COMPENSATION SYSTEMS AND EMPLOYEE RETENTION: IMPLICATIONS FOR OPERATIONAL EFFICIENCY IN FOOD SERVICE ESTABLISHMENTS

In the food service industry, employee retention is critical to the business because continuity, customer interaction and coordination of tasks rely on a workforce that is experienced on the frontlines. This study explored the relationship of employee's perception of compensation system, work experience supportive of retention and operational efficiency in one food service branch located in Mandaluyong city, Philippines. A descriptive-correlational, cross-sectional and quantitative design was employed. Seventy-six current employees were selected purposively and responded a four-point questionnaire. The instrument included questions on compensation and workplace support, retention-supportive motivator factors and perceptions of operational efficiency. Descriptive statistics, Shapiro-Wilk tests and Spearman's rank-order correlations were employed. Compensation and workplace support were rated positively, with working conditions (M = 3.67, SD = 0.45) and workplace relationships (M = 3.65, SD = 0.46) being rated as average. The retention-associated dimensions had the following ratings: Responsibility (M = 3.72, SD = 0.41), Achievement (M = 3.71, SD = 0.43), and Advancement (M = 3.49, SD = 0.64). There was a strong correlation between compensation-system scores with employee-retention scores (rho = .824, p < .001) and a very strong correlation between employee-retention scores with operational-efficiency scores (rho = .890, p < .001). These results can only be seen as association and do not necessarily reflect the entire population of the branch that participated in the study. The results uphold clear pay audits, uniform health benefits, clear promotion criteria and quantifiable retention programs. This study utilizes the concepts of compensation systems, employee retention, operational efficiency, food service employees, Herzberg two-factor theory, and social exchange theory.