30 Years 22 44.0
Between 31 - 40 Years 18 36.0
Between 41 - 50 Years 07 14.0
More than 51 years 03 06
Qualification Intermediate 6 12.0
Graduation 18 36.0
Master's 26 52.0
Occupation Employee 50 100.0
Work Experience Between 0 - 1 Year 3 6.0
Between 02 - 05 Years 14 28.0
Between 06 - 10 Years 17 34.0
More than 11 Years 16 32.0

Findings

Table 1 demographics statistics shows complete picture of the demographic

section. The total data was collected from manufacturing Industries. It shows that the

gender portion of the table shows that 76% of the respondents were male and remaining

24% were female.

The age portion of the table shows that the 44% of the respondents falls between

20 to 30 years age group, 36% of the respondents falls between 31 - 40 years age group,

14% of the respondents falls between 41 - 50 years age group and 06% of the respondents

falls more than 51 years old age group.

The qualification portion of the table shows that the 12% of the respondents have

intermediate qualification, 36% of the respondents have graduation qualification and 52%
of the respondents have master’s qualification.

The occupation portion of the table shows that the 100% of the respondents are

working as employees in organizations.

The work experience portion of the table shows that the 06% of the respondents

falls between 0 to 01 years of work experience, 28% of the respondents falls between 02

to 05 years of work experience, 34% of the respondents falls between 06 to 10 years of

work experience, and 32% of the respondents falls more than 11 years of work

experience.
 Chapter 06: Conclusion

Analysis of this study were not run due to Lockdown.

 Chapter 07: Limitations and Suggestion

Analysis of this study were not run due to Lockdown.

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 APPENDIX

Questionnaire
Sr
Demographic Information
.
1 What is your gender? 1) Male  2) Female 
1) 20 - 30 2) 31 - 40 3) 41 - 50
2 In what age group are you? 4) 51 & Above 
  
1) Studen 2) Employe 3) Businessma 4) Living
3 What is your occupation?
t e n Retired 
1) Matric 2) Intermediate 3) Graduation 4) Master’
4 What is your qualification?
   s
Your total professional 1) 0-1 year 2) 2-5 3) 6-10 years 4) 11 years &
5
experience?  years   above 

Please base your answers of the following scale where applicable:

1 = Strongly Disagree; 2= Disagree; 3= Neutral, 4 = Agree; 5= Strongly Agree.

Section 1 (Acquiring)
Strongl
Sr y Disagre Neutra Agre Strongl
Question
. Disagre e l e y Agree
e
Employee referrals acquiring is affected
6 1 2 3 4 5
method?
Advertisement in local newspapers and
7 internet job posting acquiring method can 1 2 3 4 5
attracting applicants?
Does the company image or branding can
8 1 2 3 4 5
attract applicant?
Does the equal employee opportunities can
9 1 2 3 4 5
motivate the applicants?
Strongl
Sr y Disagre Neutra Agre Strongl
Question
. Disagre e l e y Agree
e
Professional development opportunities will
10 1 2 3 4 5
motivate the applicant?
Social support from family and/or friends
11 1 2 3 4 5
can attract applicants?
Does Organization can fair acquisition now
12 1 2 3 4 5
a days?
Company discipline can motivate the
13 1 2 3 4 5
applicants?
14 Right person for the right job is important? 1 2 3 4 5
Section 2 (Training)
I have many opportunities to learn new
15 1 2 3 4 5
things?
The Organization uses a systematic process
16 for identifying employee development needs 1 2 3 4 5
and implementing solutions?
 Employees are continually developed
17 through training, education, and 1 2 3 4 5
opportunities for promotion?
18 Senior managers mentor junior employees? 1 2 3 4 5
My manger assists me to identify my
19 1 2 3 4 5
training and development needs?
20 The training I receive is relevant to my job? 1 2 3 4 5
Section 3 (Compensation)
21 Presence of attractive compensation system? 1 2 3 4 5
22 Presence of equitable internal salary? 1 2 3 4 5
23 Presence of equitable external salary? 1 2 3 4 5
Presence of salary that reflects performance
24 1 2 3 4 5
& employees Retention?
Presence of salary that encourages better
25 1 2 3 4 5
performance?
Presence of salary that reflects standard of
26 1 2 3 4 5
living?
Section 4 (Employee Retention)
I am planning on working for another
27 1 2 3 4 5
organization within a period of three years?
Within this organization, my work gives me
28 1 2 3 4 5
satisfaction?
If I want to do another job, I would look first
29 1 2 3 4 5
at the possibilities within this organization?
I would choose to work for the company for
30 1 2 3 4 5
the next five years?
The work that I am doing is very important
31 1 2 3 4 5
to me?
If I could start over again, I would choose to
32 1 2 3 4 5
work for another organization?
I would recommend my friends to join this
33 1 2 3 4 5
organization?
It doesn’t matter if I am working for this
34 company or another organization as long as I 1 2 3 4 5
have work?
Thank you for your time and responding to this survey.