Compensation Policy a Tool ; Fostering Employee Retention

In a world of mom-and-pop operations, offering competitive employee benefits is what will set one business apart from another and will attract and retain valuable employees. This trend is evident even in times of economic recession. Viewing the same phenomenon from a different perspective, organizations today are at greater risk of losing capable human resources to other organizations. The keyword in terms of human resource management is 'Employee Retention.' Employee turnover hike the costs of any organization. An insight to which are the most effective retention strategies that can have a long-term impact. Compensation is the most important factor favoring employee retention. The purpose of the paper is to highlight the importance of designing an effective compensation as a key to retain employees. Compensation might not be the most important factor in determining whether an employee will stay with you, but it can tip the balance. The study comprises of a sample of 300 employees from automobile sector. This study explores the relationship between compensation policy and employee retention in Automobile sector. The sample size consists of 300 employees. Data was analyzed with Descriptive Statistics. Pearson Correlation Coefficient was employed to establish the relationship among the variables. The findings indicated that effective compensation package had positive relationship with employee retention and thus affects employees' decision to stay in the company. The implication of the study is that, the management should provide effective working environment to retain employees. Finally the study also recommends that thriving and friendly environment should be provided at the workplace to make employees more satisfied to remain in the company.