Table of Contents

CHAPTER ONE .................................................................................. 1

1.0 Introduction.................................................................................... 2
1.1 Background .................................................................................... 2
1.2 Problem statement. ...................................................................... 7
1.3 Objectives of the study ................................................................ 8
1.3.1 General objective of the study ....................................................................... 8

1.3.2 Specific Objective of the Study ..................................................................... 8

1.4 Research Questions ....................................................... 8
1.5 Significance of the study ............................................... 9
1.6 Scope of the Study ......................................................... 9
1.6.1 Content Scope ................................................................................................ 9

1.6.2 Geographic Scope: ......................................................................................... 9

1.6.3 Time scope: .................................................................................................... 9
1.7 Key terms definitions ................................................................... 9
1.8 Conceptual framework ................................................................ 10

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 CHAPTER ONE
1.0 Introduction
This study was investigate the effect of salary structure on employee performance
banadir region Mogadishu- Somalia .This section contains the background of the , the
problem statement , the significance of the study ,the objectives of the research ,the
research questions , the scope of the study , the definition of the key terms , and
conceptual framework .

1.1 Background
A salary structure is a framework of pay grades in which employers implement salary
for their employees. Employers use different types of salary structures in order to
manage salary increases and career progression and they also use salary structures to
ensure that staff are paid fairly and equitably in a way which does not discriminate (e.g.
gender discrimination in pay). Levels of salary and how salary is distributed can have a
massive impact on a business, including efficiency and productivity rates along with
links to morale and motivation of the workforce. ACAS guidance states that salary
systems should be clear, simple and easy to follow so that workers know and
understand how much salary they are entitled to. This might go some way to explain
why more employers are now moving away from the more traditional hierarchical
shape pay systems towards salary systems that incorporate fewer bands and job roles
are more ‘harmonised’ within their pay system (., 2016).
Sultana Nazia & Bushra Begum (2013)1 had given in their paper that Employee
retention is an effort by a business to maintain a working environment which supports
current staff in remaining with the company. Many employee retention policies are
aimed at addressing the various needs of employees to enhance their job satisfaction
and reduce the substantial costs involved in hiring and training new staff. Employee
retention is the process in which the employees are encouraged to remain with the
organization for the maximum period of time or until the completion of the project.
Retention Strategies helps organizations provide effective employee communication to
improve commitment and enhance workforce support for key corporate initiatives.
According to Get Les McKeon, employee retention is defined as "A systematic effort
by employers to create and foster an environment that encourages current employees to
remain employed by having policies and practices in place that address their diverse
needs. The costs associated with turnover may include lost customers, business and

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damaged morale. In addition, there are the hard costs of time spent in screening,
verifying credentials, references, interviewing, hiring and training the new employee
just to get back to where you started ( Kaur, (2014-2017)). Another concept to Sinha
and Sinha (2012), the concept of employee retention is a complex one and there is no
single recipe for keeping employees. There were various definitions of employee
retention. Hom and Griffeth (1995) define retention as a process whereby high royalty
among employees to their organization. In order to gain royalty, it involved all the
strategies, efforts been implemented and sustained by the organization in all aspects to
retain the talent. The retention of employees is a priority of every organization to
compete, attract and retain talented staff (Naris & Ukpere, 2010). The reasons for
retaining employees are for organizational success and sustainability (Olekers & Du
Plessis, 2012). This is further supported by Osteraker in his study conducted in 1999
that employee retention is crucial to determine the success of an organization.
Additionally, Hughes and Rog (2008) revealed retention as “ways of keeping talent
within organization”. Rhule (2004) added that organizations need to develop and
implement relevant strategies to ensure the retention of a talented workforce. There
were a few reasons for employees’ staying in an organization such as compensation and
benefits, training and development, work-life balance, work environment, job content
and career advancement. However, employers realized that some individual reasons
were varied due to different organizations and influenced by the organization’s culture,
organizational management and the nature of the organization. Nurses play a crucial
role in any country healthcare system, be it in public or private hospitals. The retention
of these nurses is a great challenge due to many factors such as increased workload,
working long hours, challenging tasks, low salaries and poor working environment.
Kaestner (2005) highlighted that human resource management in every hospital must
ensure the required workforce of nurses is well maintained particularly to cope with the
growing demand for clinical service.

