Giving monetary compensation to employees can significantly cut attrition rates, a study released on Wednesday said. Employees were more likely to continue with their jobs that provided performance-based monetary compensation, the study showed.
The study was conducted to know the impact of research and recognition on attrition in India in 2022. Over 100 firms and one million employees participated in the project. The attrition rate of employees who were not provided any kind of reward stood at 38 per cent, according to the report. Whereas the attrition rate of employees who received monetary rewards dropped to 5%. Attrition in employees who received non-monetary compensation was recorded at 11 per cent.
The study was conducted by Advantage Club, an employee engagement platform. A resourceful Rewards and Recognition strategy with monetary and non-monetary rewards can effectively cut attrition rates, the study showed.
The study recorded the level of attrition in employees who did not receive any reward with people who received some kind of reward or recognition from their employers. Attrition in employees who receive monetary rewards, non-monetary rewards, and a combination of both was also a part of the study.
The highest average attrition level was observed in firms with an employee size of more than 50,000 at 31 per cent. The highest overall attrition level was recorded in the Business Process Outsourcing (BPO) sector (40 per cent) and the lowest in logistics (4 per cent).
Companies spend about 2-5 per cent of the total payroll on R&R, according to the study. In Western countries, employers tended to allocate a much higher R&R budget for their employees.
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In the case of employees who receive no reward, monetary compensation can cut attrition by 87 per cent , while non-monetary rewards can reduce attrition by 71 per cent.