Remuneration Strategy for Employee Retention in Star Industries

This paper provides a new remuneration strategy for employee retention in Star Industries, addressing issues of staff turnover and dissatisfaction. It discusses the aims of the strategy for the organization and employees, the impact of external and internal factors on developing remuneration strategies, job evaluation methods, concepts of relativity/equity, steps to validate staff claims, market position and benefits for the new strategy, and the impact of FBT on salary packaging. The paper concludes with the position of Star Industries as an employer of choice.

Running head: HUMAN RESOURCE MANAGEMENT
July 5, 2019
(XYZ)
CEO OF Star Industries
(Address)
Dear sir/ma’am
I am compelled to write this letter to you because of the alarming situations that have rising
in your esteemed organization Star Industries. Staff turnover is becoming a big issue in the
company because of the remuneration policy that the company follows which is not attracting
the employees and thus the employees are leaving for better opportunities. This issue has
been affecting the company immensely negatively. In the exit interviews most of the
employees have complaint and expressed dissatisfaction because of the condition of the
workplace and for the poor strategies in terms of remuneration. I would like to propose a
remuneration strategy that will help in attracting the employees and make them retain in the
company, I would also like to propose some ideas that will help in changing the conditions of
the workplace and would also like to propose the strategy so that it benefits the esteemed
organization.
I would be highly obliged if you go through the proposed strategy and consider it so that it
may bring positivity and benefits to the employees of the organization and to your esteemed
organization, Star Industries.
Sincerely

1HUMAN RESOURCE MANAGEMENT
(Name of the HR manager)

2HUMAN RESOURCE MANAGEMENT
HUMAN RESOURCE MANAGEMENT
Name of the Student
Name of the University
Author Note

3HUMAN RESOURCE MANAGEMENT
Table of Contents
Executive Summary...................................................................................................................3
Question 1..................................................................................................................................4
Aims of remuneration strategy...............................................................................................4
The aims of the strategy for the organization.....................................................................4
The aims of the strategy for the employees.......................................................................4
Question 2..................................................................................................................................4
Impact of the factors that will help in developing remuneration strategies...........................4
5 external factors that Star Industries needs to consider while developing remuneration
strategies.............................................................................................................................4
5 internal factors that Star Industries needs to consider while developing remuneration
strategies.............................................................................................................................5
Question 3..................................................................................................................................6
Job evaluation.........................................................................................................................6
3 methods that Star Industries can use to evaluate jobs.........................................................6
Question 4..................................................................................................................................7
Concepts of relativity/equity..................................................................................................7
Internal relativity/equity.....................................................................................................7
External relativity/equity....................................................................................................7
Interpersonal relativity/equity............................................................................................7
Question 5..................................................................................................................................7

4HUMAN RESOURCE MANAGEMENT
Steps to validate the claim by the staff...................................................................................7
Methods to validate the claim by the staff.............................................................................7
Question 6..................................................................................................................................8
Market position Star Industries needs to acquire to create new remuneration strategy.........8
Benefits and incentive structures Star Industries might adapt...............................................8
Question 7..................................................................................................................................8
Impact of FBT on salary packaging.......................................................................................8
Question 8..................................................................................................................................9
Position of Star Industries as employer of choice......................................................................9

5HUMAN RESOURCE MANAGEMENT
Executive Summary
This paper is a case study of the company Star Industries which is currently facing issues in
terms of employee retention because of the unfavorable remuneration policies that the
company follows. This paper will provide a new remuneration strategies and policies that will
help the company in retaining their employees, some strategies that will help in improving
the current condition and the situation of the workplace and will also help build a new
structure which will be beneficial for the organization.