To accomplish organizational business objectives, efforts that an organization adopts

to keep productive and desirable employees are referred as employee retention (Frank,
Finnegan, & Taylor, 2004). In every sector, employee retention is a major issue because
high turnover cost results in failure for achieving organizational objectives. Highest
attention is paid to retention as it helps not only in reducing turnover outlays or in

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minimizing the cost of recruiting and training but because it aids in retaining talented
workforce from getting poached (Sandhya & Kumar, 2011).However, when an
employee terminates his job, the organization suffers loss of customer loyalty (in
service sector), loss of expertise, more organizational cost (hiring, administrative, and
training), and interruption in daily workflow, which may prove disastrous for the
organizations in the end (Brandt,Bielitz, & Georgi , 2016; Karsan, 2007; Ton &
Huckman,2008). Study conducted by Marescaux, De Winne, and Sels(2013) indicates
that practices like declarative participation ,consultative participation, worker director,
and worker union can result in enhancing employee retention. To retain talented
employees, employers and supervisors have to provide employees opportunities such
as challenging task and a certain level of autonomy and freedom intheir jobs (Khalid &
Nawab, 2018)
Organizations always try to work on their different techniques in order to maintain their
skilled and talented employees. Employee retention is a process by whichemployees
are expected to stay in the organization with their willingness for the maximum period
of time. Every organization invests time and money in hiring new employee, make
them a corporate ready material and bring them at same level with the existing
employees. The organization is completely at a loss when these employees leave their
job once they are fully trained and completely adjusted to the job. Rewards and benefits
are in general direct and cash or indirect and non-cash compensation paid

to an employee for the job done in an organization. Schuler and Jackson, (2006) define
retention as everything an employer does to encourage qualified and productive
employees to continue working for the organization. Retention is defined as a voluntary
move by an organization to create an environment which engages employees for long
term Chaminade, (2007).
The retention of employees has become Similarly, According to Mayfield, (2008)
retention of valuable employees is one of the most significant issues confronting
leaders. Retention of talented employees by employers is imperative because the
organization‟s competitive advantage is often dependent on the specialized knowledge
and skills possessed by these employees Schreuder and Theron (2001). According to
Accenture (2001) study on high performance issue find that organization strategy
regarding employee retention primarily started from US, Europe and Asia. Given the
mobility nature of talented employees, retaining them becomes a matter of concern to

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employers since, in the view of Buckingham (2000), their leaving means a loss to the
organization of its intellectual capital or intangible assets. e a leading challenge faced
by many organizations worldwide (Adane, 2017).
Hong, Hao, Kumar, Ramendran and Kadiresan (2012) did a study on the impact of pay
on employee retention. This outcome depended on 278 respondents in Malaysia's
training area. The creator similarly found that, remuneration is huge to worker
maintenance. Remuneration offers workers some level of security, independence,
affirmation and improved confidence, which in this manner manufactures their
sentiment confidence, inciting enthusiastic duty and maintenance (Döckel, Basson and
Coetzee, 2006). Be that as it may, this outcome may remain constant for other
comparative organizations yet most likely not the protection firms in light of the fact
that the matter of the two establishments is in no way, shape or form indistinguishable.
As such, a study on the influence of compensation on employee retention at Jubilee
Insurance Company Limited, Kenya was carried out.
In Africa
In Kenya, Isaac (2016) did an exploration on compensation practices and their impact
on employee retention in regulated SACCO sector in Nairobi City County. The
exploration done was descriptive in nature. The population targeted was comprised 33
SASRA SACCOs inNairobi City County. The information collected was through the
use of questionnaires. The study found that regulated SACCOs had adopted variable
compensation pay program such as allowances and bonus, insurances schemes for
health, dental, life, disability and vision and retirement benefits in rewarding of
employees to improve performance. The research was however focused on SACCOS
unlike this study which was based on Jubilee Insurance Company Limited.
Employees are the organization’s key resource and the success or failure of
organizations center on the ability of the employers to attract, retain and reward
appropriately talented and impotent employee. Employee’s willingness to stay on the
job largely depends on compensation packages of the organization (Armstrong, 2003).
In attempt to ensure employee optimal satisfaction and retention, organizations need to
consider a variety of appropriate ways to reward the employee to get the desired result
(Falola, 2014). It has been argued that the degree to which employee are satisfiedwith
their job and their readiness to remain in an organization is a function of compensation
packages (Osibanjo, 2012).
Organizations that have goals to achieve would require satisfied and happy staff in her

