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Examining employee retention and motivation: the moderating effect of employee generation

Evidence-based HRM

ISSN : 2049-3983

Article publication date: 18 April 2022

Issue publication date: 20 September 2022

This study explored moderating effects of employee generations on factors related to employee retention and motivation in the workplace.

Design/methodology/approach

The authors developed a survey instrument and collected the survey data via Amazon Mechanical Turk. After filtering out bad responses, the authors ended up with 489 sample cases for this study. The authors used structural equation modeling for data analysis.

Evidence showed that only transformational leadership was significantly related to retention of Generation X employees and only work–life balance had a significant relationship with intrinsic motivation. For Generation Y employees, transformational leadership was the only factor affecting their retention while both transformational leadership and autonomy showed significant impacts on their intrinsic motivation. Generation Z employees reported that only transformation leadership affected their retention while transformational leadership, corporate social responsibility and autonomy were significantly related to their intrinsic motivation in the workplace. All three generations showed statistical significance between intrinsic motivation and employee retention.

Practical implications

This study could help business practitioners increase employees' work motivation and retention.

Originality/value

First, our results revealed interesting similarities and differences between generations in terms of the factors that affected employees' retention and motivation. Second, this study proved that employees' generation affects the impacts of transformational leadership, CSR, autonomy, WLB and technology on their motivation and retention in the workplace. Third, the results of our study also showed that employees of different generations are intrinsically motivated by different factors, proving the importance of considering generational differences in motivation literature.

• Employee generation
• Generational differences

Lee, C.C. , Lim, H.S. , Seo, D.(J). and Kwak, D.-H.A. (2022), "Examining employee retention and motivation: the moderating effect of employee generation", Evidence-based HRM , Vol. 10 No. 4, pp. 385-402. https://doi.org/10.1108/EBHRM-05-2021-0101

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

1. Introduction

For the past several decades, employee retention has been an important topic to both scholars and practitioners because employees, the most valuable assets of an organization, are the ones who add to its value, quantitatively and qualitatively ( Anitha, 2016 ). Therefore, employers have taken steps to ensure that employees stay with the organization for as long as possible ( Alferaih et al. , 2018 ). Doing so is challenging because the workforce is becoming more confident and demanding due to changes in markets and demographics ( Anitha, 2016 ). A disengaged workforce leads to higher turnover rates that increase the costs of recruiting and selecting new employees ( Malinen et al. , 2013 ).

The objective of this study is to examine the moderating effects of employee generations on factors related to employee retention and motivation in the workplace. In doing so, this study makes a significant contribution to literature in several ways. First, although there have been numerous studies on factors that affect employees' retention such as a manger's leadership style (e.g. Khan and Wajidi, 2019 ), a firm's commitment to corporate social responsibility (e.g.  Valentine and Godkin, 2017 ), autonomy (e.g. Kim and Stoner, 2008 ), work–life balance (e.g.  Koubova and Buchko, 2013 ) and technology (e.g. Haar and White, 2013 ), there are no studies that have examined the effect of these five factors on employee retention and the underlying mechanism of these relationships. Second, few studies have examined effects of these five factors on different generations of employees – Gen X, Gen Y (also known as the Millennials) and Gen Z. Studies have focused on certain generations such as Gen Y (e.g. García et al. , 2019 ) or Gen X (e.g. Westerman and Yamamura, 2007 ), but no studies have been conducted to understand the different effects of the five factors on employee retention spanning three different generations. According to the US Bureau of Labor Statistics (2021) , while 40% of the 2020 American workforce comprises Gen X and 44% of Gen Y, Gen Z represented 15% of the American workforce. This indicates that Gen Z has also become an important generation to consider when examining generational differences of employee retention. Finally, no studies have reported the effects of these variables on retaining employees from these various generations during the pandemic. Retaining employees is a challenge at the best of times, but it has become even more challenging during the pandemic. A recent survey of working age people in various industries found that about 40% of respondents expressed strong intention to quit their current job in the next three to six months ( De Smet et al. , 2021 ).

2. Literature review and hypotheses

2.1 employee generations.

Based on the generational theory originated from the work of Mannheim (1970) , generations refer to groups of individuals (i.e. cohorts) born in the same period, sharing similar historical events and social experiences. This means that a cohort of individuals who shared common historical and social experiences are more likely to share similar characteristics, attitudes and behaviors ( Strauss and Howe, 1991 ). Given that the main objective of this study is to examine generational differences in effects of leadership styles, corporate social responsibility, autonomy, work–life balance and technology on intrinsic motivation and employee retention, we will use the generational theory as our theoretical framework to develop hypotheses in the next sections.

2.2 Effects of leadership across generations

Transformational leadership is defined as transforming the values and priorities of followers and motivating them to perform beyond their expectations ( Kark et al. , 2003 ). Concurrently, Wilkesmann and Schmid (2014) reported that one characteristic of strong leaders is the ability to motivate and influence people. Motivation was also found to be a complex act that had several factors involved. Employees, who were proactive both at work and in their personal lives, were positively affected by both their employer's leadership style and ability to foster a team and showed stronger motivation ( Felfe and Schyns, 2014 ; Khan and Wajidi, 2019 ). Gerhold and Whiting (2020) explored the motivations of employees over several generations, from Boomers to Gen Z, and the leadership skills that inspired them. They found no significant differences among generations. Rather the differences were driven more by an employee's stage of life and career than age. They reported that leadership fundamentals were a constant. These fundamentals, building strong teams, providing feedback and understanding employees' motivations, were multi-generationally relevant skills. In addition, Diskiene et al. (2019) found that the relationship between a leader's emotional and social intelligence and an employee's motivation to work was undeniable, although there was some variance depending on the latter's age. Interestingly, younger workers relied less on their leader's emotional stability to motivate them than older, more experienced workers.

The generation of employees will moderate the effect of leadership on their intrinsic motivation in the workplace, such that transformational leadership is more positively related to the workplace motivation of younger generation employees.

The generation of employees will moderate the effect of leadership on employees' retention in the workplace, such that transformational leadership is more positively related to the workplace retention of younger generation employees.

2.3 Effects of corporate social responsibility across generations

The generation of employees will moderate the effect of CSR on employees' intrinsic motivation in the workplace, such that greater CSR is more positively related to the workplace motivation of younger generation employees.

The generation of employees will moderate the effect of CSR on employees' retention in the workplace, such that a CSR policy is more positively related to the retention of younger generation employees.

2.4 Effects of autonomy across generations

The generation of employees will moderate the effect of autonomy on employees' motivation in the workplace, such that greater autonomy in one's job role is more positively related to the workplace motivation of younger generation employees.

The generation of employees will moderate the effect of autonomy on employees' retention in the workplace, such that greater autonomy is more positively related to the retention of younger generation employees.

2.5 Effects of work–life balance across generations

The generation of employees will moderate the effect of WLB on employees' motivation in the workplace, such that greater WLB is more positively related to the workplace motivation of a younger generation of employees.

The generation of employees will moderate the effect of WLB on employees' retention in the workplace, such that greater WLB is positively related to the retention of a younger generation of employees.

2.6 Effects of technology across generations

The generation of employees will moderate the effect of technology on employees' motivation in the workplace, such that more technology is more positively related to the workplace motivation of younger generation employees.

Companies competent with IT knowledge, objects and entrepreneurship had better chances of attracting loyal prospects and retaining their employees, especially those of Gen Z ( Haar and White, 2013 ). In addition to attracting employees, digital communication created two-way channels of dialogue and helped employees understand how their roles were helping the company. This increases possible retention rates ( Kick et al. , 2015 ).

The generation of employees will moderate the effect of technology on employees' retention in the workplace, such that more technology is more positively related to the retention of younger generation employees.

2.7 Motivation and retention

Employees' intrinsic motivation is positively related to their retention in all generations.

3.1 Sample data and questionnaire

The definition of generations in terms of the birth year varies across studies. As a compromise, we used the middle value. Thus, for the purpose of this study, three generations (Gen X, Y and Z) are defined based on the age as of August 2020. Specifically, Gen X is between 40 and 55 years old; Gen Y is between 25 and 39 years old; and Gen Z is between 18 and 24 years old. We created a survey questionnaire with the items that measured our variables and posted it on Google Forms. To take the survey, we required members of Amazon's Mechanical Turk to be employed and ages 18–55 years old. The survey was first run for a week in the third week of April 2020 and received 570 responses. We deleted 9 responses due to repeat responses and 24 due to multiple missing values, which reduced the total number of valid responses to 537. Furthermore, 48 responses were deleted due to poor response quality. Poor responses were identified using items that were reverse coded. After removing the poor responses, we were left with 489 useable and valid sample cases for this research. Regarding the sample size per each generation group, Gen Z is 120 (24%), Gen Y is 278 (56%) and Gen X is 91 (18%).

3.2 Measures

Our participants indicated their responses to all items on a 7-point Likert-type scales, ranging from 1 (strongly disagree) to 7 (strongly agree). Note that Cronbach's alpha for all variables exceeded the 0.70 cutoff value ( Greco et al. , 2018 ), indicating that all of the variables were reliable and could be used in the analysis. Examples of each item for each category are in Table 1 .

3.2.1 Retention

We used three items from Armstrong-Stassen and Schlosser (2008) to measure the employees' intention to remain with their company.

3.2.2 Transformational leadership

We used the Vera and Crossan (2004) 12-item scale to assess transformational leadership, consisting of four dimensions – charismatic leadership, inspirational motivation, intellectual stimulation and individual consideration.

3.2.3 Corporate social responsibility

We chose items from Woo (2013) to measure, which assessed five dimensions of CSR: environment, human rights and labor issues, product responsibility, society and economics. We excluded the product responsibility category because of low factor loading problems.

3.2.4 Autonomy

We used three items from Hackman and Oldham (1976) to assess autonomy.

3.2.5 Work–life balance

To measure this variable, we used five items from Brett and Stroh (2003) .

3.2.6 Technology

To measure this variable, we picked three items from Nambisan et al. (1999) .

3.2.7 Intrinsic motivation

We used items from Grant (2008) to measure intrinsic motivation.

3.3 Analytical models

In this study, we created three analytical models to test our hypotheses that examine the generational differences in the relationships between five independent variables and three dependent variables. The first model was the intrinsic motivation model in which intrinsic motivation was the dependent variable and transformational leadership, CSR, autonomy, WLB and technology were the independent variables. Y 1 = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4 X 4 ( w h e r e   Y = I n t r i n s i c   M o t i v a t i o n ;   X 1 = T r a n s f o r m a t i o n a l   L e a d e r s h i p ;   X 2 = C o r p o r a t e   S o c i a l   R e s p o n s i b i l i t y ;   X 3 = A u t o n o m y ,   X 4 = W o r k - L i f e   B a l a n c e ;   X 5 = T e c h n o l o g y )

The second model was the retention model in which retention was the dependent variable and the five independent variables were the same as the first model. Y 2 = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4 X 4 ( w h e r e   Y 2 = R e t e n t i o n ;   s a m e   f o r   X 1   t o   4 )

The third model examined whether intrinsic motivation affects retention. Retention was the dependent variable and intrinsic motivation was an independent variable. Y 2 = β 0 + β 1 Y 1 ( w h e r e   Y 2 = R e t e n t i o n ;   Y 1 = I n t r i n s i c   M o t i v a t i o n )

Figure 1 describes our analytical models with the results. When conducting three analytical models, we used a subsample analysis instead of a two-way interaction design to examine generational differences in the relationships as we hypothesized. This method allows us to compare the impact of each independent variable on dependent variables among different generations of employees. This approach is preferable because it reduces the possibility that noise will be introduced into the model ( Stone-Romero and Anderson, 1994 ).

4.1 Descriptive statistics and correlations

Table 2 summarizes descriptive statistics for the variables used in our study.

4.2 Measurement model

To evaluate the fit of our measurement model, we conducted a series of confirmatory factor analyses (CFA). We used several fit indices such as chi-square ( χ 2 ) values, the Comparative Fit Index (CFI), the Root Mean Square Error of Approximation (RMSEA) and the Standardized Root Mean Square Residual (SRMR). As shown in Table 3 , the results of CFA suggest an excellent fit ( χ 2  = 757.41, p  < 0.01; CFI = 0.95, RMSEA = 0.06, SRMR = 0.07) for our hypothesized seven-factor model ( Hooper et al. , 2008 ). In addition to our focal seven-factor model, we further assessed the fit of alternative models. The results proved that the hypothesized seven-factor model fits the data significantly better than the other possibilities.