6HUMAN RESOURCE MANAGEMENT
Question 1
Aims of remuneration strategy
The aims of the strategy for the organization
Star Industries is a successful company based in Australia. This company recently has
been facing problems because of the remuneration strategies and policies that the company
provides to the employees which have resulted in employee turnover for the company.
Currently Star Industries is far behind in terms of their employee benefits and remuneration
strategies. Star industries provides general benefits to their employees like casual leaves and
sick leaves however does not provide extra benefits to the employees like other industries are
currently providing like rewards and recognition and other benefits like leaves and health
facilities. This is the issue that has led the employees of the company to look for jobs where
they are valued and are provided adequate benefits. This is the sole reason why the company
needs a remuneration strategy
Star Industries for this reason has to come up with new remuneration policy that will help
the company in curbing this problem and this issue. The aim of the remuneration strategy is
the following:
 To make sure the remuneration strategy attracts employees and provides them with
benefits that will pave way for employee retention.
 To make sure that the employee as well as the organization benefits after the
remuneration strategy.
 To facilitate the performance of the employees and motivate them to provide the
company with positive and good performance which will later help in contributing to
the success of the company.

7HUMAN RESOURCE MANAGEMENT
The aims of the strategy for the employees
The aims of the strategies for the employees are the following:
 To make sure the employees are satisfied in the environment of the workplace
 To make sure that the employees are benefited and are provided the necessary leaves
and remuneration they deserve
 To make sure the employees are motivated and help in facilitating the performance of
the employees which will result in the fruitful outcomes by the employees for the
organization.
Question 2
Impact of the factors that will help in developing remuneration strategies
5 external factors that Star Industries needs to consider while developing remuneration
strategies
In order to make and come up with a new remuneration strategy Star Industries needs
to consider some external factors which will help in enhancing the remuneration strategies.
Labour market- The demand for labour has a huge impact on the remuneration strategies
and it highly influences the salary fixation and the wages of an employee1. Star Industries is
currently having a huge employee turnover therefore there is a demand of employees in the
company. It is important to offer high wages to the skilled labors that benefit the organization
thus Star Industries needs to consider this factor while making remuneration strategies.
1 De Groen, Willem, and Ilaria Maselli. "The impact of the collaborative economy on the labour market."
(2016).

8HUMAN RESOURCE MANAGEMENT
Cost of living- Cost of living is an important factor which needs to be taken under
consideration while making a new remuneration strategy. This is something one organization
needs to consider especially during the period when the prices rise. Cost of living must be
considered to ensure that the salary that the company is offering benefits the employees and
make sure they can avail basic necessities2. Star Industries need to set the salary depending
on the consumer price index (CPI)
Labor laws- Labour laws have been introduced in many countries for the employees and
make sure they get a specific remuneration for the work in order to attain quality of life3. Star
Industries needs to make sure that the remuneration strategy follows the laws which are
proposed by the government of the country.
Economy- Economy has a huge impact on the salary fixation of the employees. In most of
the cases it is seen that the cost of living will increase and rise in an economy that is
increasing. Moreover the health of the economy exerts a huge impact on remuneration
decisions4. Star Industries needs to consider the economy of Australia while making a new
remuneration strategy.
Society- Star Industries needs to consider and understand the society and make remuneration
strategy which is ethical and will help the employee in order to attain a quality of life which
the country offers to its people.
2 O’Meara, KerryAnn. "Half-way out: How requiring outside offers to raise salaries influences faculty retention
and organizational commitment." Research in Higher Education 56, no. 3 (2015): 279-298.
3 Kaiser, Cheryl R., Brenda Major, Ines Jurcevic, Tessa L. Dover, Laura M. Brady, and Jenessa R. Shapiro.
"Presumed fair: Ironic effects of organizational diversity structures." Journal of personality and social
psychology 104, no. 3 (2013): 504.
4 Henderson, Troy. "Public sector austerity and its spill-over effects." WAGES CRISIS (2018): 115.