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workforce. Importantly is the fact that for any bank to take off and achieve its strategic
goal would strongly depend on her capacity to attract, retain and maintain competent
and satisfied staff into its employment ( Chiekezie, Emejulu, & Nwanneka, 2017).

In developing countries in Africa, such as Senegal, Ghana, and Nigeria, the issue of
employee retention is of great concern to business leaders(Ldama & Bazza, 2015).
Indeed, all organizations are configured to achieve specific goals and human resources
Is the most important resource for achieving the goals. To keep employees, it takes
motivation. The factors that motivate employees to stay in their jobs are essential
because they affect the performance of the organization. In fact, trained employees
allow organizations to gain a competitive advantage. This is consistent with
(Awolusi, 2013), that a highly motivated person works hard to achieve the
organization's goals, given their abilities and understanding of the work.
In n Zimbabwean Studies on employee retention strategies need to be incorporated in
the organisation’s strategic plans if the organisation has to have effective retention
strategies which are funded and supported by the leadership. Turnover must be
managed and the reduction of turnover costs must be effectively managed. Employers
must gather feedback from the employees pertaining to their preferences, expectations
and intentions (Mahan et al., 2018).

Results from previous studies have reflected that for organisations to ensure that they
retain employees and that employee satisfaction is high they have to respect the high
performers accordingly, recognise the efforts of the high achievers and reward the high
achievers with perks that will induce them to perform better (Mathimaran and Kumar,
2017). Employees need better working conditions, they need better working hours.
They need to relax and work under relaxed conditions; frequent tea breaks and longer
lunch breaks are proposed such that the workers will not be overworked. The
employees should also be paid for their increased productivity levels. Incentives should
be put in place to motivate the employees. Initiation of team work would help to
increase performance and productivity as the employees would work as team members,
and be able to consolidate their production levels to meet the organisational objectives
(Mishra, 2013). It has been observed in previous studies that the supervisor’s attitude
should be included as this has a strong bearing towards employee satisfaction and the
retention of employees at work. Employee loyalty is determined by how satisfied the
employees are with their employer. Employee and employer relationship needs to be

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improved. Measures have to be put in place to ascertain that good relationships are
initiated, in order to facilitate the retention of the employees. There is also a need for
the human resources department to come up with strategies in order to address the
current market needs of the employees (Nasir & Mahmood, 2018.
The key findings have reflected that the employees are not satisfied with their jobs. The
Zimbabwean manufacturing firms are performing below capacity and this makes it
difficult for them to retain skilled employees. Lack of appropriate rewarding systems
and recognition, work-life balance, inadequate training and development opportunities,
lack of effective communication, lack of effective management and leadership
decisions, lack of innovation and lack of succession planning are the major factors that
lead to employee turnover in the Zimbabwean manufacturing sector. Employees are in
need of job satisfaction, a good working environment, effective and efficient leadership,
attractive remuneration, fringe benefits, job fit and career development. Employees
become committed to their work and the organisation if these factors are addressed.
Most of the employees leave for the South African labour market, where the industries
are performing well and there is a constant demand for skilled workers
In Somalia, most studies are conducted on the effect of salary structure of on employee
retention and a few are within the training and employee performance. For instance,
(Ibrahim & Dahie, 2016), conducted a study on the impact of salary structure and
development on worker performance in Mogadishu-Somalia. Their study found out
that salary structure on employee retention is more important. It is recommended that
certain areas be improved, that is, management financial backing, the provision of
feedback to employees and the conducting of employee training on a continuous basis.
a powerful positive relationship between training and development and employee
retention However, existing studies in Somalia failed to address salary structure and its
effects on employee retention in Somalia ( Damei, 2020).

