Employee Turnover Intentions can be defined as a measurement of whether a business or organisation’s employees plan to leave their positions or whether that organisation plans to remove employees from positions. The pay level has an enormous impact on turnover intentions considering that people start seeking new job opportunities with higher salaries to satisfy their life needs. The pay level is more influential for employees than pay raises. Therefore, those workers content with their salary amount are less likely to search for a new workplace. When the payment decreases, the turnover intention increases vice-versa. As for the financial incentives, they are crucial for employees of the young age groups more than for older staff. Therefore, it is vital to cater to workers needs in the incentives scheme according to their age groups as this factor is not the most influential for the turnover intentions.
As stated previously, the turnover rates rise when the employees are not satisfied with some aspects of their position. However, the most popular theory for turnover intention is The Theory of Organisational Equilibrium by March and Simon (1965). It presents the desire to leave the company after an employee has estimated one’s contribution to the organisation and, consequently, the organisation’s contribution to one’s life. In other words, a worker assesses the impact of one’s accomplishments and responsibilities on the business operating and whether the employers fairly reward them.
Another theory is mainly connected to social relationships at work — The Job Embeddedness Theory and was initially proposed by Mitchell (2001). This concept focuses on the significance of the social links with colleagues, managers, and employers in shaping one’s satisfaction with the work environment. Therefore, the lack of solid relationships at the workplace increases employee turnover intentions.
Furthermore, Herzberg’s Two-Factor Motivation-Hygiene Theory presented by Herzberg (1966) concludes that job satisfaction depends mainly on the factors that increase motivation and those that contribute to the dissatisfaction. For instance, motivators such as responsibility, learning, investment in the process, and achievements are strongly connected to an employee’s job satisfaction. However, the “hygiene factors” like unfair policies, unpleasant conditions, negative ways of punishment, and job insecurity contribute to the soar in turnover intentions. Overall, the mix of both types of factors leads to the formation of an individual’s job satisfaction. Consequently, if the negative aspects outweigh the positive ones, an employee starts seeking new and more profitable job opportunities.
It was established that turnover intentions are influenced by satisfaction with the financial, material, and psychological rewards.
The Effect of Financial Rewards on Employee Turnover Intentions
Financial rewards have an immense impact on employee turnover intentions. In other words, pay level, incentives, and pay rises contribute to the advancement of the psychological needs of an employee. Therefore, if a person is not satisfied with one’s financial encouragement in work, one is more likely to be less productive and hardworking and eventually leave for better job opportunities. Overall, the staff’s satisfaction with the financial factor of the total reward system has a negative effect on turnover intentions.
In addition, cash incentives are one of the most crucial factors that motivate employees to improve their performance and contribute to the business success. The commitment of the staff to the company results in bigger chances of a business gaining competitive advantages on the global market and, consequently, advancing its setting financially and non-financially. In other words, financial rewards are seen as the leading factor of an employee’s essential driving force. Consequently, when staff works hard and improves overall performance, they expect to yield fruitful benefits from their commitment to the organisation. When employers are not financially valued for the challenging and demanding tasks, workers start feeling un-valued, and the satisfaction with the position considerably decreases.
Employees who are completely satisfied with their job bring joy, happiness, inspiration, and effective communication to the organisation’s working environment. On the contrary, an unhappy worker yields chaos, arguments, and quarrels in the working team, consequently affecting the overall staff community’s performance. Furthermore, it might result in the company’s strategy collapse and lead to the lack of opportunities to gain recognition on the global market.
Overall, when creating a business strategy for achieving success, companies should pay attention to employees satisfaction first. It is possible to develop various incentive programs to motivate better performance at the workplace. For instance, organisations might implement the following rewarding programs like bonuses for the best worker of the month, incentives for employees who have done all their jobs faster than expected, and financial encouragement for staff who have not missed any deadline.