Several statistical indictors were used to assess the reliability and the convergent and discriminant validity of our constructs. As shown in Table 4 , composite reliability (CR) estimated our constructs to be from 0.885 to 0.946, which were all above the threshold value of 0.7 ( Fornell and Larcker, 1981 ). Therefore, internal consistency was validated. Convergent validity of the constructs was also acceptable. All estimated factor loadings were significant at p  < 0.001, and all estimates are above 0.6 and most estimates are above 0.7. Furthermore, average variance extracted (AVE) for all constructs are above 0.5, the acceptable threshold level ( Fornell and Larcker, 1981 ). Given that the AVE for each construct was greater than the squared correlations between two constructs ( Fornell and Larcker, 1981 ), discriminant validity of the constructs was achieved. Hence, these results provided support for using the seven constructs as reliable and distinctive variables in our analysis.

4.3 Test for the potential common method bias

Given the nature of our data using a single source of information, we tried to control for common method bias with both procedural and statistical remedies. In terms of procedural remedies, we ensured respondent anonymity, provided a guidance with detailed instruction, added reversed items and minimized the length of the survey following guidelines provided by Podsakoff and Organ (1986) . In terms of statistical remedies, we conducted Harman's single-factor test to examine potential common method bias ( Harman, 1967 ; Podskoff and Organ, 1986 ). Our results of the Harman's single-factor test indicated that the single factor accounted for 43.37% of the total variance, not exceeding 50% ( Podsakoff and Organ, 1986 ). Thus, common method bias does not appear to be an issue in this study.

4.4 Testing hypotheses using structural equation model

The results of the testing using structural equation modeling showed that the hypothesized model yielded an excellent fit ( χ 2  = 2,194.49). In order to further assess the validity of the hypothesized model, we tested a more parsimonious model that removed the direct paths from the independent variables to retention. This would be an alternative model. According to the principle of model parsimony, an alternative model would fit the data better if the χ 2 value of the hypothesized model did not drop significantly. If the χ 2 value of the hypothesized model dropped significantly, however, the hypothesized model would fit the data better. Although the alternative model also yielded an excellent fit ( χ 2  = 2,316.78), our hypothesized model provided a significantly better model fit compared to the alternative model (Δ χ 2  = 122.29). Table 5 presents a summary of the fit indices for the hypothesized and alternative models.

Consistent with H1a , the effects of transformational leadership on the employees' intrinsic motivation were different among the generations. They were significant for Gen Y ( β  = 0.50, p  < 0.01) and Gen Z ( β  = 0.37, p  < 0.01), but not for Gen X ( β  = 0.18, n.s. ), supporting H1a . Although transformational leadership had a significant effect on all employees' retention ( β  = 0.30, p  < 0.01 for Gen X; β  = 0.33, p  < 0.01 for Gen Y; β  = 0.29, p  < 0.01 for Gen Z), the effects were not different across generation groups. Therefore, H1b was not supported.

Consistent with H2a , CSR was positively and significantly related to employees' intrinsic motivation for Gen Z ( β  = 0.23, p  < 0.05), but not for Gen X ( β  = 0.03, n.s. ) or Gen Y ( β  = −0.02, n.s. ). However, the effects of CSR on employees' retention were not significant in any of the generation groups ( β  = 0.03, n.s. for Gen X; β  = 0.03, n.s. for Gen Y; β  = 0.02, n.s. for Gen Z), failing to support H2b .

Supporting H3a , autonomy was positively and significantly related to employees' intrinsic motivation for Gen Y ( β  = 0.28, p  < 0.01) and for Gen Z ( β  = 0.24, p  < 0.05), but not for Gen X ( β  = 0.18, n.s. ). H3b was not supported because autonomy did not have a significant impact on employees' retention in any of the generation groups ( β  = 0.01, n.s. for Gen X; β  = 0.01, n.s. for Gen Y; β  = 0.01, n.s. for Gen Z).

Hypotheses 4a proposed that the effect of WLB on employees' intrinsic motivation would be more significant to younger generations while Hypothesis 4b proposed that the effect of WLB on employees' retention would be more significant to younger generations. The results revealed that WLB was positively and significantly related to employees' intrinsic motivation for Gen X ( β  = 0.42, p  < 0.01), but not for Gen Y ( β  = 0.04, n.s. ) and Gen Z ( β  = 0.05, n.s. ). However, WLB did not have a significant effect on employees' retention in any of the generation groups ( β  = 0.01, n.s. for Gen X; β  = 0.04, n.s. for Gen Y; β  = 0.02, n.s. for Gen Z). H4a was not supported because the effect of WLB on intrinsic motivation was not significant among younger generations, Gen Y and Gen Z. In addition, H4b was not supported because no significant difference was found among the three generations.

Hypotheses 5a and 5b proposed that the effect of technology on employees' intrinsic motivation ( H5a ) and their retention ( H5b ) would differ by generation. However, technology had no significant effect on employees' intrinsic motivation in any generation groups ( β  = 0.08, n.s. for Gen X; β  = 0.07, n.s. for Gen Y; β  = 0.05, n.s. for Gen Z). Furthermore, technology had no significant effect on employees' retention in any generation groups ( β  = 0.03, n.s. for Gen X; β  = 0.05, n.s. for Gen Y; β  = 0.04, n.s. for Gen Z). Based on these findings, neither H5a nor H5b was supported.

Hypothesis 6 proposed that employees' intrinsic motivation would be positively related to their retention in all generations. Our findings supported this contention ( β  = 0.54, p  < 0.01 for Gen X; β  = 0.48, p  < 0.01 for Gen Y; β  = 0.49, p  < 0.01 for Gen Z).

5. Discussion

5.1 theoretical contributions.

The results of this study provided several theoretical contributions to management literature. First, our results revealed interesting similarities and differences between generations in terms of the factors that affected employees' retention and motivation. For Gen X employees, transformational leadership was significantly related to retention and only WLB had a significant relationship with their intrinsic motivation. For Gen Y employees, transformational leadership was also the only factor affecting their retention, while both transformational leadership and autonomy had a significant impact on their intrinsic motivation. Finally, for Gen Z employees, only transformation leadership also mattered for their retention while transformational leadership, corporate social responsibility and autonomy were significantly related to their intrinsic motivation. For all three generations, there was a statistically significant relationship between intrinsic motivation and employee retention.

Second, this study proved that employees' generation affects the impacts of transformational leadership, CSR, autonomy, WLB and technology on their motivation and retention in the workplace. As motivating and retaining employees becomes more challenging and workforces become more diverse in terms of generation, understanding generational differences in employee motivation and retention becomes a very important topic to explore. Only a few studies looked at generational differences in either employee motivation ( Andrade and Westover, 2018 ) or employee's retention ( Roman-Calderon et al. , 2019 ) and no studies have examined the different effects of transformational leadership, CSR, autonomy, WLB and technology on employee motivation and retention spanning three different generations.

Third, the results of our study also showed that employees of different generations are intrinsically motivated by different factors, proving the importance of considering generational differences in motivation literature. However, our results did not provide empirical support for generational differences in retaining employees. Interestingly, only transformational leadership significantly affected employees of all generations. This finding would emphasize the critical role of leadership in retaining employees regardless of their generation.

5.2 Practical implications

The retention of an employee, especially younger generation employees, is pivotal in ensuring that organizations will be able to maintain sustained competitive advantages during the period of the pandemic since many companies have been experiencing serious younger generation employee retention issue. For instance, major retail companies, such as Target and Walmart, have been confronted with challenging managerial decisions because of the workforce shortage and have been forced to decrease their operation hours. To resolve this challenge, many companies have tried to increase the retention rate of their employees, especially those of the younger generation, by offering competitive financial and non-financial packages such as signing bonuses, healthcare benefits and/or opportunities for a college education. Despite all these endeavors, many companies have still been experiencing serious employee retention problems, which they have never experienced before. The findings of this study could be highly useful for organizations that are experiencing serious employee retention issues, many of whom are younger generation employees who are quitting their jobs during the pandemic.

First, these findings suggest reasons why so many organizations have had a challenging time managing low employee retention rates by showing that the impact of major factors (transformational leadership, CSR, autonomy, WLB and technology) on employee retention could vary depending on an employee's generation. For instance, our study's findings show that organizations actively implementing CSR policies may positively affect the retention of younger generation employees relative to older generations by intrinsically motivating younger generation employees more. Therefore, organizations should consider generational differences in employee motivation and retention when implementing employee retention strategies since an effective strategy for one employee generation may not be effective (or even harmful) for another employee generation.

Second, these results illustrate that employee retention is not a simple function, but rather a result of interactions between employee motivation and the specific generation. For instance, for Gen X, even though job autonomy does not directly affect employee retention, job autonomy still plays a crucial role in affecting employee retention by affecting employee motivation. Therefore, organizations should take care of factors affecting employee motivation as well because employee motivation works as a significant pathway to boost employee retention.

5.3 Limitations and future research directions

While the study advances our understanding in these areas, it has several limitations that future studies could explore. First, given that our study was a cross-sectional study with all responses collected from a single period, strong causality arguments cannot be made. Considering that our study collected the sample during the period of pandemic, it would have been a more interesting study if we deployed a longitudinal design because longitudinal data would have allowed us to examine how our independent variables affected employee motivation and retention as employee worked through the pandemic. Future studies should implement longitudinal design by collecting samples at different time points to provide greater insight into the causality argument as well as into the impact of the pandemic. Second, although this study examined the impact of employee motivation on employee retention as a significant pathway, we didn’t test the mediating effect of employee motivation on employee retention. Further studies could be done to investigate the mediating effect of employee motivation on employee retention in the context of different employee generations. Furthermore, regarding employee generation as a moderator, even though we used sub-sample design to examine the moderating impact of an employee's generation on employee motivation and retention, further studies could test the effect of the interaction between our independent variables and employee generation. Third, future studies could extend our study by examining whether our findings could change depending on the industry (e.g. retail, manufacturing) as well as firm characteristics (e.g. size). For instance, stronger impact of CSR on employee motivation in Gen Z may not exist in the financial industry wherein competitive environment and culture dominates.

Research framework

Summary of measure

Measure	Cronbach's alpha	Dimension	Item
Retention	0.94	Retention
Transformational leadership	0.96	Charismatic leadership
		Inspirational motivation
		Intellectual stimulation
		Individualized consideration
Corporate Social Responsibility (“I think the company in which I work tries to …”)	0.90	Environment
		Human rights and labor
		Society
		Economic
Autonomy	0.94	Autonomy
Work–life balance	0.90	Work–life balance
Technology	0.89	Technology
Intrinsic motivation (“Why are you motivated to do your work?”)	0.93	Intrinsic motivation

Means, standard deviations and correlations of the variables

			SD	1	2	3	4	5	6	7	8	9
1.	Retention	4.73	1.84
2.	CSR	4.90	1.22	0.64**
3.	Autonomy	5.07	1.51	0.54**	0.39**
4.	WLB	4.62	1.63	0.22**	0.11*	0.26**
5.	Technology	5.40	1.40	0.49**	0.45**	0.46**	0.18**
6.	Intrinsic motivation	4.76	1.73	0.65**	0.48**	0.54**	0.26**	0.44**
7.	TFL	4.77	1.44	0.65**	0.48**	0.48**	0.25**	0.44**	0.70**
8.	Generation X (dummy)	0.19	0.39	0.01	−0.01	0.00	0.11*	0.10*	0.07	0.09*
9.	Generation Y (dummy)	0.57	0.50	−0.01	0.07	0.03	−0.06	0.00	0.01	0.05	−0.55**
10.	Generation Z (dummy)	0.25	0.43	0.00	−0.08	−0.04	−0.03	−0.09*	−0.08	−0.14**	−0.27**	−0.66**

TFL = Transformational Leadership. CSR = Corporate Social Responsibility. WLB = Work–life Balance.  = 489. Cronbach's alphas appear across the diagonal in parentheses

 < 0.05

 < 0.01

Model		df	CFI	RMSEA	SRMR
Seven-factor model	757.41	254	0.95	0.06	0.07
Six-factor model	840.28	255	0.95	0.07	0.10
Five-factor model	842.77	257	0.95	0.07	0.09
Four-factor model	904.35	260	0.94	0.07	0.09
Three-factor model	926.28	264	0.94	0.07	0.09
Two-factor model	947.56	269	0.94	0.07	0.09
One-factor model	1,033.82	275	0.93	0.08	0.13

Summary of the reliability and the convergent and discriminant validity of constructs

Latent variables	Dimension/item	Standardized factor loadings	AVE	CR
Retention	RT1	0.901	0.845	0.942
	RT2	0.928
	RT3	0.928
Transformational leadership	Charismatic leadership	0.883	0.814	0.946
	Inspirational motivation	0.813
	Intellectual stimulation	0.945
	Individual consideration	0.961
Corporate social responsibility	Economic	0.709	0.607	0.860
	Society	0.869
	Human rights and labor	0.807
	Environmental	0.719
Autonomy	AT3	0.936	0.834	0.938
	AT2	0.898
	AT1	0.905
Work–life balance	WLB5 (reverse coded)	0.653	0.652	0.903
	WLB4 (reverse coded)	0.835
	WLB3 (reverse coded)	0.802
	WLB2 (reverse coded)	0.867
	WLB1 (reverse coded)	0.860
Technology	T3	0.808	0.721	0.885
	T2	0.884
	T1	0.853
Intrinsic motivation	MI3	0.919	0.815	0.929
	MI2	0.853
	MI1	0.934

 = 489. AVE = Average variance extracted; CR = Composite reliability

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Factors Affecting Employee’s Retention: Integration of Situational Leadership With Social Exchange Theory

Wei xuecheng.