9HUMAN RESOURCE MANAGEMENT
5 internal factors that Star Industries needs to consider while developing remuneration
strategies
Star Industries needs to consider some internal factors that will help in making a new
remuneration strategy
Business strategy- The business strategy of an organization should determine the salary to
their employees. In order to grow rapidly the company needs to offer higher remuneration in
comparison to their competitors however if the strategy of the organization is to protect the
earnings due to the reducing fortunes of the organization then the remuneration needs to
below average or average5. Star Industries needs to assess their current business strategy and
make a remuneration strategy based on that.
Job evaluation- Every employee gets a different salary on the basis of their performance and
their designation thus Star Industries needs to differentiate the different hierarchy of jobs in
order to create a new remuneration strategy6.
Experience- Experience helps in enhancing the skills of an employee and helps in providing
better outcomes due to the knowledge gained7. Star Industries may consider the experience of
an employee in order to make new remuneration strategies.
Potential- Employees are often paid more even though they do not have a lot of experience
based on their potential to perform8. Star Industries needs to assess the potential of their
5 Kownatzki, Maximilian, Jorge Walter, Steven W. Floyd, and Christoph Lechner. "Corporate control and the
speed of strategic business unit decision making." Academy of Management Journal 56, no. 5 (2013): 1295-
1324.
6 Rubel, Mohammad Rabiul Basher, and Daisy Mui Hung Kee. "High commitment compensation practices and
employee turnover intention: Mediating role of job satisfaction." Mediterranean Journal of Social Sciences 6,
no. 6 S4 (2015): 321.
7 Bilan, Yuriy, Halyna Mishchuk, and Tetiana Dzhyhar. "Human capital factors and remuneration: analysis of
relations, modelling of influence." Business: Theory and Practice 18 (2017): 208.
8 Mitra, Atul, Aino Tenhiälä, and Jason D. Shaw. "Smallest meaningful pay increases: Field test, constructive
replication, and extension." Human Resource Management 55, no. 1 (2016): 69-81.

10HUMAN RESOURCE MANAGEMENT
employees and make remuneration strategies which will help the employees with potential to
work better.
Seniority- Seniority is one of the important criteria for pay increase as they serve the
organization for a long period of time9. Star Industries needs to make new remuneration
strategy keeping the employees in mind and the increment structure.
Question 3
Job evaluation
Job evaluation is defined as the process of understanding the worth of the different
jobs that are present in the organization in order to provide different wages according to the
worth of the jobs in an organization. This is often related to the value that is produced on
several factors like skill, effort, working condition and responsibility.10
3 methods that Star Industries can use to evaluate jobs
Star Industries may consider the different methods in order to evaluate job in order to
create a new remuneration strategy
Ranking method- In this method the jobs are ranked from highest to lowest based on the
importance of the job in an organization. Here the jobs are compared and then ranked on the
basis of their complexity in performing the job and content11. Here the job is analyzed
9 Downes, Patrick E., and Daejeong Choi. "Employee reactions to pay dispersion: A typology of existing
research." Human Resource Management Review 24, no. 1 (2014): 53-66.
10 Latif, Muhammad Shahzad, Mushtaq Ahmad, Muhammad Qasim, Momal Mushtaq, Ambe Ferdoos, and
Hummayoun Naeem. "Impact of employee’s job satisfaction on organizational performance." European Journal
of Business and Management 5, no. 5 (2013): 166-171.
11 Novaković, Jasmina. "Toward optimal feature selection using ranking methods and classification algorithms."
Yugoslav Journal of Operations Research 21, no. 1 (2016).

11HUMAN RESOURCE MANAGEMENT
thoroughly. Star Industries can use this method as this is inexpensive and this will help the
company to evaluate jobs based on their importance within the company.
Job grading method- In this method the grades and classes of the jobs are determined before
and then the jobs are assigned to the employees and then the job is evaluated12. Star Industries
can use this method as employees highly accept this method and in this method the entire
jobs are compared with different job and are not segregated into factors. This method is not
that subjective which will make the work easier for the organization.
Point-ranking method- In this method the key factor of a job is identified and later the sub
factors of the job are determined. Later the sub factors are evaluated on the basis of the
importance13. Star Industries should use this method for evaluating jobs as this is a method
which is free of errors as the jobs are looked from all perspectives.
Question 4
Concepts of relativity/equity
Internal relativity/equity
Internal equity is defined as the comparison of the positions within an organization in
order to ensure that the employees of an organization are getting paid equally. The employees
of an organization must understand this or else this might result in employees feeling
12 Shaout, Adnan, and Mohamed K. Yousif. "Performance evaluation–Methods and techniques survey."
International Journal of Computer and Information Technology 3, no. 5 (2014): 966-979.
13 Miyake, Yuki, Wataru Kumagai, Kenichi Tamura, and Keiichiro Yasuda. "Search point ranking‐based
adaptive cuckoo search." IEEJ Transactions on Electrical and Electronic Engineering 13, no. 7 (2018): 1075-
1076.