Such a motivating reward system might result in healthy competition at the workplace and keep employees at a productive and efficient pace. Furthermore, the pay level should properly correlate with the amount of work an employee must complete during a month. Workers should be required to complete a questionnaire regarding their overall satisfaction with salary, incentive, and financial benefits they acquire to set a pay level for each employee fairly. However, organisations should not forget about constant pay rises if an employee is thriving and contributes to achieving the corporational goals of a company. By implementing previously mentioned methods, businesses may have a chance to decrease employee turnover intentions and keep high retention rates, respectively.
The Effect of Material Rewards on Employee Turnover Intentions
Material rewards play a pivotal role in enhancing the working environment and contributing to improving employees wellbeing. Fringe benefits packages allow workers to relax at the office and home or even on vacation. For instance, such perks as free playrooms, spa, and hotel accommodation are favorable for the workers in the hospitality industry as they enable them to alleviate stress from the arduous work without leaving the organisation. Therefore, when the staff uses such benefits together, it also influences their bonds and relationships by improving them. Consequently, it creates a more comfortable and pleasant environment for colleagues at the office, increasing their productivity and performance eventually.
Furthermore, employers should encourage employees high-quality performance with material rewards like free vacations, new experiences (diving, bungee jumping, parachuting, and salsa), and healthcare programs. Workers would have an opportunity to relax and reduce the tension by attempting new sports, hobbies, which they might become interested in eventually. Paid vacations are also a fruitful benefit for staff since they might visit new countries, get familiar with their culture, and even acquire new knowledge abroad.
In addition, employers should implement healthcare programs in every respected organisation in the hospitality industry to improve employees health. This way, employers might examine employees health, which sometimes can be worsened due to the hard work. Therefore, this data can be implemented to improve the workers health by easing one’s responsibilities or reducing the number of tasks that should be completed monthly.
Sometimes, executives provide workers with opportunities for self-growth at the workplace, which is also pleasant for the staff since they feel valued and appreciated in the company. Moreover, employers benefit from such perks due to the advancement of staff skills through various training and new technologies. Consequently, it contributes to the overall success as employees improve the last stage of Maslow’s hierarchy of needs, self-actualization, which drives them to be even more productive and achieve desired goals. In other words, it can be concluded that such types of perks yield advantages both for staff and the organisation itself.
However, other attractive lavish perks can be implemented in the company to enhance the working environment and, therefore, reduce turnover intentions, such as movie day in the office to improve relationships between colleagues and team off-sites to strengthen the team spirit. For instance, on Lazy Monday Mornings, employees can spend time together at the office and be engaged in activities together that are not related to the work. Moreover, employees can be allowed to spend a certain amount of days a month working from home, where they feel comfortable and calm.
Overall, the fringe benefit packages enhance the working environment, which is crucial for one’s well being according to the third level of Maslow’s model, love and belongings. It is evident that when workers feel appreciated in the team and have fewer factors negatively affecting the working settings, their performance considerably increases and results in the advancement of financial rewards. That is why material rewards are strongly connected to financial ones, and both positively contribute to job satisfaction, which considerably decreases employee turnover intentions.
The Effect of Psychological Rewards on Employee Turnover Intentions
As for the psychological rewards, they tend to enhance the mental well-being of employees at work. Therefore, they start feeling less unease, anxiety, and anger while communicating with colleagues and completing the tasks. Supervisors should focus on giving feedback, supporting, encouraging, and assisting employees during their workdays. This way, staff might become more self-confident since they would be able to examine their mistakes in some responsibilities and consequently, fix them to enhance their further performance.
Moreover, it is vital to create such an atmosphere where employees feel valued and appreciated by employers who can sometimes show them the right direction or even help them. During the work, it is crucial for staff to see the concern from the top as it motivates them and completes the fourth level of Maslow’s model, self-esteem. Employers consider incorporating different employee enhancing therapies within the workplace environment. For instance, it is reasonable to hire a psychologist and counselor who could help the workers with problems related to their personal life and working settings. Such a method might enhance psychological rewards as employees would see that executives are concerned about their mental health and well-being. Overall, if an individual feels satisfied and at peace in the working environment, one less likely might quit the current organisation as stated in The Job Embeddedness Theory proposed by Mitchell (2001).