1 School of Management, Universiti Sains Malaysia, George Town, Malaysia

Qaisar Iqbal

2 Centre for China-India-Pakistan Studies, Sichuan University of Science and Engineering, Zigong, China

3 School of Chemistry and Environmental Science, Inner Mongolia Normal University, Hohhot, China

Associated Data

The original contributions presented in this study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.

Sketching on the Social Exchange Theory (SET), the present study aims to investigate the direct relationship between training and development, work environment, and job satisfaction with employee retention. The contingent role of transformational leadership was also analysed under the Situational Leadership Theory (SLT). Accordingly, we collected data from 287 employees of SMEs in northern China by employing a convenience sampling approach, exhibiting a response rate of 57.40 percent. The Partial Least Square-Structural Equation Modelling (PLS-SEM) analysis was then run to test the proposed hypotheses. The findings revealed a significant positive impact of training and development, work environment, and job satisfaction on employee retention. However, no moderating effect of transformational leadership was indicated on their direct relationship. This study has enriched the literature on employee retention and the leadership arena. To the best of the authors’ knowledge, there is no prior evidence concerning the study’s integrated relationship of the continuous variables. The implications and limitations were finally expressed at the end of this manuscript.

Introduction

Employee retention is intricate in a competitive market, albeit vital for the long-term competitive advantage and organisational success and longevity ( Das and Baruah, 2013 ; Arachchillage and Senevirathna, 2017 ; Kaur, 2017 ; Mahan et al., 2018 ; Paul and Vincent, 2018 ). The current COVID-19 situation has seen employee retention emerge as the core problem for organisations across the globe ( Karatepe and Olugbade, 2017 ; Yousaf et al., 2019 ). Low employee retention results in various issues, that is, increased training and recruitment cost, insufficiently skilled employees, and disruption to organisational operations ( A’yuninnisa and Saptoto, 2015 ; Ping et al., 2021 ). Due to these circumstances, small and medium enterprises (SMEs) view employee retention as highly complex and uncertain ( Park et al., 2019 ; Tian et al., 2020 ).

In China, SMEs are the driving force of its social and economic development ( Hadj, 2020 ; Hui, 2021 ), though they are presently finding it hard to operate at their full efficiency. This situation is exasperated by the COVID-19 pandemic, limited resources, low anti-risk capabilities, and diminished production scale ( Zhanjie et al., 2017 ). These SMEs face bankruptcy and employee retention ( Hui, 2021 ) due to adverse market conditions and economic uncertainty ( Yu X. et al., 2019 ). China possesses approximately 770 million people in its workforce ( Zhang and Chen, 2019 ), albeit maintaining the most significant global average turnover rate, that is, 18% ( Friedman and Kuruvilla, 2015 ; Yu X. et al., 2019 ). Hence, practitioners and academicians continuously report the severity of employee turnover in China ( Karatepe and Olugbade, 2017 ; Afsar et al., 2018 ).

High employee turnover weakens employees’ commitment and sets up negative perceptions of organisations ( Hadj, 2020 ). Privately owned enterprises in China reported a 20% turnover rate, while state-invested enterprises and foreign-invested enterprises displayed 8% and 15%, respectively. Such staggering employee turnover is a pressing issue for Chinese SMEs as they grapple with managing employee retention ( Zhang and Chen, 2019 ; Hu, 2021 ). Thus, practical managerial tools must be employed to alter employees’ behaviours ( Choi and Peng, 2015 ). Given these points, it is imperative to investigate the underlying factors to enhance employee retention, considering the scarcity of research in China ( Hom et al., 2017 ; Yousaf et al., 2019 ; Li et al., 2021 ).

Organisations are currently discussing varying strategies and practices to preserve their employees ( Tanwar and Prasad, 2016 ; Bibi et al., 2018 ). Employee retention is a process through which employees are influenced to stay with their organisations for a longer period ( Hom and Griffeth, 1995 ). Generally, employees are easy to retain, provided they see a good match with their employer ( Umamaheswari and Krishnan, 2016 ). Extent literature concluded the significant role of various elements in relation to employee retention, such as intrinsic and extrinsic motivation factors ( De Sousa Sabbagha et al., 2018 ), job promotion ( Woodall et al., 2017 ), and bonus ( Chinyio et al., 2018 ). Others include organisation commitment ( Perreira et al., 2018 ), compensation ( Colson and Satterfield, 2018 ), and knowledge sharing ( Agarwal and Islam, 2015 ). This list can be extended to peer support, organisational culture, and work-life balance ( Deshwal, 2015 ; Ombanda, 2015 ).

Notably, career development opportunities, benefits and rewards, and psychological factors are deemed vital for employee retention ( Bibi et al., 2018 ; Lyman et al., 2020 ). Academicians and practitioners have developed a consensus about the crucial role of human resource management in developing this idea ( Deshwal, 2015 ; Tian et al., 2020 ). Drawing on the basis of Social Exchange Theory (SET), this study aims to examine the direct effect of training and development, work environment, and job satisfaction on employee retention among China’s SMEs.

The leaders in an organisation commonly initiate change, execute, and interconnect with the desired results ( Bass and Avolio, 1996 ; Bass and Riggio, 2006 ). In essence, employee retention is also not possible without effective leadership ( Covella et al., 2017 ). In the last few years, numerous leadership styles have been examined concerning employee retention, such as laissez-faire, instrumental, transformational, and transactional leadership ( Antonakis and House, 2014 ; Iqbal, 2016 ). Transformational leadership highly impacts employee commitment in contrast to transactional leadership ( Deichmann and Stam, 2015 ). These leaders are highly concerned about real-time problems and establish new benchmarks, develop understanding, shape employees’ behaviours, and accomplish organisational objectives ( Middleton et al., 2015 ; Tian et al., 2020 ; Iqbal et al., 2021a ).

Transformational leadership comprises four dimensions, that is, individual consideration, intellectual stimulation, idealised influence, and inspirational motivation. The first dimension, individualised consideration, is the extent to which leaders understand and prioritise the team member’s needs. Meanwhile, intellectual stimulation is the extent leaders offer support and encourage employees to generate innovative ideas beneficial to delivering optimum performance. Moreover, inspirational motivation provides necessary support to the employees, enabling them to pursue organisational goals. The final dimension, idealised influence, encourages practical examples of a leader exhibiting innovative thinking, faith, pride, uprightness, interest, effective communication, and trust ( Bass and Riggio, 2006 ).

Employees in China prefer leaders who exhibit transformational leadership attributes in the form of role models, non-use of abusive power, selflessness, and centring on employees’ well-being ( Su et al., 2019 ). Hence, transformational leadership has become one of the most crucial roles in the organisational success of China’s SMEs ( Lin and Sun, 2018 ). The current pandemic has resulted in economic uncertainty, environmental challenges, and the suitability of transformational leadership. Therefore, the Situational Leadership Theory (SLT) is applied to investigate its moderating role in the proposed relationship of training and development, work environment, and job satisfaction with employee retention.

Numerous contributions are made in this study concerning the theory and literature. First, the study developed the SET by revealing the direct impact of work environment, job satisfaction, training, and development on employee retention. Second, the insights on the conditional role of transformational leadership were elaborated in the context of SLT. The literature presented conflicting results and lacked clear explanations of the relationship’s nature of antecedents with employee retention ( Abeysekera, 2007 ; Haines et al., 2010 ; Mangi et al., 2011 ; Ahmad et al., 2017 ). In this context, further studies are recommended to better comprehend the training and employee retention relationship ( Bibi et al., 2018 ). Given these points, this study enriches the empirical evidence, specifically regarding the direct connection of training and development, work environment, and job satisfaction with employee retention. The final contribution included the literature on employee retention from the perspective of China’s SMEs.

Literature Review

Theoretical background.

The SET is widely applied to unravel the employer–employee relationship, especially in the employee turnover and retention literature ( Coyle-Shapiro and Conway, 2005 ; Gopalan et al., 2020 ). According to this theory, a person, who benefits from someone, feels obligated to repay that person through positive behaviours and devotion. Furthermore, this theory postulates that employees deliver their optimum performance upon achieving support and perceiving value from their employers ( Eisenberger et al., 2001 ). Hence, the theory is used to investigate the employees’ behaviour, enabling organisations to enforce certain HRM practices and igniting unique social exchange relationships.

From the SET perspective, employee retention can be induced by training and development offered by employers, which facilitate mutual benefits and create reciprocated obligations. This phenomenon occurs because individuals and organisations are involved in exchange relationships ( Raihan, 2012 ). Employees perceive responsibility to repay their employers upon providing a conducive working environment. This repayment may derive in the form of increased loyalty, commitment, and stay for a long time ( Settoon et al., 1996 ). Simultaneously, their job satisfaction and proper behavioural responses will increase, owing to the perception of fulfilling emotional needs ( Iqbal and Hasnah, 2016 ; Latorre et al., 2016 ; Iqbal et al., 2017 ; Rubel et al., 2021 ) and improving employee retention ( Rubel et al., 2021 ). Therefore, the current study posits that job satisfaction and work environment followed by training and development are positively related to employee retention.

A specific type of leadership is required to tackle the distinct needs and current challenges of a particular environment. Hence, according to the SLT, a single leadership style is insufficient for every situation ( Hersey and Blanchard, 1969 ). In this case, effective leadership, that is, transformational leadership, emerges as a promising idea and is applicable across diverse fields. This concept facilitates the concept of adapting to varying circumstances and work environments ( Hersey and Blanchard, 1969 ). In the context of employee retention, an environment must be structured where they feel empowered, valued, and connected to their employers ( Ohunakin et al., 2019 ; Frye et al., 2020 ); thus, this leadership style is consistent with these requirements ( Kim and Park, 2020 ). Consequently, this leadership style enhances the employees’ capability and reshapes the organisational image in the marketplace ( Mwita and Tefurukwa, 2018 ; Singh et al., 2020 ). Drawing on the SLT, the current research claims the moderating role of transformational leadership on the relationship of training and development, work environment, and job satisfaction with employee retention.

Hypotheses Development

Training and development with employee retention.

Training and development is the degree to which training within the organisation is offered to the employees to foster their skills ( Delery and Doty, 1996 ). As an overarching HRM practice, it is often considered a broad collection of activities that refer to continual learning and developing general job and career-related skills ( Boon et al., 2011 ). Furthermore, training is the fundamental source of competitive advantage and employee retention ( Umamaheswari and Krishnan, 2016 ; Yamin, 2019 ). Training and development intensify the social exchange relationship between the employee and their employer ( Dysvik and Kuvaas, 2008 ), offering employees valuable abilities, skills, and knowledge ( Fletcher et al., 2018 ). This idea elicits obligations within employees to repay the organisation ( Koster et al., 2011 ).

Training and development programmes deal with the employees’ skills and competencies, enabling them to positively respond to various challenges the organisations face ( Rhee et al., 2014 ). Moreover, positive dispositions of employee growth can be achieved via motivation and modifying their skills or attitude toward organisational effectiveness ( Gope et al., 2018 ; Yamin, 2019 ; Khan et al., 2021 ). These skills and competencies are vital for their managerial positions and professional growth ( Schuler and Tarique, 2012 ; Ambrosius, 2018 ). Past studies have found a positive relationship between training and development with commitment ( Ahmad et al., 2017 ), employee performance ( Sinha et al., 2010 ), and job satisfaction ( Bibi et al., 2018 ). Others include employee retention ( Lee, 2005 ), employee commitment ( Ahmad et al., 2017 ), and employees’ intentions to stay ( Chew and Chan, 2008 ). Therefore, the hypothesis H1 is postulated as follows:

• H1: Training and development significantly and positively influence employee retention.

Work Environment and Employee Retention

The working environment concerns the availability of a conducive workplace ( Edgar and Geare, 2005 ) and is defined as the degree to which employees consider the workplace physically safe. Employees can share their views on their surroundings with their mutual consideration with organisations by assessing the environment ( Lewin et al., 1939 ; Li et al., 2022 ). Some examples of work environment indicators include supervisor support ( Stirpe and Zárraga-Oberty, 2017 ), physical working conditions ( Richards et al., 1994 ), social worker support ( Haggins, 2011 ), and helping behaviours during decision-making ( Subramaniam and Mia, 2001 ). Notably, a study found a significant relationship between work environment and employee retention ( Al-Hamdan et al., 2017 ).

