Critically Evaluate The Effectiveness of Incentive Schemes on Employee Retention Levels (GC01475)
1.0 Introduction
Retaining an improved level of an employee by the UK retail industry including Ice Land has been a challenging issue. There are evidence that several incentive schemes can motivate workforces to stay for a long time basis in workplaces (Mullins, 2013). Therefore, it has been a significant issue for the UK retail industry including Ice Land, UK to study the effectiveness of incentive schemes on employee retention.
This chapter has outlined the introduction of the undertaking research works. At first, the researcher has discussed the research background. Then, the researcher has outlined the research rationales. Next, the research aims and objectives have been outlined. Following these, the researcher formulated the research questions. Finally, the researcher has developed research hypothesizes.
1.1 Research Background
Retained workforces contribute more with their skills and experiences in the workplaces than newly joined ones Mullins (2013). However, high employee turnover in an organization can impact business in different ways such as creating staff and skills shortages, increasing overall costs, and decreasing business performance and workforce performance (Groysberg, 2010). Staff’s motivations through different incentives can play an important role to improve employee retention levels with improved productivity and performance in workplaces (Bratton and Gold, 2012). However, many retailers including Iceland are ignoring this issue in many cases because of not having enough knowledge.
Iceland, one of the leading frozen-foods retailers in the UK, has been operating with about 35,000 workforces and serving millions of customers every week in more than 750 stores for the last 25 years. Iceland is growing steadily with improved market shares, sales revenue, profit margin and customer loyalty. However, it is nowadays facing a high employee turnover of 44%, which is creating staff and skills shortages, increasing costs in selection and recruitment, training and development, and impacting on productivity and workforce performance (Iceland Annual Report, 2014).
As a result, this proposed study will evaluate the effectiveness of different incentive programs on customer retention levels to suggest Iceland for improving its incentives schemes to motivate and retain staff for a long time basis.
1.2 Research problems
The UK retail industry including Iceland is using several rewards and incentives schemes to motivate their workforces and improve their performance. However, many retailers, particularly in Iceland have been facing challenges and difficulties in managing staff motivations and their performance in workplaces. In addition, most of the organizations including Iceland still now do not have enough understanding about the impact of several incentives programs/schemes on staffs motivations. According to the Iceland Annual Report (2014), Iceland is facing a high level of staff turnover (45%) and poor motivation, which has been impacting business performance and productivity. In addition, the highly competitive labor market has increased the demand for skilled and experienced workforces, which has reduced the staff retention level in Iceland. Therefore, it has been a significant issue for Iceland on how it can improve its staff motivation level and their performance in workplaces. As, according to Mullins (2013) notes, several incentives schemes play an important role in improving staff motivations and their performance in workplaces, Iceland has to conduct a study on how these incentives impact its workforces’ motivations.
Therefore, the undertaking study has evaluated the impact of several incentives and reward schemes on staff motivations in the perspectives of Iceland business. The study measures and evaluates Iceland’s workforce’s judgments towards incentives provided by Iceland and employees’ satisfaction and motivation levels against that incentives. Finally, the research work recommends Iceland so that it can improve its incentives and rewards programs to improve staffs motivations and work performance.
1.2 Significance of the research
UK retail industry is facing challenges in staff motivation, retention and loyalty (Bratton and Gold, 2012) which are giving hard time in fulfilling staff experiences and staff shortage, gaining improved productivity and performance (Mullion, 2013). In the same way, Iceland is facing an increased staff turnover of 44%, which is impacting its overall cost, profit, productivity and performance. Thus, Iceland needs to find out ways of improving its staff retention level. High staff turnover in UK retail industry including Iceland is impacting business in different ways (Groysberg, 2010). It is creating skills and staff shortages which are reducing overall staff performance in Iceland. In addition, when staffs leave frequently Iceland needs to recruit frequently and need to train and develop the new staffs, which are cost-effective and time-consuming. Furthermore, when new staff joins in workplaces it takes time to perform better, which impacts overall productivity. In a word, high employee turnover impacts Iceland’s sales and profits.
