Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse

Managers"

Chapter I

THE PROBLEM AND ITS BACKGROUND

Introduction

Employee is the most important asset in a company. One of the factors

becoming the benchmark for the development of a company is the performance of its

employees. The problem which is frequently arises and ultimately hampers the

performance of employee is the desire of employees to retire from the company

(turnover intention). The high level of turnover intention would be a serious problem for

many companies and could even frustrate the company when it became clear that the

recruitment process that has obtained qualified staff eventually turned out to be useless

because the recruited staff had chosen a job at another company (Toly, 2001). Turnover

intention is characterized by various things concerning employee behavior, among

others: being lazy at work, increased absenteeism, starting to oppose or protest to

superiors, violating the work order, and the lack of seriousness in completing the

responsibility (Harnoto, 2002: 2). Some empirical studies have found that dissatisfaction

on compensation is a factor that dominates employee turnover intention (Ghafoor et al.,

2017; Chen et al., 2014; Cao et al., 2013). Compensation can be interpreted as the

overall remuneration received by employees for performing their work, and then the

company provides it in the form of money, allowances or awards that aims to motivate

employees to participate in the growth and development activities of the company and

also build employee commitment (Chen & Hsieh, 2006). The given compensation

system should be fair and reasonable for employees. Giving compensation felt by unfair

employees hence many things that are not expected by the company will happen, such
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

as increasing the movement of labor (turnover intention). Compensation can be in form

of financial and non-financial remuneration.

Financial compensation consists of two forms: direct and indirect. Direct financial

compensation is payments to employees that can be in the form of wages, salaries,

bonuses and commissions. While the indirect financial compensation includes all

moneys paid out to an employee that are not included in direct compensation. This form

of compensation is often understood as the portion of an employee’s contract that

covers items such as temporary leaves of absence, benefits and retirement plans. Non-

financial rewards can be in form of team leadership opportunities, praise, self-esteem,

and recognition of achievements that employees have made. A good compensation

system can motivate employees, thereby reducing the intention of looking for other jobs

and turnover (Wanous, 1974; Shi, 1991) Zeffane (1994) argues that dissatisfaction on

compensation will lead to negative employee behavior such as absenteeism and

lethargy. These indications often grouped in resignation behavior or also referred to as

the desire to stop working. However, Chepchumba and Kimutai (2017) found that the

basic components of compensation, ie basic salaries and commissions, did not

significantly influence turnover intention. This result gap provides an opportunity for

researcher to reexamine the effect of financial and nonfinancial compensation but on

different observational objects. This study aims to examine the effect of financial and

nonfinancial compensation on employee turnover intention partially and simultaneously.

The research was conducted in three mining support companies which are engaged in

repair and maintenance service of heavy equipment of coal mining in South Kalimantan

Province, Indonesia. The average age of companies studied are five years old. Due to
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

their young age and they still in the development stage, they need strategic efforts in

treating employees as a valuable human capital for the development of a better

company. Therefore, efforts in detecting the presence of turnover intention on

employees and whether compensation influences it are needed to be considered.

Review of Related Literature

According to studies, compensation packages have a huge impact on an

employees’ level of engagement. High compensation provides employees with a sense

of satisfaction from their job and incentivizes them to perform better (especially when

compensation is directly related to job performance). On the contrary, studies have also

shown that low compensation hinders employee motivation and performance. An

effective compensation package stems from good compensation planning. Traditionally,

compensation planning is done on spreadsheets.

The relationship between financial compensation on turnover intention

Job dissatisfaction has often been identified as an important reason that causes

individuals to leave their jobs. Empirically it can be concluded that job dissatisfaction

has a direct influence on the formation of outgoing desire. Dissatisfaction on financial

compensation could lead to employee’s intention to retire from the company. Financial

compensation is divided into 2 (two) types, namely: 1) direct financial compensation, ie

payments received by employees in the form of salaries, wages, bonuses, and

commissions. Salary is remuneration paid periodically to the employees and has a

definite guarantee, whereas wages are remuneration paid to workers by referring to the

agreement of payment. Bonus is a kind of reward given that is not included in the

employee's basic salary. 2) Indirect financial compensation, ie all rewards not included
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

in direct compensation. The form of indirect compensation is any kind of rewards that

employees receive indirectly. Examples of these indirect financial compensations are

social security, insurance, family health benefits, leave, etc. Money is considered a

highly significant motivator. Many studies have found a negative relationship of financial

compensation on employee turnover intention. Ghafoor (2017) found negative effect of

financial compensation on software industry employee in Pakistan. Rubel and Kee

(2015) asserted that the higher the level of compensation practice the lower the level of

employee turnover intention.

The relationship between nonfinancial compensation on turnover intention

Nonfinancial compensation is a reward given to employees in the form of awards

such as more challenging work, wider work hours, career rewards, social security, or

other forms that can lead to job satisfaction. Aspects of nonfinancial compensation

include work and work environment (Neckermann and Kosfeld,2008). Ryan et al (2000)

argued that non-monetary types of compensation can be very meaningful to employees

and very motivating for performance improvement. The satisfaction of non financial

compensation makes the employee desires to stay in the company and to decrease the

intention of turnover. Nyaribo and Nyakundi (2016) found that non financial

compensation (job design, better workplace environment, career development, training)

and non financial incentives (participation, recognition) could motivate employees, drive

up their performance as well as to retain staff. Asiago (2015) noted that use of non-

financial rewards affects the employees’ mental and physical wellbeing in their work and

also the quality of their production which is important in the attraction, and retention of