Organisational rules and regulations encompass the work environment, affecting employee retention ( Yam et al., 2018 ). Consequently, an exceptional working environment increases trust among employees, which is useful for employee retention ( Candela et al., 2015 ; Ede and Rantakeisu, 2015 ). The positive energy motivates employees to accomplish their professional goals effectively, enhancing their commitment to the organisation ( Mangi et al., 2011 ; Umamaheswari and Krishnan, 2016 ). The perception of the working environment can either positively or negatively impact specific employees’ job outcomes, such as commitment, participation, and intention to stay ( Gunaseelan and Ollukkaran, 2012 ). Given these points, the discussion above drives the development of hypothesis H2:

• H2: Work environment significantly and positively influences employee retention.

Job Satisfaction and Employee Retention

Job satisfaction concerns employees’ evaluations of their jobs based on perceptions by comparing their actual job outcomes with desired ones ( Schleicher et al., 2011 ). The concept is defined as a positive state where employees share their feelings about their job ( Locke, 1976 ), ranging from moderate- to low-level satisfaction ( Locke, 1976 ; Quigley et al., 2007 ). Furthermore, the idea is considered a causal factor that promotes intentions to stay with the organisation because it is a pleasant psychological state. In this case, individuals perceive content with their work ( Fletcher et al., 2018 ). Therefore, job satisfaction fosters the social exchange between employers and employees, where satisfied employees exemplify positive experiences. This experience is supported by the social exchanges between the employee and the organisation, reinforcing their intentions to stay with the organisation ( Koster et al., 2011 ).

Employees from varying organisations, industries, and geographical locations exhibit different levels of job satisfaction ( AbuAlRub et al., 2009 ). However, job satisfaction positively affects employees’ intentions to stay irrespective of industries and region ( AbuAlRub et al., 2009 ). For instance, a multi-level study found that job satisfaction is positively related to the employees’ intentions to stay in the united kingdom (UK) ( Fletcher et al., 2018 ). Moreover, meta-analytic evidence has demonstrated that those who are satisfied at work are more likely to retain their employment ( Fishbein and Ajzen, 2011 ); therefore, the hypothesis H3 is proposed on the basis of SET as follows:

• H3: Job satisfaction significantly and positively influences employee retention.

Moderating Role of Transformational Leadership

Transformational leadership is considered highly effective in driving employee retention ( Kossivi et al., 2016 ; Amankwaa et al., 2019 ), in which the leaders initiate, execute, and interconnect change with the desired outcomes ( Bass and Riggio, 2006 ). This form of leadership influences employees by altering their perceptions, views, ambitions, and moral standards ( Bass and Avolio, 1996 ). Transformational leaders also offer an ideal approach to employees and exhibit the attributes of significant faith, effective communication, uprightness, trust, and innovative thinking ( Tian et al., 2020 ). These leaders promote intellectual stimulation, idealised influence and inspirational motivation, and individualised consideration. In addition, leaders can facilitate employees by understanding their issues and creating a psychologically safe environment through individualised consideration ( Iqbal et al., 2021b ).

Transformational leaders are viewed as role models and counsellors who encourage them to participate in organisational activities. Supervisor support, training, information accessibility, and counselling lead to higher employee retention ( Ooi et al., 2021 ) and higher employability ( Matsuo, 2021 ). Furthermore, healthy communication positively influences the work environment ( Denton, 2011 ) via sharing of innovative ideas and intellectual stimulation, an indicator of open communication. This approach culminates in improved work that enhances talent management ( Perlow and Kelly, 2014 ). Moreover, open communication and improving resource management in employee allocation ease employees’ adaptation to new work environments ( Castrogiovanni et al., 2011 ).

Organisational support in the form of supervisor support, rewards, and favourable working conditions are vital to stimulating organisation-related outcomes, that is, reduced withdrawal behaviours and commitment ( Rhoades and Eisenberger, 2002 ; Gillet et al., 2022 ). Supervisor support is critical to replenish employee physical and psychological resources to increase their retention probability ( Kalliath and Kalliath, 2014 ). Furthermore, transformational leaders affect employees’ behaviour resulting in high employee retention ( Sow et al., 2016 ). Leaders can develop a reward system within their organisation which is highly effective in retaining employees ( Adekanbi, 2016 ). They must also ensure sufficient resources to employees following the organisational goals. Moreover, shared vision is directly related to the employees’ engagement ( Boyatzis et al., 2017 ) and continuous improvement ( Fardazar et al., 2015 ; Iqbal and Piwowar-Sulej, 2022 ). This leadership style presents a shared vision and elaborates the underlying reasons, enhancing their participation and involvement in decision-making. Previous studies found that transformational leadership negatively impacts employees’ turnover intention ( Maaitah, 2018 ) but positively affects their knowledge base ( Fletcher et al., 2018 ). For instance, a positive impact of various factors on employee retention, that is, idealised influence, inspirational motivation, individualised consideration, and intellectual stimulation ( Jiang et al., 2017 ). Therefore, the following hypotheses, H4, H5, and H6, are proposed:

• H4: Transformational leadership significantly moderates the training and development—employee intentions relationship.
• H5: Transformational leadership significantly moderates the work environment—employee intentions relationship.
• H6: Transformational leadership significantly moderates the job satisfaction—employee intentions relationship.

With reference to the above discussion, the hypothesized model is drawn as shown in the below Figure 1 .

Research framework.

Research Methodology

Context, sample, and data collection.

In China, organisations face fierce pressure to retain employees due to the shortage of skilled and talented employees ( Fu et al., 2020 ). Statistically, 44% of the top management in organisations operating in China view this issue as a critical barrier to employee retention ( Mashiah, 2021 ). China’s manufacturing makes up two-thirds of SMEs ( Zhu et al., 2012 ; Iqbal et al., 2021c ; Xuecheng et al., 2022 ), where most operate in the northern region. Therefore, this study focuses on the SME employees in this region. Moreover, this study requires a minimum of 185 responses based on the sample-item ratio ( Hatcher and O’Rourke, 2013 ). Online survey forms were structured to collect data, comprising six sections that measure various factors. The factors include training and development, work environment, job satisfaction, employee retention, transformational leadership, and respondents’ demographics.

We adopted a convenience sampling approach for data collection, considering China’s time and financial constraints and current COVID-19 restrictions. The present study is cross-sectional in design, where data are collected at a specific time from the employees. The online survey link was disseminated via 500 email addresses with the assistance of the human resource department. Accordingly, 287 responses were received, which is sufficient, indicating a response rate of 57.40%. Furthermore, a gentle reminder was included during data collection to increase the number of responses. In this study, we also marked it mandatory to check against each item in the online survey form, ensuring no missing values in the dataset.

Measurement of Variables

We adopted measurement scales of four continuous variables in the current study. Previous studies have reported reduced quality and high cognitive ability required to collect data using a high Likert scale ( Cummins and Gullone, 2000 ; Iqbal et al., 2020 ). Therefore, a 5-point Likert scale was employed, ranging from 1 = strongly disagree to 5 = strongly agree. Delery and Doty (1996) have defined training and development as the degree to which organizations offer training to employees to foster their skills. We adopted the 4-item scale from Delery and Doty’s (1996) study to measure training and development. For example, one item is “We receive formal development training which increases our promotion chances within the organisation.” Similarly, Bibi et al. (2018) used an identical scale in the context of Pakistan and found it highly reliable (α = 0.918). In this study, the Cronbach’s alpha value of this scale is 0.719.

The work environment is defined as the degree to which employees perceive the availability of a safe and conducive workplace ( Edgar and Geare, 2005 ). Subsequently, 4-measurement items were adopted from Bibi et al.’s (2018) study to assess the work environment. For instance, one item is “We always feel safe working here in this environment.” In the current study, the Cronbach’s alpha value of this 4-item scale is 0.928. Meanwhile, job satisfaction is defined as the pleasurable emotional state emerging from the job appraisal as facilitating the accomplishment of one’s job values ( Locke, 1976 ; Zhang M. M. et al., 2016 ). In this case, we adopted a 3-item scale from Cammann et al.’s (1979) study to measure job satisfaction. An example of this item is “In general, I like working here.” This scale was utilised by Zhang L. et al. (2016) , who found it highly reliable (alpha = 0.870). Accordingly, the Cronbach’s alpha value in this study for the 3-item scale is 0.921.

Transformational leadership is defined as those who have idealised influence, intellectual stimulation, inspirational motivation, and individualised consideration. We adopted 20 items of the Multifactor Leadership Questionnaire (MLQ) to analyse transformational leadership. This analysis was related to the four items, namely intellectual stimulation, idealised influence, inspirational motivation, and individualised consideration. A sample of the item is “my leaders give me tasks with enthusiasm.” A previous study ( Ohunakin et al., 2019 ) indicates high reliability where Cronbach’s alpha values of its four dimensions were between 0.88 and 0.92. In this study, the Cronbach’s alpha values are in the range of 0.875–0.918.

Employee retention is defined as the effort by an organisation to keep desirable employees to fulfil business objectives ( Frank et al., 2004 ; Govaerts et al., 2011 ). We adopted six items ( Govaerts et al., 2011 ) to measure employee retention, for example, “I love working for this company.” The present study’s measurement scale was highly reliable, that is, Cronbach’s alpha = 0.794, aligning with Khalid and Nawab’s (2018) findings.

Analytical Approach

In this study, the research framework is complex due to its prediction-oriented feature and the presence of independent variables, dependent variables, and moderators. Therefore, partial least squares-structural equation modelling (PLS-SEM) was selected following Hair et al. (2020) . This approach is considered a proper analytical strategy compared to covariance-based structural equation modelling (CB-SEM) ( Ringle et al., 2020 ). The technique revolves around the assessment of the measurement model and structural model, though it requires prior evaluation of the former measurement.

Results of the Study

Data screening.

Before analysis, data screening must be conducted, which concerns missing values, outliers, data normality, and common method bias. We ensured the absence of missing values in the current dataset by marking mandatory against each measurement item in the online survey form. Moreover, univariate outliers and multivariate outliers were investigated through Z-score and the Mahalanobis distance test. Accordingly, three responses were removed in the univariate outlier because of the Z-score values greater than 3.29 ( Tabachnick and Fidell, 2007 ). Meanwhile, the Mahalanobis distance test revealed that the P -value of 15 cases is less than 0.001, a clear indicator of multivariate outliers; therefore, the 15 responses were excluded from the dataset.

The normality was assessed based on the skewness and kurtosis values, and in this study, the skewness values of all continuous variables extend from −1.307 to 1.531, which are within ± 3. However, the kurtosis values fall out of the ± 3 range ( DeCarlo, 1997 ), and thus, the data are not univariate normal. The Mardia’s coefficient skewness 0.005 and kurtosis values (β=172.761,ρ < 0.005) confirmed the multivariate normality. Nevertheless, the PLS-SEM does not require data normality; hence, non-normal distribution is not an issue. Next, we applied Harman’s single factor test and the correlation matrix procedure to examine the common method bias. Harman’s single factor test revealed that a single factor only counts for 39.41% < 0.50% of the total variance ( Podsakoff et al., 2012 ), confirming no issues with method bias. The correlation matrix exposed that no single correlation between continuous variables is greater than 0.90 ( Bagozzi et al., 1991 ); thus, the current study is free from common method bias. We have also examined the model fit of hypothesized model based on two-index strategy recommended by Hu and Bentler (1999) . In the present study, hypothesized model was found fit based on comparative fit index (CFI) (0.96 > 0.95) and standardised root mean square residual (SRMR) (0.049 < 0.09) ( Hu and Bentler, 1999 ), as compared to alternative models.

Frequency Analysis

The present study is dominated by male participants ( n = 176, 61.32%), where most participants ( n = 109, 37.98%) fall between the ages of 25 and 35, followed by 85 between 36 and 45. The most significant number of participants ( n = 144, 50.17%) in current research possessed a bachelor’s degree and nine participants (3.14%) with PhDs. Finally, more than 50% of the participants ( n = 153) acquired 5–10 years of working experience, while nine participants with more than 20 years of professional experience.

Descriptive Analysis

In this study, the mean values of training and development ( M = 4.145), work environment ( M = 4.334), job satisfaction ( M = 4.322), and employees’ retention ( M = 4.167) were found significant. Notably, job satisfaction and employee retention values were higher than those reported by a previous study among employees of multi-national enterprises (MNEs) in China ( Zhang M. M. et al., 2016 ). Regarding four dimensions of transformational leadership, idealised influence ( M = 4.132) has the highest mean value. This result is followed by inspirational motivation ( M = 4.121), individualised consideration ( M = 3.973), and intellectual stimulation ( M = 3.670). Moreover, the current descriptive analysis revealed that participants seek more idealised influence than other dimensions of transformational leadership in Chinese SMEs. In other words, a leader’s ability to exhibit high morality, ethics, and personality enables the realisation of high performance within organisations.

