Impact of Retention Bonuses on Compensation Management

COMPENSATION MANAGEMENT 0
Compensation management
System04116
2/12/2019

COMPENSATION MANAGEMENT 1
Compensation management is the practice of an organization that includes non-monetary and
monetary rewards for the employees to reimburse for the time they give to their job or task. It
uses monetary and non-monetary allowance to attract new employees, reduce employees’
turnover, encourage performance and increase engagement of employees (Welch, 2019). It is
responsible for make sure that bonuses and salary remain modest and benefit programs varied
with the requirements of the employees. In this role, the employees not only work with matter of
facts, but also ready to know the difficulties of benefits management. A retention bonus is a
reward or additional payment along with the staff’s basic pay that is offered as an inducement to
retain an important employee or workers on the work for the duration of a mainly critical
business cycle, such as acquisition, merger, or for the duration of a critical production time. In
current years, retention bonuses have become more and more popular, as business stealing has
increased. Retention bonuses can be offered to significant positions to retain workforces for a
definite span of time. The study is based on secondary data such as journal articles, official
websites, reference books and peer reviewed journals. The descriptive research methodology is
used to discuss further about effectiveness of retention bonuses. This essay is going to show how
compensation management is impacted by the effectiveness of retention of bonuses. In this
essay, discussion is made on knowing the purpose of hiring employees in the company and the
strategies used to retain those employees in the company for longer period. The strategies that
are used might be successful to retain those employees in the organization.
The company needs an employees or workers to do a specific task of the companies according to
his/her capabilities and qualification. They hire employees for performing individual task or job
in an effective and efficient manner that helps in achieving or attaining the goals of the company.
The companies hire those employees or workers by following selection and recruitment process.
Once the companies hire them, it is their responsibility to retain those hired employees for the
longer period.
It is a bigger challenge for the companies to retain those employees who are hired for a particular
task. For this purpose, they made several strategies so that they can retain those employees for a
long period. There are various strategies which company adopts to retain employees. The
company provides various tools to employees such as offers educational tools and several
channels which are preferred by employees (Nesper,2015, pp. 10). The Training of employees

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strengthens their intelligence or sense of value. With the help of training, managers or
supervisors help staffs to achieve goals or objectives and confirm they have a strong
understanding of their work requirements. A monitoring program is a strong foundation for key
employee’s growth and retention. As it is, combined with the goal-oriented feedback system, that
makes available an organized apparatus for emerging sturdy relationship within an organization.
With the help of monitoring program, an organization combines those people who have
experienced in a discipline with those people who are less experienced in a related area, with the
aim to improve specific competencies, be responsible for performance feedback, and construct a
personalized career improvement plan. An organization should form a value series as the
foundation for culture like attitude, excellence, morality, teamwork and respect. An organization,
which creates the right culture, will attract and keep key employees. Communication is essential
to build and maintain credibility in every organization. Through a staff advisory council, various
companies get communication to flow up that asks and takes employee’s views and ideas and
points them on to higher management. It is also essential for staffs to understand that the
employer is truly listening and revert to staffs input. An offering like good salaries, sharing of
profits, programs for bonuses, paid time off, health plan and pension and training compensation
directs an influential note to staffs about their prominence at the organization. The payments or
rewards offered to staffs should be expressive with the aim to encourage their awareness of an
organization and thus it has clear impact on its efforts of holding. Moreover, if the organization
promises that they will give rewards for employee’s efforts then it is their responsibility to keep
that promise. Employees performance reflects the performance of an organization (Ajang, 2014).
Having current employees offer appointment helps in minimizing the misperception of job or
work expectations. Present workforces can credibly define a position and the situation to appoint
from within; meanwhile current employees have previously learnt that they are virtuous for the
organization. It is essential for an organization to give response and training to staffs so that the
efforts of staff remain associated with the aims of an organization and meet prospects or
expectancy. An employer should be responsible for intensive response during initial few weeks
on the job of the employees. Employers throughout the year should provide employees formal
and informal responses. An organization should arrange for workshops, software or other
apparatuses to help staffs increase their knowing power of themselves, clear about their wants
from profession, and increase their setting of goals efforts. It is necessary to provide staffs with

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sufficient job challenge that will increase their understanding in their field. Workforces are
expected to remain busy in their jobs or works. They dedicated to an organization that makes
investments in their employees and for their career growth and development. Employees of an
organization will do additional work if they feel liable for an outcomes of their tasks, have a
sense of value in their work, accept or realize their work make virtuous usage of their knowledge
or skills, and be given appreciation for their efforts or contribution (Nordmeyer, 2019).
Workforces should be paid at great level to encourage even greater performance. The usage of
cash disbursements could be utilized for the recognition. These rewards and payoffs have
enormous motivational power, which is given after the achievements (Leonard, 2019). It is
essential to coordinate life or work benefits to the desires of the employees. There is case this
may possibly be in the way of nontraditional work schedule or additional holidays. When work
life stability is designed correctly, together the employer and employee derive out ahead. For
instances, the employer of the company will practice greater efficiency in the workstation as
staffs will be healthier, stress free and more efficient. Encourage those employees in an
organization to set work goals or life goals. They develop confidence and trust in their senior
leaders.
From the above study, the most effective strategy to retain the employee is “retention bonuses”.
Retention bonus means the company provides compensation to an important person that is
secured to continued work for a definite period. The necessity for retention bonuses usually
results from an expected or incomplete sale of the organization, an important restructuring, and
the planned series of new management into the business. The advantage of retention bonuses is
employee appreciation (Adewale, 2014, pp.67). The payment of bonus cannot be granted on a
holiday in the form of incentives. The payment of bonus can also utilize by way of an
appreciation for the hard efforts of employees through a definite range of period in a year.
Getting a sum as bonus will not simply make feel a employees he rewarded for the efforts put by
him, but it may inspire the employee to carry on to effort hard for extra payments or benefits.
The extra payments to the staff can utilize as an incentives, mainly in a zone where staffs must
create sales or achieve definite objective or target. Develop an aim or objective for each
employee of the organization, with a bonus in cash preference for the employee or worker that
reaches the aim or definite goals. Use extra payments to encourage the team of sales into gaining
additional sales for the year. With pros, there are certain cons of retention bonuses such as