Question

3. Henry is the marketing manager of a small electronic appliances company. He has conducted a thorough study on why employee turnover is very high in his department It is clear that current motivation levels are very low and there is not much that the company has done to retain its best employees. One major impediment is that the pay structure does not reflect market realities and there is hardly any role for incentive compensation. What kind of pay structure is likely to reduce employee turnover in this company?

Answer 1

Answer:

Base Salary and Bonus is Suitable Pay Structure to reduce Employee Turnover in this Company.

Explanation:

In Given Case, Employee Turnover is high in Marketing Department of Small Electronic Appliances Company. Moreover in the Study Conducted by the Marketing Manager Henry regarding the Employee Turnover. it is quite clear that Current Compensation Levels are Very Low. Current Compensation Levels don't motivate the Employee to work in the Company. Due to which Employee Turnover is high in the Company.

To Reduce Employee Turnover in Marketing Department Company Must adopt Base Salary and Bonus Pay Structure to retain Employees.

In Base Salary and Bonus Pay Structure, Employees are Paid Fixed Amount as a Base Salary for a Month irrespective of the level of their Performance. Fixed Base Salary Provides Sense of Surety and Security regarding Monthly Earnings to the Employees. Percentage of Variable Commission on Sale of the Product made by Employees as Bonus Payment will incentivize Employees to Sell More and Earn High.

Base Salary and Bonus Pay Structure will enable the company to retain Quality Employees as Compensation is Combination of Fixed and Variable Payment. Such Structure reduce Employee Turnover as Employees are Rewarded fairly for their Performance & incentivize them to Sell more Products as Part of Compensation is connected with selling of Product which may result in increase in Sales Revenue for the Company.

Thus, Base Salary and Bonus Pay Structure is Suitable for reducing Employee Turnover in Small Electronic Appliances Company.