Measurement Model Analysis

The measurement model analysis examines the construct reliability and validity, in which the former is assessed with reference to its indicator and internal reliability. This study revealed that all indicator loadings are more significant than 0.50 and less than 0.944, which are deemed acceptable. An item has sufficient indicator reliability provided its factor loading is more significant than 0.50 ( Chin, 1998 ). Moreover, we examined the construct reliability based on Cronbach’s alpha and composite reliability values. A construct has acceptable reliability, provided its Cronbach’s alpha or composite reliability value is greater than 0.70 ( Sarstedt et al., 2019 ).

Table 1 shows that the Cronbach’s alpha values of various items are greater than 0.70. These items comprise training and development (0.719), work environment (0.928), job satisfaction (0.921), employees’ retention (0.794), and individualised consideration (0.889). Other items include idealised influence (0.918), inspirational motivation (0.875), intellectual stimulation (0.882), and transformational leadership (0.885). Similarly, the composite reliability values of these variables are greater than 0.70 (see Table 1 ). Hence, it is evident that all the continuous variables exhibit acceptable construct reliability.

Factor loadings, reliability, AVE, and mean values.

*Means multiplication/interaction of two variables.

Construct validity is formulated on the convergent and discriminant validity, where a construct has sufficient acceptable convergent validity provided its factor loadings are greater than 0.70. Furthermore, its average variance extracted (AVE) must be higher than 0.50 ( Hair et al., 2020 ). The items of all continuous variables must possess factor loadings greater than 0.70 (see Table 1 ). The AVE values of multiple items revealed values higher than 0.50, that is, training and development (0.541), work environment (0.823), and job satisfaction (0.864). Others include employee retention (0.576), individualised consideration (0.706), idealised influence (0.712), inspirational motivation (0.669), intellectual stimulation (0.692), and transformational leadership (0.677) (see Table 1 ).

Based on the above results, all continuous variables possess acceptable convergent validity. We employed Fornell–Larcker Criterion to examine the discriminant validity of the variables. This method confirms the discriminant validity of a variable provided that the square root of its AVE is greater than its inter-constructs correlation values ( Henseler et al., 2009 ). Table 2 indicates that the square root of AVE of all variables is greater than their inter-constructs correlation values; hence, these variables exhibit acceptable discriminant validity.

Fornell–Larcker criterion.

The bold value stands for the square root of the AVE value of respective variable.

Structured Model Analysis

The structural model analysis revealed that training and development significantly influence employee retention (β=0.824,ρ < 0.05) ( Table 3 ). In essence, one unit change in training and development brings 82.40% variations in employee retention, and thus hypothesis H1 is supported. Notably, the findings indicated the significant positive impact of the work environment on employee retention (β=0.274,ρ < 0.05), supporting hypothesis H2. Meanwhile, job satisfaction significantly influences employee retention (β=0.824,ρ < 0.05) (see Table 3 ). In other words, there is a 20% change in employee retention among SME employees in China for one unit change in job satisfaction, supporting hypothesis H3.

Hypotheses testing.

The effect of its interaction terms with training and development, work environment, and job satisfaction were estimated. This approach was conducted to examine the moderating effect of transformational leadership. In this case, the interaction term of transformational leadership with various dimensions does not significantly influence employee retention in SMEs in China. The dimensions include training and development (β = −0.081,ρ=0.233 > 0.05), work environment (β=0.021,ρ=0.856 > 0.05), and job satisfaction (β=0.078,ρ=0.101 > 0.05) (see Table 3 ). Therefore, moderation hypotheses H4, H5, and H6 are rejected.

The current study examined an essential topic in organisational behaviour: what factors are vital to foster employee retention in SMEs? Accordingly, a research framework was proposed and empirically tested based on the SET to analyse the impact of multiple dimensions (training and development, work environment, and job satisfaction) on employee retention. Similarly, the conditional effect of transformational leadership was analysed based on this relationship. Current findings confirmed the positive connection among the three dimensions of employee retention. However, the contingent role of transformational leadership was not supported by the proposed relationship. Only three direct hypotheses are supported in this study, and the findings are elaborated below.

The SET was applied in this study to propose the positive relationship of the three dimensions with employee retention. The data analysis purported the significant positive relations of training and development with employee retention among SME employees in China; therefore, supporting hypothesis H1. This finding aligned with previous studies ( Zheng, 2009 ; Umamaheswari and Krishnan, 2014 ; Bibi et al., 2018 ). Past studies reported a positive impact of training and development on employee retention in Pakistan’s universities ( Bibi et al., 2018 ) and Indian ceramic industries ( Umamaheswari and Krishnan, 2014 ). A similar observation can be found in the hotel industry of Bangladesh ( Rubel et al., 2021 ) and multinational enterprises in Asia ( Zheng, 2009 ).

A study among millennial employees in Bangladesh concluded a significant positive effect of green training and development on employee retention ( Islam et al., 2022 ). Meanwhile, training and development reported a significant indirect impact on employee retention through ethical climate ( Yamin, 2019 ) and employee engagement ( Fletcher et al., 2018 ). Another study reported a negative link between the practices of perceived human resource management and turnover intention among SME employees ( Reese et al., 2009 ). Deng (2018) similarly claimed that family business retains migrant workers by fostering training and development programmes. Therefore, organisations must carefully design and implement these programmes to increase employee retention.

The current research indicated a positive relationship between work environment and employee retention. The results supported this proposition, resulting in the acceptance of hypothesis H2, aligning with previous findings ( Pek-Greer and Wallace, 2017 ; Frye et al., 2020 ; Wu et al., 2020 ). Other studies echoed the current study’s results. For instance, the work environment was positively related to employee retention among generation Y ( Frye et al., 2020 ). Meanwhile, a qualitative study in Singapore suggested that a supportive work environment strongly predicts employee retention in its education sector ( Pek-Greer and Wallace, 2017 ). In China, the work environment indirectly influences employee turnover through workplace violence ( Wu et al., 2020 ) and India’s organisational engagement ( Kundu and Lata, 2017 ). Other studies supported the positive impact of the work environment on the employee turnover intention in China’s health sector ( Wan et al., 2018 ; Wu et al., 2020 ).

This study proved the significant positive effect of job satisfaction on employee retention based on hypothesis H3, leading to its acceptance, parallel to previous findings ( Tanwar and Prasad, 2016 ; Frye et al., 2020 ). A study found that job satisfaction positively affects employee retention in hospitality ( Frye et al., 2020 ). Meanwhile, a qualitative study among IT industry employees showed that employer branding vis-à-vis job satisfaction strongly determines employee retention ( Tanwar and Prasad, 2016 ). On a similar note, Liu et al. (2010) confirmed that job satisfaction is a strong predictor of employee retention in China’s health centres. Zhang M. M. et al. (2016) similarly supported this positive relationship among Chinese employees working for multinational enterprises. In the service industry, the aforementioned three dimensions are viewed as vital factors in promoting employee retention ( Mohanty and Mohanty, 2016 ).

The present study introduced the moderating effect of transformational leadership on the relationship of the three dimensions with employee retention. A transformational leader is anticipated to significantly moderate the training and development-employee retention relationship, though the findings do not support this proposition. Hence, H4 is rejected. In this context, there is no prior study on leadership as a moderating variable on the link between training and development with employee retention. However, a study suggested a green creativity climate as the potential moderator of the green practices-employee retention link among millennial employees ( Islam et al., 2022 ).

The moderating role of transformational leadership on the work environment-employee retention relationship was not supported. This result is a clear indicator of the rejection of hypothesis H5. Similarly, there is no study regarding leadership as a contingent variable on the work environment-employee retention association. Thus, the current study offers strong empirical contributions to the field of training and development followed by the work environment. Meanwhile, job satisfaction possesses substantial weightage in employee retention, and this relationship relies on the organisational climate ( Sips et al., 2015 ). The current research established the conditional effect of transformational leadership on the job satisfaction-employee retention link.

However, the present findings do not support hypothesis H6, contradicting Sips et al.’s (2015) findings. The underlying reasons are due to the leaders’ direct role in developing organisational climate rather than their immediate effect on job satisfaction. Moreover, another study revealed that servant leaders indirectly influence employee retention through job satisfaction ( Hassan et al., 2021 ). In Nigeria, a significant positive effect of various elements was found on employee retention in universities. These elements include idealised influence, inspirational motivation, intellectual stimulation, and individualised consideration ( Ohunakin et al., 2019 ).

The current study aimed to investigate the direct effect of factors such as job satisfaction, working environment, and training and development on employee retention in China. This study also intended to examine the moderating role of transformational leadership in the relationship between job satisfaction, working environment, and training and development on employee retention based on cross-sectional data collected from employees in manufacturing SMEs in China. The current empirical findings confirm that all three factors such as training and development, job satisfaction, and the working environment significantly influence employee retention. Among these three variables, training and development have the highest positive effect on employee retention. Yet, present statistical findings do not support the moderating effect of transformational leadership on the relationship of job satisfaction, working environment, and training and development with employee retention.

Theoretical Implications

The present study significantly contributed to the extension of the theory. First, the literature is enriched by offering empirical support on the integrated understanding of the three dimensions and employee retention. Furthermore, extant literature provided contradicting findings on the relationship between the three dimensions. However, the role of transformational leadership as the conditional variable in their relationship is still missing. Second, this study augments the SET by examining the effect of training and development, work environment, and job satisfaction on employee retention. Third, the SLT is extended by providing evidence on the non-significant moderating role of transformational leadership, specifically the correlation of the three dimensions on employee retention.

Practical Implications

The current research offered several recommendations for practitioners and policymakers. Extant literature claims that employee retention is a significant challenge for SME employees in China. In this case, the current work emphasises the three dimensions critical to enhancing employee retention within China’s SMEs. The present findings found that training and development is the most crucial element which increases employee retention within organisations. Chinese SMEs may, therefore, plan their training and development programme more effectively based on their employee’s needs.

China’s SMEs should design training and development programmes that parallel their employees’ career growth. However, previous findings focused on offering training programmes related to company-specific skills rather than general skills. Accordingly, general skills enable employees to effectuate professional opportunities outside the parent organisations. Therefore, these SMEs must evaluate their programmes and perform changes concerning their company-specific skills. Equally important, the top management should employ specific strategies to foster a conducive workplace to improve the work environment and cope with employees’ burnout. Such strategies may include special counselling sessions for stress-induced employees and enforcing flexible work schedules.

The management should centre on developing the work environment, ensuring satisfied employees, establishing open communication, and fostering ideas while offering peer support. Moreover, practitioners should work on the proper fund allocation to develop a positive work environment. The current study reported a significant positive effect of job satisfaction on employee retention. Hence, the human resource and departmental managers are advised to make incremental changes, spurring employee satisfaction, that is, providing a fair salary, rewards, and incentives to their employees. Nevertheless, the moderating effect of transformational leadership does not appear significant in retaining employees for SME management in China.

Based on the above, it is proven that transformational leaders are highly effective in designing an empowered and meaningful work environment. For instance, this form of leadership offers individualised consideration and idealised influence, stimulates intellectually, and motivates inspiration. Thus, practitioners and managers should evaluate the development of leadership. Specifically, in China’s SMEs, policymakers, and managers must critically assess the leadership development programmes in their organisations.

Limitations

The current study possesses several limitations despite the significant theoretical and practical contributions. First, this study was conducted in the northern region of China, hence, increasing the generalisation in the context of China. Moreover, the sole focus on China SMEs may not provide comprehensive information on other emerging and developed economies. Therefore, future studies can enrich the quantitative findings by assessing other developing countries, such as Pakistan and India. The survey form was distributed through the human resource management department, decreasing the chance of randomly distributing the survey form to employees. This situation will hinder the generalisation issue further, especially in a broader population.

Second, this study subjectively measured all continuous variables, and such measurement might influence the presence of common method bias. Practitioners and academicians face extreme difficulty in collecting objective data from organisations. Thus, future endeavours could overcome these limitations by adopting improved research design and employing a qualitative approach to unravel the causal relationship. Third, a direct connection was found between the three dimensions with employee retention. The upcoming research must then investigate the potential mechanisms of these relations. Finally, the current study provided multiple shreds of evidence about the non-significant moderating role of transformational leadership; thus, further examinations must be made on the conditional part of other leadership styles, such as sustainable and servant leadership.

Data Availability Statement

Author contributions.