1.2 Problem statement.

The evolving target for business for the world, implementation ofgood salary structure
policies that would allow these business to retain their best hands. There had been
constant mobility of these highly skilled employees from organization to another.
The biggest challenge being faced by many companies is employee retention. The key
asset of any organization is its employees. In a world where technologies, competitors

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and products are being easily duplicated, employees play a significant role in keeping
the company one step ahead. Out of the plentiful practices available, the reward system
is one strategy to retain, motivate and attract talent in an organization. With this
perspective,
In view of the above, one of the reasons that informed this study has to do with the
unique importance of salary structure to employee retention among business This
affects the retention of employee yet it is not being addressed.
There is need therefore, to find out and examine the relationship between salary
structure and employee retention among target one banks called [my banks], which is
locate banadir region particularly Hodan district, This research will be necessary to
identify how best to retain employee for this bank tell above (at least for a longer period
of time) to prevent constant mobility.
However human resource management has a significant role insuring the company can
retain the best employees in companies; Employees who are valued salary structure by
the organization they work for get satisfaction and work for long time

1.3 Objectives of the study

1.3.1 General objective of the study
The main objective of this study will be the impact of salary structure on employee
retention banadir region, Mogadishu -Somalia.

1.3.2 Specific Objective of the Study

• To determine the impact of bonus on employee retention banadir region
Mogadishu-Somalia.
• To investigate the impact of welfare benefits on employee retention
banadirregion Mogadishu-Somalia.
• To find the impact of commission on employee retention banadir region
Mogadishu –Somalia.

1.4 Research Questions

• What is the impact of bonus on employee retention banadir region
Mogadishu-Somalia?
• What is the impact of welfare benefits on employee retention banadir
regionMogadishu-Somalia?

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 • What is the impact of commission on employee retention banadir region
Mogadishu –Somalia?

1.5 Significance of the study

This study will be useful for future researchers because it will act as a source of
information and also a guideline for them to fallow in the subsequent studies related to
same problem under investigation .This study will also be useful both private and
public institution and also will benefited by the organization .

1.6 Scope of the Study

1.6.1 Content Scope
This study will concentrate the impact of salary structure on employee retentionbanadir
region Mogadishu –Somalia

1.6.2 Geographic Scope:

Geographically study will be banadir region Mogadishu-Somalia

1.6.3 Time scope:

This study will be conducted between March up to June 2023.

1.7 Key terms definitions

• e m p l o y e e r e t e n t i o n : means keeping the employee in and with your
organization, it involves taking actions that motivate and tempt employees to
staywith the organization for the maximum period of time.
• e m p lo y e e P a r tic ip a tio n : is the involvement of employees in decision-making processes
and organizational activities helping increase engagement and
this meaning allowing employees to be part of
operation for example they can share ideas in meeting or gives feedback
this help them feel important and involved in the success of the company
• e m p lo y e e s a tis fa c tio n : the level of contentment employees feels with their jobs
work environment management and growth opportunitiesthis is about happy and
comfortable employees arework it depends on things like the work environment
fair treatment recognition and chances to grow satisfied employees work
better and are more loyal

• e m p lo y e e c o m p e n s a tio n : this refers to what company gives employees in

return for their work such as salary bonuses piad time when employees are well-co
mpensated they feel valued and more

motivated to work additional detail a strong compensation system also helps attracttalented workers
and reduces the risk of employees leaving the organization fair and competitive pay is key to
employee retention 9
 Ithas become the core of any employment welfare facilities (health insurance,
retirement plan, training, travel perks, compressed work schedules and food
andhousing) ,(GDN, 2015) as in (Opatha, 2002).
• p r o d u c t i v i t y b a s e d e a r n i n g s : are a common way to remunerate
employees (salespeople) for securing the sale of a product or service. The intent is
to create a strong incentive for the individual to invest the maximum effort
into their work.

1.8 Conceptual framework

Dependent Variabl
Independent variable [IV] e
[DV]

employee compensation employee retention

employee satisfaction

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