valuable.
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

Synthesis

People are often motivated by money. The salary a worker is paid by his

employer can have a great influence on his performance in the administration. A worker

doesn’t simply view his salary as a dollar amount, he sees it as the value his employer

places on him as a worker. The level of appreciation he feels can have a direct impact

on his overall performance. A worker is more likely to perform to his potential if he’s

happy with the salary he is earning. A person earning a high salary feels motivated to

do a good job, because he wants to please his employer to retain his position. His

salary brings him a feeling of security, allows him to feel accomplished and gives him a

high status ranking that he enjoys. A person is much more willing to put in extra hours at

the office if he feels his financial rewards are a fair trade-off. A well-paid employee feels

valued by his organization. He knows management isn’t just paying him to get the job

done, he’s also respected for his subject matter expertise. This employee is more likely

to be satisfied with his job and not feel the need to look for a similar position with better

pay. However, an employee who doesn’t feel like his organization is paying him a high

enough salary is much more likely to look for and accept a higher paying position of a

comparable nature at another company. Many workers may need to get second job to

make ends meet, which leaves them tired, overworked and resentful. Performance rates

are typically low, as workers feel little motivation to exceed standards and absentee

rates tend to be high. Employee turnover in these companies is often very high, as

people don’t want to work for a company paying below industry standards. Using a

performance-based pay strategy can provide a worker with extra motivation to do his
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

job to the very best of his ability. This can be an effective way to align a worker’s

incentive to earn additional monetary bonuses with the goals of the company.

Statement of the Problem

This study aims to identify the impact of salary grade of nurse managers in

relation to the fast turnover of nurses in hospital. This study aims to seek the following

question.

1. What is the demographic profile of the nursing managers in terms of –

2. What is the level of satisfaction of nursing managers in in the compensation their

receive in in selected hospital in manila?

3. What is the level of satisfaction of nursing manager in the compensation they

receive and the scope of their work?

4. What is the level of turnover intention of nursing manager in the compensation

they receive and the scope of their work

Conceptual Framework

The conceptual framework for this study is described in Figure 1. The

concept description followed the Input-Process-Output model of System Approach.

In the IPO model, a process is viewed as a series of boxes (processing elements)

connected by inputs and outputs. Information or material objects flow through a

series of tasks or activities based on a set of rules or decision points. (Harris &

Taylor, 1997) Flow charts and process diagrams are often used to represent the

process. (Harris & Taylor, 1997) What goes in is the input; what causes the

change is the process; what comes out is the output. (Armstrong, 2001) The IPO

model will supply the general structure and guide for the direction of the study.
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

Demographic profile of
the nursing managers
Level of satisfaction of
nursing manager in
term of salary grade.
. Level of satisfaction
of nursing manager in
term of job scope
Data gathering
Impact of Salary Grade
procedure to the Fast Turnover of
Nurses in Hospitals in
Survey questionnaire
Manila as Perceived by
Nurse Managers"
Data tabulation and
interpretation

For Recommendation

Hypothesis

H1: is there significant impact between nursing manager fast turnover and salary

grade in selected hospital in manila.

Scope and Delimitation

Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

This study is focus on the identifying the impact of salary grade to the fast

turnover of nursing managers in selected hospital in Manila as perceived by nursing

manager. This study will also survey questionnaire to get the perception of nursing

manager in salary grade and turnover of nurses in hospital in manila.

This study does not include nurses except the nursing managers only. The

proponent seek approval from head nurse to conduct research among nursing

managers.

Significance of the Study

Nursing Managers. This study is beneficial among nursing managers in

selected hospital in Metro Manila. This study will able to help the nursing manager to

identify the relationship between the nurse and compensation to the intention turnover.

This study will help the nursing manager in identifying the level of satisfaction of nursing

manager in term of compensation they received and the work scope as their basis for

job exit.

Hospital Administration. This study is beneficial among hospital administration

in selected hospital in Metro Manila. This study will able to help the hospital

administration to identify the different factor that influence the nursing manager to leave

their job. This study will serves as basis for the hospital administration in how to improve

their compensation and benefit packages to increase the retention and decrease the

turnover intention of nursing manager in hospital in manila.

Researcher. this study is beneficial among the researcher of this study. The

researcher will able to understand job scope of nursing manager. This study will able to

help the researcher to understand how the compensation contribute in the turnover
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

intention of the nursing manager in selected hospital in manila. This study will enlighten

the researcher in the current situation of nursing manager and recommend how to

improve the compensation and salary grade of nursing manager to reduce the turnover

intention.

Future Researcher. this study is beneficial among the future. The future

researcher will able to understand job scope of nursing manager and how the

compensation contribute in the turnover intention of the nursing manager in selected

hospital in manila. This study will enlighten the researcher in the current situation of

nursing manager and recommend how to improve the compensation and salary grade

of nursing manager to reduce the turnover intention.

Definition of the Terms

Compensation. refers to the act of providing a person with money or other

things of economic value in exchange for their goods, labor, or to provide for the costs

of injuries that they have incurred.

Satisfaction. Satisfaction is the act of fulfilling a need, desire, or appetite, or the

feeling gained from such fulfillment.

Turnover Intention. Is a measurement of whether a business' or organization's

employees plan to leave their positions or whether that organization plans to remove

employees from positions. Turnover intention, like turnover itself, can be either voluntary

or involuntary.
Impact of Salary Grade to the Fast Turnover of Nurses in Hospitals in Manila as Perceived by Nurse
Managers"

http://www.ijstr.org/final-print/apr2018/Compensation-And-Turnover-Intention-In-Coal-Mining-

Support-Companies-In-South-Kalimantan.pdf