Analyzing the Impact of Employee Perks on Organizational Turnover in the Pharmaceutical Sector of Bangladesh

Abstract

This study explores the impact of employee benefits on organizational earnings within the pharmaceutical sector in Bangladesh, an emerging economy. To conduct this investigation, researchers gathered pertinent data from the annual reports of 26 pharmaceutical companies listed on the Dhaka Stock Exchange (DSE), spanning the period 2017–2021. The primary variable under scrutiny is the employee benefits ratio (EBR), calculated by dividing the total benefits, excluding regular salaries and wages, by the total revenue. Additionally, the study examines the association between the salaries and wages ratio (SWR) and firm turnover. Focusing on these two key variables, the research also incorporates various control factors— namely, leverage, firm age, tangibility, liquidity, firm size, growth, and non-debt tax shield—to enhance the model's robustness. Organizational turnover are measured using return on assets (ROA) and return on equity (ROE) as the dependent variables. The panel-corrected standard error regression analysis reveals that the employee benefits ratio (EBR) and salaries and wages ratio (SWR) exert a significant positive influence on ROA. This implies that increased salaries and additional benefits serve as motivational factors for employees, fostering job satisfaction and enhancing performance. However, these variables do not demonstrate a significant association with ROE. Furthermore, factors such as firm age, leverage, tangibility, liquidity, and firm size exhibit a notable impact on firm performance. These findings collectively contribute to a comprehensive understanding of the relationship between employee benefits, organizational turnover and will help organizations to design their incentive programs effectively.