Munich Personal RePEc Archive

Organizational Approach for the Design of a Comprehensive Compensation Package for Bank Employees in Afghanistan A Strategy for Acquiring and Retaining Talent

Mirza, Aimal (2019): Organizational Approach for the Design of a Comprehensive Compensation Package for Bank Employees in Afghanistan A Strategy for Acquiring and Retaining Talent.

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Abstract

Purpose: To investigate the phenomena that could be attributed to the absence of a comprehensive compensation package in Afghan banks. This study aims to devise strategies for the design of a pay package that will improve employee retention and reduce the turnover rate in this industry. Findings: The study suggests that an effective pay package could lead to employee loyalty, but this requires the development of a sound, strategic approach that would include the pay-mix design, market positioning and choice of pay policy. The major findings of this study show that there are no major disagreements between employees and administrators over most of the components of the pay packages offered. However, considering how the data reflects on the small changes desired, this study recommends that banks offer a base salary that is relatively larger than the other components of the pay package. It also recommends that banks participate in employees’ pension funds, pay gratuity and offer performance-based pay that is based on a well-defined performance-appraisal system. Methodology: Primary and secondary data were collected from 11 Kabul-based financial institutions, where a total number of 92 employees participated in this study. A one-way ANOVA regression and descriptive statistics were utilized to analyse the data. Practical implications: This study has strong policy implications for a modern, sound and equitable approach to human resource management in the Afghanistan financial sector that could lead to fostering and retaining talent. Originality: The topic is first in its kind to be researched in the Afghanistan context.

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