HOW TO RETAIN PERSONNEL – SALARY MATTER

Changing jobs is becoming a threat to business enterprises which may be small or big. This study focus on why employees are forced to change their job because of money matter.
Salary is a big fact about 70-80% to changing job. Why big companies also cannot retain their personals. Previous management studies say that the company’s goal and his personal’s goal should supplement each other. But that should be studied in detail. A company should find what should be the appropriate level of salary for each his person, what should be the increase every year so that its employee found comfortable in his company.

Most of the business houses have a fixed policy to increase salary every year. Most of the cases it is 8% annual and in case of promotion about 12%. So average growth in salary comes about 10% every year. Last five years it is seeing that average inflation is 8%. So actual growth in salary is about 2%, which is coming from promotion only. That is the policy of why the employee left’s company after 2 to 3 years. After that, his post is filled by another person, who takes about 20-25% more salary, which is from the previous one. These processes go year by year, the question arises, why this salary is not given to the previous person.

Our studies say that 8% increase in salary is only required to cover inflation because of rupees depreciation. But there is one more inflation in India or other countries. That is lifestyle growth. When if one look at 10 years back our lifestyle was somewhat different then today’s. Like for example, there was no cost of mobile and its services. Is it a person remain today without a mobile? not at all. Like an example transport expenses. Ten years back the city was small. There distances between offices to home was small. These distances not only increase expenses of petrol but also the expenses of the vehicle also. These kinds of numerous things changes in our lives every year, which is not seen closely. But these changes are necessary every year in life. These come to a poor labor life to CEO a big company. My study says that average lifestyle growth is coming at about 4% in the last 5 to 10 years. It may change from time to time. So when we combine inflation and lifestyle growth:-
Effective inflation = Average inflation + average lifestyle growth
= 8% + 4% = 12%
So the increase in salary is about 12%. There is no change in salary in reality for an employee.

Effective inflation is still not an indicator of a human’s need. That indicator gives an employee’s fulfillment of its present needs only. But the employee has his future goals and requirements like children’s higher education and their marriage. Besides he has requirements of own home, own vehicle, home appliances, and furniture, etc. Our study says that from the last 10 years, future goals are also a big pressure to change the job. Future goals satisfy two types of need. First, it satisfies necessary or compulsory future need like children’s education, marriage, and house.
Second, it fulfills dreams need like luxury life by car, home appliances, furniture, family tourism, etc. Our studies say that both the things, which makes future goals, require a 4% increase in salary each year. So man’s minimum need from his job may be stated like that-
Employee average need = Average inflation + Average lifestyle growth
(In salary) + Average future goals need
= 8% + 4% + 4% = 16% (for year 2014-15)

So according to the last 10 years study says that employee needs about 16% each year. So a 16-18% increase in salary did not shuffle the employee form his job.
Is the company wants to fulfill the employee’s need? Business organizations did not give that increase in salary, firstly. But when a person left and another comes they give to force higher salary to his next employee. Then the general salary level is increased. It is seen that the cost of the average human resource increases by about 16% in each year from the last ten years. Thus companies are forced to give this increase to his employees by changing jobs.

So above the whole study gives a one thumb rule that double inflation is the need of every employee or labor. So this whole study gives the right level of increase in salary level. So retaining personal because of money matter should be an easy task now.