12HUMAN RESOURCE MANAGEMENT
undervalued which may result in employees to resign14. An honest remuneration system
boosts employee loyalty as well as the morale of the organization which paves way for
organizations acquiring several benefits in the long run.
External relativity/equity
External equity is the perception of the employees of the rewards and conditions of
their employment in comparison to the rewards and conditions of the employees belonging to
different firms15. Organizations often compare the pay structures of different companies
which are present in order to make remuneration strategies. Employees however consider
other factors other than normal pay structure in order to determine external equity like work
environment, benefits, job security and many more. Organizations need to check the market
rate, industry standards, organizational fairness and the offer made by the competitors in the
market in order to ensure their remuneration policies.
Interpersonal relativity/equity
Interpersonal equity is basically determining the fact that the resource distribution is
fair to both the relational partners. It is measured with the help of the comparison between the
costs and the rewards16. Employees are motivated only when they are been treated equally
and fairly which has a positive impact on the performance of the employees as well as the
organization.
14 Olabode, ADEOTI Johnson, OLAWALE Alabi Yinusa, and ASABI Mathew Oludele. "IMPACT OF
COMPENSATION STRATEGY ON EMPLOYEES’PERFORMANCE OF DANGOTE FLOUR MILL,
ILORIN, KWARA STATE, NIGERIA." Ilorin Journal of Human Resource Management 3, no. 2 (2019): 1-11.
15 Sady, Kayo, and Chester Hanvey. "Pay Equity." In Wage and Hour Law, pp. 171-184. Springer, Cham, 2018.
16 Malc, Domen, Damijan Mumel, and Aleksandra Pisnik. "Exploring price fairness perceptions and their
influence on consumer behavior." Journal of Business Research 69, no. 9 (2016): 3693-3697.

13HUMAN RESOURCE MANAGEMENT
Question 5
Star Industries is at great risk of losing their value staff member as they feel they can
earn more and acquire benefits in some other organization.
Steps to validate the claim by the staff
Star Industries needs to take certain steps in order to validate the claims that the staff of
the company has stated or put forward:
 Star Industries needs to do proper research on the remuneration policies of other
countries belonging to the same industry
 Information needs to be acquired from reliable sources in order to validate this claim.
Methods to validate the claim by the staff
 Star Industries needs to conduct a survey among the employees of the organization in
order to understand how many employees in the firm think the same way as the staff.
 The company needs to acquire the remuneration policies and benefits of other
organizations in order to understand the claims.
Question 6
Market position Star Industries needs to acquire to create new remuneration
strategy
Star Industries has recently seen suffering a problem in terms of employee turnover
and thus it is important for the company to come up with new remuneration strategy that will
help the company in retaining their employees and also recruit skilled employees in order to
make sure the organization generates benefits. However in order to increase the wages of the

14HUMAN RESOURCE MANAGEMENT
employees and to provide benefits the company needs to acquire a positive market position
and generate profits in order to provide the staff with handsome salary and benefits.
Benefits and incentive structures Star Industries might adapt
 Paid leaves on serious and important occasions like serious illness of a family
member, any work in the bank and many more
 Paid maternity and paternity leave
 Ensure work-life balance
 Child care leaves
 Fringe benefit tax
 Extra pay for extra shifts
 Paid sick leaves
 Certain amount extra to be paid as incentives
 Rewards on the basis of performance other than increment.
Question 7
Impact of FBT on salary packaging
FBT is Fringe Benefit Tax which is tax that is payable by the employers in order to
provide benefits to an employee or their family members. FBT has had a huge impact on the
salary packaging as it provides employees with certain benefits which helps the employees
from tax deduction and shows the organization’s concern for the employee and helps in
attracting, motivating and retaining employees17. Benefits like novated leasing arrangements
17 Hammer, Tove Helland, and Ariel Avgar. "The impact of unions on job satisfaction, organizational
commitment, and turnover." In What Do Unions Do?, pp. 346-372. Routledge, 2017.

