The Effect of Compensation on the Turnover Intention of Employees in IT Sector Company in Sri Lanka

Abstract

Employee turnover has become considerable challenge for many firms in the face of global competition. XYZ (Private) Ltd has observed an increase in their turnover rates recently as well as few grievances regarding the current compensation. Moreover, XYZ (Private) Ltd operates in a highly dynamic industry with many changes being done to compensation structures. Academics and professionals have been interested in employee turnover intentions as an antecedent to actual turnover behavior over the last six decades. The company should consider about how to influence the intention of the employees to remain with the organization by paying special attention to compensation. Therefore, the main purpose of this study is to investigate the effect of compensation on the turnover intention of employees in XYZ (Private) Ltd. Accordingly, the researcher attempted to identify the effect of four dimensions of compensation which are pay level, pay raises, pay structure administration and benefits on the turnover intention. This study adopted the quantitative methodology, and the key variables were operationalized based on past literature. The data was obtained using a self-administered structured questionnaire from 148 employees from two main departments. It was later analyzed using various statistical techniques such as descriptive analysis, correlation analysis and linear regression analysis. The findings demonstrated that satisfaction on compensation negatively influences the turnover intention of employees in XYZ (Private) Ltd. All four dimensions that were considered under compensation indicated a strong negative relationship with turnover intentions of employees. Further, the study concluded with identifying few recommendations to improve the existing compensation structure to decrease the employee turnover intention and retain the best talent in the organization.