All authors listed have made a substantial, direct, and intellectual contribution to the work, and approved it for publication.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

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Identifying factors for employee retention using computational techniques: an approach to assist the decision-making process

• Research Article
• Published: 31 August 2020
• Volume 2 , article number  1612 , ( 2020 )

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• Zahid Halim   ORCID: orcid.org/0000-0003-3094-3483 1 ,
• Muhammad Waqas 1 , 3 ,
• Cedric A. Edwin 4 &
• Ahsan Shah 1  

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In the today’s competitive environment, employee retention is a challenge faced by many industries. This work aims to identify the factors that influence employee retention. This is done using employees’ feedback and various computational techniques. A survey is conducted within multiple sectors to collect data. The questionnaire is divided into two parts: the first part includes demographic information, whereas the second part contains questions pertaining to employees’ job description and their satisfaction. The questions on the second portion are based on theories like Herzberg’s duality theory, expectancy theory, social cognitive theory, and sociocultural theory. These theories are further linked with factors like motivation, recognition and reward, bullying and work harassment. Later, the frequent items mining technique from the domain of data mining is utilized to identify the frequent factors from an employee perspective toward better retention rates. A test is also conducted to ensure the reliability of the data. The obtained results indicate it to be 87% reliable. A comparison between two frequent items mining methods indicates four times quicker performance of the k Direct Count and Intersect (kDCI) method in identifying key retention aspects from the data. A tool is utilized for analysis of variance (ANOVA) and exploratory factor analysis (EFA) tests to find factors crucial for retaining employees. The result identifies that work environment, reward and recognition, work performance, supervisory support, and income have high impact on employee retention.

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1 Introduction

Human resource is generally the most valuable asset for an organization. Skilled human recourses enable an organization to excel and achieve its objectives efficiently [ 1 , 2 ]. To classify an employee as skillful, her experience acts as a key indicator in addition to other basic credentials [ 3 ]. Organizations prefer to retain their existing skilled employees by offering multiple perks and benefits [ 4 ]. They also try to attract skilled resources using similar measures. At times, such skilled resources are attracted by the competitor organizations. This results in the issue of employee retention [ 5 ]. The issue is dependent on the country’s culture, its economic growth, the number of companies operating in public/private sectors and the availability of skilled human resource [ 6 ]. Interestingly, today`s corporate sector has seen an increased number of employees leaving the previous job to find better opportunities [ 7 ]. Organizations facing this challenge need to adopt new strategies and identify factors to motivate their skilled resources. Human resource (HR) departments maintain an employee retention policy for this task. Such policies are highly dependent on the data from their current staff, organization’s functions, and other previous experiences. Identification of key factors that influence employee retention is an important research undertaking. These factors do depend on the study domain. Previous studies have suggested multiple reasons for an employee to leave an organization. These can be low current pay, competitor offering better career opportunity, organization’s environment, organization’s culture or employees being bullied by the coworkers. On the contrary, an organization can also ask its employees to leave their job due to poor performance, attitude issues or financial crises. All this results in affecting overall health of an organization since new human resource needs to be evaluated, hired, trained, and transferred the domain knowledge. Therefore, skilled employee retention is crucial to many organizations. If an organization fails to retain its current employees, they must invest a considerable amount of money for training new employees again and over again.

Most of the organizations strive to keep their employees satisfied to reduce their turnover rate. Loosing skilled and experienced workers reduces organization's productivity and profitability. Previous studies [ 8 , 9 ] show that to keep “employee happy,” organizations should consider some key factors like knowing the employee well, creating an interactive, innovative, and cultural environment that indirectly keeps reminding your employees to stay loyal to their organization, offering reward, and recognizing best performers. Providing workers with a better leadership also works well in retaining the staff [ 9 ]. Few of the rapidly growing sectors like telecom, information technology and higher education need to know the key factors specific to them that can assist in retaining skilled work force. The work presented here deals with this issue by utilizing computational techniques and the emerging concepts of data mining. The key aim of this study is to find the factors that can increase employee retention in various working sectors. This work uses frequent items mining (FIM) techniques from the domain of data mining to identify factors that commonly exist together to influence employee retention. Finding frequently occurring items in a transactional database is an active research problem. The problem is commonly known as market basket analysis. The applications of finding frequently occurring items range from core computer science problems to a range of multidisciplinary areas of research. The aim of market basket analysis is to find all items in a dataset that occur together above a certain frequency [ 10 ]. Later, these frequently occurring patterns are analyzed to find associations between various factors. This study is based on following research questions.

RQ1: Which factors do the computational techniques identify as crucial for retaining employees and what is the relationship between those factors across multiple sectors in the developing countries?

RQ2: Which demographic and organizational environmental factors influence employee retention across multiple sectors in the developing countries and how these factors rank against each other?

To address the abovementioned questions, this research uses a qualitative approach. The research questions are answered through a questionnaire in this work. A survey was distributed in the major cities of Pakistan such as Karachi, Lahore, Rawalpindi, and Islamabad. The survey questions were built based on the factors such as recognition and reward, advancement and growth, relationship with supervisors, work conditions, income, ethical behavior, organizational satisfaction and commitment, bullying and work harassment. These factors helped to identify the features and their correlation for employee retention. The data analysis was divided into six stages: These include (a) loading raw data from the survey forms to a text file, (b) analysis of data through one-way ANOVA, (c) identification of correlating factors through frequent items mining (FIM), (d) analysis of data through exploratory factor analysis (EFA), (e) analysis of data through Pearson correlation (PC), and (f) analysis of data through regression analysis (RA). The association rule mining technique, which is preceded by the FIM method, is used to analyze and interpret the data. The ARM is a tool that identifies the frequently occurring factors in the responses with other features. The Statistics Package for Social Science Software (SPSS) is also used to analyze the data. One-way ANOVA is used to see a significant difference in data, and the EFA is used to interpret the variables. The Pearson correlation is used to observe the correlation between independent and dependent variables, and regression analysis is used to study the impact of independent variables on the dependent ones. A combinational approach is applied to the data that helps in analyzing the responses.

1.1 Present work aim and motivation

The employee retention is a growing problem in today's modern world, and it needs to be solved using various retention strategies to improve the employees' turnover rate. There is a demand for skilled workers in areas such as hospitals, software industry, universities, banks, and many other emerging sectors. However, unfortunately, the number of qualified employees at times remains low. Organizations are therefore in a need to find ways to reduce their turnover rate. This study aims to determine the factors that can reduce such organizational problems. Specifically, the task here is to determine what factors are used for higher employee retention in various organizations. This study is focused to find the features that influence employee retention and the relationship between independent factors and employee retention. The findings will be useful for many organizations to enhance their retention strategies. This work is motivated by the employees’ perspective rather than the organizational point of view. Therefore, the finds of this work are based on the data collected from various mid- to early-career individuals instead of taking the decisions-makers’ perspective.

The rest of the paper is organized as follows. Section  2 contains a detailed literature review on employee retention and other important factors for the same. Section  3 lists the methodology utilized in this work. Section  4 contains the results obtained. Section  5 lists the policy implications. Finally, Sect.  6 concludes this work and also mentions a few of the further research directions.

2 Related work

This section covers the previous work on employee retention. The section is organized factorwise where the previous work on each factor that can help retain employees is described. The section also contains relevant theories that can help build a conceptual framework for this or other such studies. Previous studies have shown the following factors that influence employee motivation to continue working with the same organization, working environment, organization commitment, reward and recognition, work performance, supervisor support, and income.

2.1 Working environment

The working environment is a factor in an organization where employee tends to show their positive abilities and leadership skills. Authors in [ 11 ] suggest that a positive working environment can have good impact on the employees. They state that different organizations may have dissimilar working environment depending on the clients the organization deals with. Ritter et al. [ 12 ] suggest a working environment that includes a culture where it involves good communication between co-workers, leadership style, and professional growth. In retaining employees, one needs to have a healthy working environment. The good working environment requires an appreciation for others, a strong relationship between colleagues, and no harassment [ 13 ]. Christmas et al. [ 14 ] suggest retaining an employee with good professional skills by improving the organization’s working environment. In order to improve their working environment, organizations should facilitate their employees and provide them necessary equipment that can help the organization in better management. The work in [ 15 ] presents a study on employee engagement. Their aim is to find correlation between purpose and joy in a work environment among the managers and their employee engagement. The domain of study is medical profession, and the data are collected from nurses. The authors use Cronbach's alpha to gauge internal consistency in a population sample. The obtained results do not find any significant correlation between nurse manager meaning and joy in their work and the employee engagement. Their study is limited to a specific set of individuals, and the same method if applied to a different dataset may yield diverse results. The work in [ 16 ] presents a study on employees’ perception on formulation of human resource policies. They also cover the implementation of various human resource retention plans in their work. The focus domain of their work is the hospitality industry. The data in their work are primarily obtained through personal interviews of employees in a specific region within a few cities.

2.2 Organization commitment

Studies have shown that employees with higher commitment stay with the organization for a longer period, whereas those having low commitment leave the organization during early stages. The employees with higher commitment also desire to stay in the organization and work hard with a positive attitude. Previous work identifies that organization's commitment is related to employees’ turnover. Higher rate of commitment level of the organization results in lower turnover. Bashir et al. [ 17 ] represented three dimensions of organizational commitment. Affective commitment is the sense of attachment toward the organization and relation with employee’s characteristics, work performance, and structure of the organization [ 18 ]. For example, an employee stays in the organization because she knows their value in the organization [ 19 ]. Continuance commitment is the realization of a cost that is related to the organization [ 20 ]. For instance, employees will stay in the organization because they know if they leave, they have to face a higher risk of not getting a new job [ 18 ]. The normative commitment deals with an emotional feeling of employees [ 17 ].

2.3 Reward/recognition and work performance

The terms reward and recognition have high impact on employee retention. These factors are used by organizations to motivate their employees. A reward is given by the organizations to the employees for their best performance, which keeps them motivated. The work in Silbert et al. [ 21 ] suggests that organizations can offer reward in the form of cash, bonuses, promotion, recognition, or announcing a worker as an employee of the month, offer trip, and other benefits. According to the authors, organizations present reward to employees so that they keep giving their best performance. Such organizations believe that reward and recognition keep employees motivated for future performance. It is important that employee should think that their perceptions are valued by the organization when they are rewarded.

Work performance is another factor that has an impact on employees and the organization. It is a critical factor for retaining employees. Reviewing the performance of employees can help both the organization and the employees. Employees can be assisted by telling them where they stand in the organization and what are their strengths and weaknesses. In a few cases where employees are highly talented, an increased pay or other benefit does not motivate them; however, performance appraisal does. The organization implies factors like performance appraisal, leadership, reward and recognition, training, and development in order to keep employees motivated to work harder .

2.4 Supervisor support

Supervisor support is defined as a relationship between employees and managers, and it is a factor that has huge impact on the employee retention. The employees tend to stay in an organization when they have good communication skills and strong support from supervisors. When employees have a supportive environment that increases their ability and comfort level of working, they tend to produce excellent results. The authors mention that an organization should be a place where the employee tends to stay. For this, the supervisors should be trained so that they can build a comfortable working environment for the staff [ 22 ]. A study suggested that improved employee’s performance results in a tendency to improve the capabilities of their work [ 23 ].

2.5 Income-related benefits

The work in [ 24 ] stated that employees and supervisors are motivated to work effectively when they are paid and provided with other benefits. There are a number of reasons for employees to be dissatisfied with a job. In addition to an individual’s domestic issues, income is one of the reasons when employees feel dissatisfied [ 25 ]. To improve retention strategies, organizations should periodically increase income scales and other benefits such as good working environment, leadership skills, the workload that employee can bear, and flexible timings. Deery et al. [ 26 ] find other factors such as flexibility in work, learning, and training, provision of resources to employees and reward system to improve employee retention. Gevrek et al. [ 27 ] explore the Schadenfreude effect in employee retention. They study five different salary rises in their work. Their study is based on a dataset constructed over a period of five years by obtaining data from university employees. The obtained results suggest that a one-time, small increase in compensation does not influence employee retention. The work in [ 28 ] aims to identify the retention strategies that have an actual effect on the employee turnover. They present a procedure to build an uplift model for testing the effectiveness of the different strategies for the task at hand. Their uplift model is based on a machine learning classifier, i.e., random forest. It is used for personal treatment learning estimation.

2.6 Bullying and work harassment

Bullying is considered as one of the serious problems at the workplace. Studies conducted worldwide identify increased bullying factor in organizations [ 29 ]. There are direct negative effects of bullying. It is stated that violence in the workplace also increases the factors such as bullying, workplace harassment, and emotional abuse [ 30 ]. The work in [ 31 ] examines the correlation between workplace bullying and high-performance work practices (HPWPs). They also suggest a few possible solutions. The obtained results suggest a positive effect of HPWPs on employee well-being. They also observe that reduced role conflict has an influence of HPWPs and less bullying. A limitation of their work is reliance on single-source, self-reported data. This may have caused biased views.