15HUMAN RESOURCE MANAGEMENT
where employees lease motor vehicles and the employers make the lease payments. The
employees still use the vehicles for their conveyance as per the original terms of the lease.
The employees benefit from this as they are provided conveyance and also save extra
money18. Other notable benefits that fall under FBT is reporting requirements which is where
employers lodge FBT return if they have any kind of liability during the year of FBT. These
benefits have a positive and a huge impact on the salary packaging as this helps in retaining
employees, employee satisfaction and also help in motivating employees to perform in a
better manner which eventually benefits the organization .
Question 8
Position of Star Industries as employer of choice
Star Industries needs to make certain positive changes in the organizations that will
help them in positioning them as employer of choice thus Star Industries can taken certain
steps that are mentioned in the following:
Create positive environment- Star Industries needs to create a positive working
environment for the employees and make sure they are provided with all the necessary
amenities and provide them with safe working conditions that will help in motivating the
employees.
Consider the employees- Star Industries need to take feedbacks from the employees and
understand the problems they are facing and make necessary changes. According to scholars
feedback is an important factor in an organization which helps organizations in making
18 Murphy, Peter. "In Search of Unicorns: Self Employed Australia submission to the 2019 Inquiry into the
Victorian On-Demand Workforce." Workforce (2019).

16HUMAN RESOURCE MANAGEMENT
positive changes in the organization which pave way for positivity and show employees they
are valued in the organization19.
Career growth opportunities- Employees always look for growth opportunities in order to
develop their career which helps them in the near future20. Star Industries needs to take
certain measurable steps that help provide growth opportunities to the employees that will
ensure employees to retain in the company.
Provide benefits and incentives- Money is one of the most important resources to an
employee and one of the motivating factors for employees to perform positively in an
organization21. Star Industries needs to make a remuneration strategy that focuses and puts
emphasis on the pay structure as well as provide benefits and incentives that will make
employees want to associate themselves with the company and work hard in order to make
sure they acquire the benefits and incentives.
Star Industries need to position themselves positively in the market and show their ethics in
managing employees positively. These factors will help the organization in positioning
themselves in a positive manner which will attract and motivate employees to work in Star
Industries and also help in contributing to the organization positively which will generate
profits for the organization and will help the organization in becoming successful.
19 Auh, Seigyoung, Bulent Menguc, Pinar Imer, and Aypar Uslu. "Frontline Employee Feedback-Seeking
Behavior: How Is It Formed and When Does It Matter?." Journal of Service Research 22, no. 1 (2019): 44-59.
20 Lapointe, Émilie, Christian Vandenberghe, Karim Mignonac, Alexandra Panaccio, Gary Schwarz, Nathalie
Richebé, and Patrice Roussel. "Development and validation of a commitment to organizational career scale: At
the crossroads of individuals’ career aspirations and organizations’ needs." Journal of Occupational and
Organizational Psychology (2019).
21 West, Colton, Jessica Ricks, Caroline Strachan, John Iacono, and Carly Shay. "Factors that Influence
Recruitment and Retention." (2019).