Consequently, it needs to motivate and retain its staff for a long time. Employee motivations with several incentive schemes can improve staff retention levels significantly (Briton and Gold, 2012). Although there are some incentive schemes existed in Iceland, in most of the cases staffs are not happy with that. In addition, Iceland is failure to identify its staff’s needs and expectations in many cases. On the other hand, Iceland sometimes ignores these significant issues because of enough understanding of the effectiveness of incentive schemes on staff retention. Therefore, Iceland needs to know the effectiveness of incentive schemes in improving staff retention levels. The proposed study will evaluate the effectiveness of the widely used incentive schemes in the retail industry. Then, the study will evaluate the incentives schemes used in Iceland, and identify Iceland’s staff’s needs and expectations. Next, the study will find out the weaknesses of Iceland’s incentives schemes. Finally, the study will suggest Iceland for
1.3 Research aims and objectives
1.3.1 Research aims
The aim of the undertaking research study is to evaluate the Iceland staffs’ reactions against the incentives and rewards schemes provided in workplaces. Then, the study focuses on how Iceland can improve its incentive schemes to increase its staff motivation levels and work performance.
1.3.2 Research objectives
1) To analyze the different incentive schemes used for staff by Iceland
2) To assess Iceland’s ability to retain staff
3) To analyze the effectiveness of the existing incentive schemes from an employee’s point of view as a motivation tool and in improving retention level
4) To analyze the impact of incentive schemes on staff retention level
5) To provide recommendations for Iceland to do further improvement in its incentive schemes to improve staff retention.
1.4 Research Questions
1) What types of incentive schemes are used by Iceland to improve their retention levels?
2) Is Iceland able to retain its staff with its existing incentive schemes?
3) How the staffs react against Iceland’s existing schemes provided its workforces for improving their retention levels?
4) What are the impacts of incentive schemes on staff retention?
5) What are the weaknesses of Iceland’s incentive schemes?
5) How can Iceland develop its incentive schemes to improve staff retention levels?
1.5 Research Hypothesis
H1:Â Incentive schemes have a significant impact on staff motivation and retention.
H3: Incentive schemes do not have any influence on staff motivation and retention.
Chapter 2: Literature Review
2.0 Introduction
Conducting a critical literature review on the research topic and subject matter is one of the vital part of a research study. Literature review is the current texts, knowledge and understanding, and theories developed over time on the research topic and subjects (Saunders et al, 2013). In this chapter, the researcher has critically reviewed the literature of the undertaking research topic and subject. Firstly, the researcher has reviewed the concepts of staff retention and staff turnover, the causes of staff retention and the related issues. Then, the researcher has reviewed the concept of incentives schemes, types of incentive schemes, and principle of incentive schemes. Next, the researchers has reviewed the effectiveness and impacts of incentive schemes on staffs motivation and loyalty. Following this, the researcher has reviewed the existing inceptive schemes applied in Iceland workplace. At the end, the research has concentred on the undertaking researches on the research topics and subjects.
2.1 Staff retention
2.1.1 What is staff retention?
According to Michael (2010), staff retention is the remaining of workforces within the workplace’s membership boundary. A crude measurement of staffs retention is as follows:
2.1.2 Importance of staffs retention
According to Mullins (2009), a moderate level of staff turnover can be good for a business; it means fresh ideas and approaches. However, each company requires strategies to gain high performance and competitive advantages. A higher level of staff turnover is expensive. It also impacts on organisations’ internal morale and external reputation. Therefore, it is significant for the companies to understand the essence of both staff retention and staff-turnover. According to Rowley and Purcell (2009), several issues can be cause of high staff turnover like poor staff motivation, poor salary and wages, stress in workplaces, poor commitment, transient nature of employees, and training and development. Deery (2012) sates that workforces can resign their jobs due to poor management and leadership styles, poor organisational behaviour and cultures, poor work environment, etc. Rowley and Purcell (2009) said, several variables effects workforces’ mind and force them to leave jobs, where the key issues are promotional opportunities, work stress, job commitment, motivation and satisfaction in work, work difficulties, etc. However, Deery (2012) revealed that motivation and satisfaction of employees in workplace differ from departments to departments and companies to companies…………….
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