2.7 Factors that improve retention

There are a few other factors that can improve employee retention. These have been identified by an assortment of research contributions. Past work states that retaining talented employees should be the organization's primary focus. In their work, health, success and safety are correlated with retaining the employees. The studies in [ 32 ] and [ 33 ] identified some strategies for retaining employees and improving employee productivity by including factors in organizations such as appreciating employee on a good performance, mentoring, management, morale, and employee development training. Work in [ 34 ] identifies factors such as leadership skills, utilization of skill, compensation, safety and security and professional success to improve employee retention. A study [ 35 ] conducted in five companies of India on hundred managers and staff concludes that the factors such as income, training possibilities and careful selection of employee improve job satisfaction and commitment. It also has an influence on retaining employees. Another study on middle managers of Nigeria concludes three factors: compensation, advancement growth and affiliation, to be the reason to stay within the organization [ 36 ]. A research on hotel employees discovered that employee tends to stay in an organization for a longer period if they are satisfied with their job and the environment of the organization. The communication has always been a factor through which one can understand the employees better. Studies have shown that poor communication between co-workers leads to a poor employee retention. The economic circumstances and market forces in the world have an impact on the employee’s decision to stay or leave an organization. The certainty of an employee leaving a job and finding another job is when economic conditions are better. A research study found that the better the economic surroundings, the higher are the chances for an employee to leave the organization. Somewhat similar work that utilizes computational methods [ 37 , 38 , 39 , 40 , 41 ] to predict customer churn can be seen in past works. Similar computational methods [ 42 ] can be utilized to predict the retention period of a particular employee in an organization. However, for this, the historical data related to the employee and the company will be required to train the model.

2.8 Employee retention factors in the developing countries

Compensation is considered to be a key factor to retain employees in the developing countries. In this context, the work in [ 43 ] presents a case study of Hong Kong and China. The data are collected from 704 respondents to identify the important compensation components by various organizations. The study also identifies the six most important compensation components from an employee perspective. In Hong Kong, these five factors are salary, merit pay, end-year bonus, annual leaves, mortgage loan, and profit sharing, whereas for China the first three factors are the same as those for the Hong Kong and the remaining three include housing provision, overtime allowance, and individual bonus. This suggests that the employee retention factors vary between various countries and economies. Lall et al. [ 44 ] evaluate the analytical framework of the globalization–employment relationship in the developing countries. The focus of their study is on the manufacturing sector employees. It is observed in the study that globalization may cause an outflux of the talent pool from the developing/underdeveloped countries to the developed nations. Lowell et al. [ 45 ] present a report on the impact of high-skilled mobility from the developing countries. The report focuses on eight countries, namely Bulgaria, South Africa, Argentina, Uruguay, Jamaica, India, Philippines, and Sri Lanka. They identify four issues yet to be researched about. First is to evaluate the particular channels of impact generated by highly skilled emigration. Second is to study the range of feedback effects on the total emigration impact. Third and fourth are how high-skilled migration increases country trade and the need for documentation. Bhatnagar et al. [ 27 ] present talent management strategies for employee retention in a developing country, i.e., India. The author finds that low factor loadings indicate low engagement scores at the beginning of the career. However, high factor loadings at intermediate stages of employment are indicative of high engagement levels. A key finding is that good engagement results in higher retention in the developing countries. The work in [ 46 ] utilizes a new Cultural Intelligence (CI) measure to empirically study the evidence on several key antecedents of CI across five countries. The measure is named as Business Cultural Intelligence Quotient (BCIQ). This or a similar measure can be adopted for employee retention.

Based on the abovementioned literature survey, the conceptual framework developed for the current study is demonstrated in Fig.  1 . As evident from this literature review, a detailed study that identifies key employee retention factors and correlates them with each other using a computational technique for the developing countries is needed. This work aims to bridge this gap.

Conceptual framework of the proposed work

3 Methodology

This section describes the methodology used to collect and analyze the data. Moreover, the section also describes the research design, area and population selected for the study, its sampling procedure/size, and the data collection procedure. This work presents a quantitative research that will answer questions asked from multiple organizations. The queries are related to factors such as work environment, work performance and motivation, organization commitment, and satisfaction, reward and recognition, income, supervisors support and bullying, and work harassment.

3.1 Research design

For the current research study, a quantitative research mechanism is carried out via questioner distribution to a targeted population. The responses were measured through the statistical instrument. Quantitative research is to be carried out for a huge number of population, and they are tested by mathematical and statistical instruments. On the contrary, qualitative research is not appropriate for this research study as qualitative research deals with data related to observation and a specific style. It does not statistically describe findings. The exploratory research answers the “why” and “how” questions, whereas descriptive research focuses on four Ws, namely “what,” “where,” “when,” and “who.” Therefore, the exploratory research methodology is also not applied here because of the close-ended nature of the questioner.

3.2 Theoretical framework

The concept of employee retention falls under the theoretical framework of leadership, motivation theory and practice. The theoretical framework of this research is specifically based on the work of Latham [ 47 ]. Latham’s theory not only provides a chronological history of motivation theory and practice, but also presents an “insider view” on leadership and motivation. He presents six distinct eras of how motivation theory and practice has evolved over the past 110 years. The first era, according to Latham, presents the birth of behavioral theory in management and motivation. Industrial and Organizational (I/O) psychologists in this era were not interested in studying inner motivations and considered money to be the primary motivator at the workplace. The second era is marked with the trend of measuring the impact of attitudes on work and employee motivation. This era placed emphasis on the decision-maker and revealed the importance of identifying variables in building theoretical frameworks. The first and second eras are deemed obsolete for the current research due to their unidimensional approach toward measuring employee motivation. However, both these eras are fed into the proposed work indirectly. In the third era, the focus turned toward assessing and forecasting factors that influence employee motivation. This era had the strongest impact on organizational practices in the developing countries. The fourth era introduced the notion of scientific theories and methods in leadership and motivation research. The present research is based on the leadership and motivation theories of the third and the fourth era due to their relevance in the developing countries. According to Latham, we are currently in the fifth era and this period is marked with putting the practitioner at the center and devising frameworks that proactively and holistically aid in taking well-informed decisions. However, the sixth era is the era of the future. Latham predicts that the future of leadership and motivation theory will take deeper roots in psychology and consider the emotions and beliefs of employees. This research aims to provide crucial lessons for practitioners in the fifth and sixth eras.

3.3 Geographical zones

This study is carried out in four major cities of Pakistan, namely Karachi, Lahore, Rawalpindi, and Islamabad. The choice of these sites is made based on their population and availability of larger number of public and private organizations. Karachi is one of the biggest business hubs and also has many other service-oriented companies. Lahore is one of the known cities of the Punjab province, the populationwise largest province of Pakistan, where people are struggling to be retained in their organization, and most of the research data were collected from this zone. Islamabad, which is the capital city of Pakistan, has many organizations, and data were also collected from here. Figure  2 shows an overview of the general research design.

Overall research design

3.4 Population of the study

For this study, the target group was all categories of sectors where we could get a significant number of employees. This was done to analyze the factors which are generally applicable to all possible working classes instead of focusing on just any particular group. The organizations in which this study is carried out are large appliances venders, corporate sector, schools, universities, banking sector, government organizations, hotel industry, information technology companies, hospitals, professional engineers, and telecommunication sector.

3.5 Sampling size and data collection

The sample size is an illustration which tells about the targeted population in the research. To carry this research, a target of 1000 was set and 853 responses were received. However, to achieve more responses, the targeted population could have been increased. For the current study, enough samples were received, i.e., 85.3% turnout rate; therefore, the target was not further increased. Figure  3 lists an overall summary of the data collected. Both primary and secondary methods were used for data collection. It is important for the researchers to test the result of hypothesis, and it is also important to collect data through secondary methods to save time.

Summary of the collected data

3.5.1 Primary data collection

Primary data collection is a method of collecting genuine data. Questioners are the primary data source in this research. These were developed based on existing theories on employee retention. The collected data help to analyze patterns through FIM technique and Statistical Package for the Social Sciences (SPSS). Questioners are the best way to gather data, and it is the most effective and efficient mechanism through which one can measure various factors. This study was conducted on many individuals in diverse organizations. Firstly, all forms were distributed in multiple organizations and within one-month the forms were returned. The data were recorded in a Microsoft excel sheet for further process. Moreover, data analysis was performed through FIM and SPSS.

3.5.2 Secondary data collection

Secondary data collection method was used for reviewing theories and literature from many sources such as research papers, articles, and thesis reports. These sources were used to relate the factors that influence employee retention and learn employee retention strategies.

3.6 Hypothesis

Properly formalized hypothesis enables to guide the research toward appropriate simulation and experiments in order to answer key research questions. For this study, seven initial hypotheses were formed. These are listed as follows:

H1: Better work environment will result in higher employee retention.

H2: Higher organizational commitment results in higher employee retention.

H3: Increase in reward and recognition system results in higher employee retention.

H4: Increase in the individual’s work performance results in increased employee retention.

H5: Higher support and supervision by managers result in higher employee retention.

H6: Increase in employee income results in increased employee retention.

H7: Higher rate of bullying and work harassment results in lower employee retention.

3.7 Research instrument

When large amount of data is needed for a study, a survey seems the most effective way to do the needful. The questionnaire for this study was designed using Google forms Footnote 1 , and also a few instances were printed in the hard copy. The survey form was divided into two sections: the first section asked for the demographic information such as gender, age, experience (overall), experience (with the current organization), organization name, organization category, and monthly income range, whereas the second section asked for the factors affecting employee retention. Moreover, the second section was comprised of 54 questions and these questions were measured by a five-point Likert scale ranging from one to five, where 1 showed strongly agree, 2 showed agree, 3 indicated neutral, 4 showed disagree, and 5 showed strongly disagree. The questions contained in the survey are listed in “ Appendix .”

A few constraints and problems were faced while conducting this study. Some companies refused to fill the survey because they thought that the survey was a bit lengthy and it will take their time. Few did not return the required number of forms requested from them. There were a very few people who did not understand English. For such individuals, questions translated into their local language were used.

4 Results and findings

This section presents the experiments conducted and their results. These experiments are mainly conducted using SPSS as a tool and FIM as a data mining technique. The demographic profile utilized here includes gender, age, overall experience, experience with the current employer, marital status, and income. The experiments are conducted mainly to answer the following questions.

Using computational techniques, which factors are crucial for retaining employees and what is the relationship between those factors across multiple sectors in developing countries?

Using computational techniques, what is the impact of motivation, recognition and reward, advancement and growth, commitment and satisfaction, work environment, individual’s performance, support and supervision by managers, employee income, bullying and work harassment on employee retention across multiple sectors in developing countries?

How do these factors improve the organization’s overall environment and increase the rate of retaining employees?

4.1 Demographic profile

Getting key information about the respondents is important before drawing conclusions about any finding. For the current study, 36% of the participants were female and 64% were male. For this study, age was categorized into five ranges: less than 20 years, between 20 and 30 years, between 30 and 40 years, between 40 and 50 years, and greater than 60 years. According to this categorization, the highest response was obtained from the 20–30-year bracket, whereas the second highest response was from 30–40 category. Based on experience, the highest number of responses came from those who had work experience of less than five years and the lowest number of responses was from individuals having work experience greater than 10 years. Among the respondents, 45.6% were single and 54.1% were married. The highest response rate, i.e., 17.5%, was from the individuals working in the higher education sector. From the salary perspective, maximum responses were from those having annual income between 4329 and 8658 USD and the lowest response rate was from those respondents who had an annual income greater than 16,500 USD.

4.2 Factor analysis

This study focuses on various factors such as working environment, organization commitment, reward and recognition, work performance, supervisor support, income, bullying, and work harassment for employee retention. Table 1 lists the mean, standard deviation, and significant difference between male and female respondents using one-way ANOVA for the employee retention factors. When both male and female were asked about the working environment in their organization, the mean for males was 1.75 and for females, this was 2.10. This indicates that male agrees on working environment to be important for employee retention, whereas females neither agree nor disagree. There was no significant difference between male and female considering organization commitment. Considering this factor, the mean for male participants is 2.52 and for female it is 2.55 indicating their disagreement. The reward and recognition factor has a significant difference. The male participants have a mean of 2.00, and females have a mean of 2.34 which lies in the agreeing range. The factor work performance has a significant difference where the mean value for males is 2.45 indicating their agreement and females have a mean of 2.90 that shows they neither agree nor disagree. When questions related to the supervisor’s administration were asked, the results indicate no significant difference between males and females. For the factor of income, there is a significant difference observed in the male and female groups, where the mean for men is 2.44 and for women it is 3.21, indicating their disagreement.

Table 2 lists the results when considering all factors and grouping these by age. The results show the highest mean for bullying factor and work harassment, considering the age-group greater than 60. The work environment has the lowest mean, i.e., 1.41 for the age-group of 40–50, whereas the highest standard deviation of 1.672 is for the factor work performance considering participants having age less than 20 years. The lowest standard deviation is 0.840 for the factor work environment within the age-group of 40–50. A significant difference is observed for the factors of working environment, reward and recognition, supervisors support, and income within the various group of ages. As shown in Table 3 , all single and married respondents have the highest mean and standard deviation in bullying and work harassment factors and the lowest mean and standard deviation in working environment factor.