17HUMAN RESOURCE MANAGEMENT
Bibliography
Auh, Seigyoung, Bulent Menguc, Pinar Imer, and Aypar Uslu. "Frontline Employee
Feedback-Seeking Behavior: How Is It Formed and When Does It Matter?." Journal of
Service Research 22, no. 1 (2019): 44-59.
Bilan, Yuriy, Halyna Mishchuk, and Tetiana Dzhyhar. "Human capital factors and
remuneration: analysis of relations, modelling of influence." Business: Theory and Practice
18 (2017): 208.
De Groen, Willem, and Ilaria Maselli. "The impact of the collaborative economy on the
labour market." (2016).
Downes, Patrick E., and Daejeong Choi. "Employee reactions to pay dispersion: A typology
of existing research." Human Resource Management Review 24, no. 1 (2014): 53-66.
Hammer, Tove Helland, and Ariel Avgar. "The impact of unions on job satisfaction,
organizational commitment, and turnover." In What Do Unions Do?, pp. 346-372. Routledge,
2017.
Henderson, Troy. "Public sector austerity and its spill-over effects." WAGES CRISIS (2018):
115.
Kaiser, Cheryl R., Brenda Major, Ines Jurcevic, Tessa L. Dover, Laura M. Brady, and Jenessa
R. Shapiro. "Presumed fair: Ironic effects of organizational diversity structures." Journal of
personality and social psychology 104, no. 3 (2013): 504.
Kownatzki, Maximilian, Jorge Walter, Steven W. Floyd, and Christoph Lechner. "Corporate
control and the speed of strategic business unit decision making." Academy of Management
Journal 56, no. 5 (2013): 1295-1324.

18HUMAN RESOURCE MANAGEMENT
Lapointe, Émilie, Christian Vandenberghe, Karim Mignonac, Alexandra Panaccio, Gary
Schwarz, Nathalie Richebé, and Patrice Roussel. "Development and validation of a
commitment to organizational career scale: At the crossroads of individuals’ career
aspirations and organizations’ needs." Journal of Occupational and Organizational
Psychology (2019).
Latif, Muhammad Shahzad, Mushtaq Ahmad, Muhammad Qasim, Momal Mushtaq, Ambe
Ferdoos, and Hummayoun Naeem. "Impact of employee’s job satisfaction on organizational
performance." European Journal of Business and Management 5, no. 5 (2013): 166-171.
Malc, Domen, Damijan Mumel, and Aleksandra Pisnik. "Exploring price fairness perceptions
and their influence on consumer behavior." Journal of Business Research 69, no. 9 (2016):
3693-3697.
Mitra, Atul, Aino Tenhiälä, and Jason D. Shaw. "Smallest meaningful pay increases: Field
test, constructive replication, and extension." Human Resource Management 55, no. 1 (2016):
69-81.
Miyake, Yuki, Wataru Kumagai, Kenichi Tamura, and Keiichiro Yasuda. "Search point
ranking‐based adaptive cuckoo search." IEEJ Transactions on Electrical and Electronic
Engineering 13, no. 7 (2018): 1075-1076.
Murphy, Peter. "In Search of Unicorns: Self Employed Australia submission to the 2019
Inquiry into the Victorian On-Demand Workforce." Workforce (2019).
Novaković, Jasmina. "Toward optimal feature selection using ranking methods and
classification algorithms." Yugoslav Journal of Operations Research 21, no. 1 (2016).

19HUMAN RESOURCE MANAGEMENT
O’Meara, KerryAnn. "Half-way out: How requiring outside offers to raise salaries influences
faculty retention and organizational commitment." Research in Higher Education 56, no. 3
(2015): 279-298.
Olabode, ADEOTI Johnson, OLAWALE Alabi Yinusa, and ASABI Mathew Oludele.
"IMPACT OF COMPENSATION STRATEGY ON EMPLOYEES’PERFORMANCE OF
DANGOTE FLOUR MILL, ILORIN, KWARA STATE, NIGERIA." Ilorin Journal of
Human Resource Management 3, no. 2 (2019): 1-11.
Rubel, Mohammad Rabiul Basher, and Daisy Mui Hung Kee. "High commitment
compensation practices and employee turnover intention: Mediating role of job satisfaction."
Mediterranean Journal of Social Sciences 6, no. 6 S4 (2015): 321.
Sady, Kayo, and Chester Hanvey. "Pay Equity." In Wage and Hour Law, pp. 171-184.
Springer, Cham, 2018.
Shaout, Adnan, and Mohamed K. Yousif. "Performance evaluation–Methods and techniques
survey." International Journal of Computer and Information Technology 3, no. 5 (2014):
966-979.
West, Colton, Jessica Ricks, Caroline Strachan, John Iacono, and Carly Shay. "Factors that
Influence Recruitment and Retention." (2019).