Table 4 lists the results grouped professionwise. The factor work environment here got the highest mean in the domain of medicine, and the lowest mean is obtained for the individuals working in telecommunication sector. The highest standard deviation is for hotel industry, while the lowest standard deviation is for the vender category. The organizational commitment has the highest mean value in the education sector (schools) and the lowest mean in the banking sector. However, the highest standard deviation is noted in government employees and the lowest standard deviation is observed in employees of the professional engineering companies. The reward/recognition being the third factor has the highest mean and standard deviation in hotel industry, and that has the lowest mean and standard deviation in telecommunication sector employees. The factor work performance has the highest mean in medicine sector and professional engineering, while it has the lowest mean in the field of education sector (schools). The highest standard deviation of work performance is observed in the hotel industry, and the lowest standard deviation is in the professional engineering sector employees. The highest mean and standard deviation of supervisor support are also for the hotel industry, and the lowest mean and standard deviation are that of the telecommunication department. The highest mean of income is observed in the telecommunication department, whereas the lowest mean is observed for the individuals working in the hotel industry. The income factor has the highest standard deviation in medicine domain and the lowest standard deviation in the government employee. The highest mean of the factor bullying and work harassment is observed in the education sector (schools), and the lowest mean is observed for the hotel industry. There is no indication of a significant difference in factors except for bullying and work harassment.

Table 5 lists the results grouped salarywise. The work environment factor has the highest mean between those respondents who earn more than 27,166 USD annually and the lowest mean for those respondents who earn between 8767 USD and 16,235 USD. The exploratory factor analysis is used here to uncover the underlying patterns. By applying EFA on two categories of experience, the results show that these factors can further be divided into three groups. Table 6 summarizes the results of this.

4.3 Hypothesis

To test the hypothesis formed in Sect.  1 , a correlation between various employee retention factors is computed (see Table 7 ) and the regression analysis is performed (see Table 8 ). Based on these, the formed hypothesis is either accepted or rejected.

4.3.1 H1: Better work environment will result in higher employee retention

The findings for hypothesis H1 indicate that the working environment is positively correlated with employee retention, which means a better working environment in an organization results in higher employee retention. The p value is less than 0.05 which means that there is a significant relationship between working environment and employee retention. The working environment`s B value is 0.294, which means that this factor has 29.4% of an impact on employee retention. The t value also shows that it has high impact on employee retention. Based on these results, H1 is accepted.

4.3.2 H2: Higher organizational commitment results in higher employee retention

The results in Tables 7 and 8 indicate that organizational commitment is slightly correlated with employee retention. The p value for this suggests that there is no significant relationship between organizational commitment and employee retention. The organizational commitment`s B value is 0.034, which means that this factor has 3.4% influence on employee retention. The t value also shows that it has low impact on employee retention. Therefore, H2 is rejected.

4.3.3 H3: Increase in reward and recognition system results in higher employee retention

The findings in Tables 7 and 8 for hypothesis H3 indicate that reward and recognition is positively correlated with employee retention. The p value for this is less than 0.05, which means that there is a significant relationship between reward/recognition and employee retention. For this factor, B value is 0.330, which means that this factor has 33% impact on employee retention. The t value also shows that it has a significant impact on employee retention. Therefore, this results in accepting H3.

4.3.4 H4: Increase in the individual’s work performance results in increased employee retention

The findings for hypothesis H4 indicate that work performance is positively correlated with employee retention. The p value is less than 0.05, which means that there is a significant relationship between work performance and employee retention. The work performance's B value is 0.311, which means that this factor has 31% of an impact on employee retention. The t value also shows that it has significant impact on employee retention. Based on these figures, H4 is accepted.

Accepted or rejected hypothesis

4.3.5 H5: Higher support and supervision by managers result in higher employee retention

The findings for hypothesis H5 in Tables 7 and 8 indicate that supervisor support is positively correlated with employee retention. The p value is less than 0.05, which means that there is a significant relationship between supervisor support and employee retention. The B value of supervisor support is 0.253, which means that this factor has 25.3% of an impact on employee retention. Therefore, H5 is accepted.

4.3.6 H6: Increase in employee income results in increased employee retention

The findings for hypothesis H6 indicate that income is positively correlated with employee retention. The p value of this factor is also less than 0.05, which means that there is a significant relationship between income and employee retention. The B value for income is 0.299, which means that this factor has 29.9% impact on employee retention. The t value also shows that it has high impact on employee retention. Based on these figures, H6 is accepted.

4.3.7 H7: Higher rate of bullying and work harassment results in lower employee retention

Finally, the findings for hypothesis H7 indicate that bullying and work harassment is slightly correlated with employee retention. The p value for this factor is not greater than 0.05, which means that there is no significant relationship between bullying and work harassment and employee retention. Therefore, H7 is rejected. Figure  4 pictorially represents the acceptance or rejection of the seven hypothesis.

4.4 Frequent items identification

The FIM technique [ 48 ] from the domain of data mining is utilized here to find factors that frequently occur together to influence employee retention. The FIM is used over transactional databases to find all those items that occur together above a certain frequency, known as the minimum support. In order to utilize FIM in this work, first all responses were converted in a database transaction format. Each row of the database represented all responses from a unique respondent. This formed a dataset with 853 records. Later, this dataset was partitioned into various categories to identify frequently occurring job retention factors for a specific group. This categorization was done for the following attributes: gender, marital status, overall experience, job description (organization), and income. Table 9 lists the results of this experiment. There are a number of algorithms available to extract the frequent items from a dataset. The output of all these algorithms is the same. However, they consume different amounts of execution time. From an application point of view, it does not matter which FIM algorithm is utilized as long as the dataset size is not extremely large. This work utilizes the AIM Footnote 2 (Another Itemset Miner) implementation of the FIM technique to extract patterns. For the sake of completeness, Fig.  5 shows a comparison of time consumed by AIM against another FIM algorithm, i.e., k DCI ( k Direct Count and Intersect) for various minimum support (minSup) values. The figure indicates that k DCI is quicker that AIM in finding the frequent itemsets.

Performance comparison between kDCI and AIM in finding frequent items

4.5 Reliability test

A reliability test was conducted before any other test to make sure that the data are reliable. The Cronbach’s Alpha test was performed for the reliability of the data, and results indicated that the collected data were 87% reliable. Table 10 lists the results of this. The value of Cronbach’s alpha ranges between 0 and 1. A Cronbach’s alpha value greater than 0.6 is considered reliable. As shown in Table 10 , the value obtained for the collected data is 0.874 indicating the reliability of the collected data.

4.6 Comparison

This section presents a qualitative comparison between the present work and past contributions regarding the identification of factors that influence employee retention. The comparison is based on seven factors, i.e., has the work considered multiple sectors, are the data mining methods utilized, is there the use of computational methods in drawing conclusions, what is the sample size, what is the geographic location of the study, is the study employee centric or organizational centric, and does the survey contain open-ended questions. The choice of comparison methods is made here due to their closeness to the task at hand and recency. Table 11 lists the quantitative comparison. It can be observed that the present work utilizes data mining methods and covers multiple domains as compared to the past works. Additionally, the majority of the past work utilizes the computational methods to gain insights about the employee retention. The table also indicates that the use of open-ended questions is rare while collecting the data. A few works have not mentioned their sample size; therefore, this field is left blank in the table.

5 Policy implications

Labor laws in many developing countries are at a nascent stage. Debates on employee rights, such as medical cover [ 49 , 50 ], provisions of sabbaticals, data protection, diversity management, investing in human resource through training and development programs, etc., are still isolated practices only functional in a handful of multinational organizations in the developing world. This research provided an in-depth understanding of the impact of demographics on employee retention across multiple sectors, which will enable policymakers to (a) develop retention strategies in the backdrop of severe competition, (b) improve organizational long-term sustainability, (c) improve organizational brand name through providing better working conditions to employees, and (d) understand the dynamics of employee retention across multiple sectors and industries.

Increased global competition has inevitably led to a severe competition in talent acquisition and retention. Organizations, today, are not only competing for customers, but also for employees. Thus, losing a resourceful human talent can be devastating for an organization. If an organization is facing quick turnover, this can adversely affect its long-term sustainability. Talented employees are not only hard to find; they exist in clusters. Therefore, if an organization loses a dissatisfied employee, a bad word-of-mouth gets spread about the specific organization, which may then find it extremely hard to attract talented employees. Conversely, if an organization has a low employee turnover, the organization shall be able to contest and survive in highly competitive markets, ensure long-term sustainability, and celebrate a good brand name.

For policymakers, this research provides the basis to understand and re-evaluate the systems and practices of motivation; recognition and reward; and advancement and growth, by placing a strong emphasis on organizational justice. Policymakers shall be able improve their decision making through this research by considering numerous variables, which may impact employee behavior, specifically retention. This work enables policymakers to systematically diagnose and comprehend organizational structures and communicational channels in light of employees’ relationship and authority dynamics with the supervisor, thus redefining organizational esprit de corps in the developing world across multiple sectors. Through this research, policymakers shall be able to decipher the complexities of work conditions and highlight aspects which contribute to or pose a challenge to employee retention. Policymakers are interested in developing customized policies for clusters of employees who have similar ethical behavior and income level. This research dived deep into how ethical behavior and income level impact employee retention and how policymakers should distinguish between employees of varying ethical behaviors and income levels. Another policy implication of this research is that it shall enable policymakers to develop policies and practices which place emphasis on organizational commitment and satisfaction. The results revealed a strong relationship between organizational commitment and satisfaction, and employee retention. Policies and practices addressing organizational commitment and satisfaction shall not only ensure that talented employees are retained in the organization, but shall also attract new and budding talent more effectively and efficiently. Finally, bullying and work harassment has become a serious concern for several organizations in the developing countries. Gender discrimination discourages several women in the developing countries to either quit or switch their workplace. Bullying, harassment and gender discrimination are not only severely unethical, but also bring the organization in the limelight for the wrong reasons. Thus, this research provides policymakers with the insight and tools to develop proactive policies to discourage bullying and work harassment and encourage fair and equal treatment of all employees.

In a nutshell, at a microlevel, this research delivers policymakers with the right variables and tools to assess the state of employee retention in an organization. At the macrolevel, however, this research provides an in-depth analysis of trends and patterns of employee retention across multiple sectors. The research sheds light on how policymakers can encourage organizations to improve employee retention through training and development programs, medical cover, sabbatical, flexible working hours, etc. Through these techniques, policymakers can benchmark best practices for employee retention. Moreover, this work highlighted which sectors are severely suffering from low employee retention, thus allowing policymakers to target specific sectors/industries on a high-priority basis.

Like any other research, there were a few limitations of this study. The aspect of training and development was not considered in this work. Another limitation was that few respondents thought that survey forms were too lengthy and even some organizations rejected to fill out these. This study was only limited to the boundaries of Pakistan. The findings may be different if applied to a different country or may vary if considered different demographic variables.

6 Conclusion

Retaining skilled employees has always been a major concern for any organization across the globe. Organizations spend a significant amount on their training and development programs for this purpose. This work presented computational methods to identify factors for employee retention using their feedback collected through a questionnaire. The focus here was to identify factors to improve employee retention strategies based on the computational methods. A survey was conducted mainly within four sectors, namely health care, business, academics, and banking sector, to collect the data. The survey was divided into two parts: the first part included demographic information and the second part contained questions pertaining to employees’ job description and their satisfaction. The questions on the second portion were based on theories such as Herzberg's duality theory, expectancy theory, social cognitive theory, self-determination theory, social bonding theory, and sociocultural theory. The findings showed that the factors such as work environment, organization commitment, reward and recognition, work performance, supervisor support, income and bullying and work harassment have an impact on demographic profile. When these factors were correlated with employee retention, the statistical tests illustrated that, except organization commitment and bullying, all variables were identified to be strongly linked with employee retention. These factors have tended to have a power through which organization can improve the working environment and facilitate not only their client but also the employees.

From the extension point of view, there are many other factors that can be used for employee retention other than those utilized here. These may include training and development, medical cover, sabbatical and paid leaves, to name a few. This research can extend to multiple countries, and the effect of various cultures on the employee retention can be studied. The survey form can also have a few open-ended questions so that the investigation can better identify what an employee feels like when given an option to mention any factor of her choice.

Data availability

The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to containing information that could compromise the privacy of research participants.

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Halim, Z., Maria, Waqas, M. et al. Identifying factors for employee retention using computational techniques: an approach to assist the decision-making process. SN Appl. Sci. 2 , 1612 (2020). https://doi.org/10.1007/s42452-020-03415-5

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A Study on Employee Retention as a Tool for Improving Organizational Effectiveness

International Journal of Management, Technology, and Social Sciences (IJMTS), 6(2), 121-132. ISSN: 2581-6012. 2021

12 Pages Posted: 11 Dec 2021

Nethravathi P. S.

Srinivas University

P. S. Aithal

Poornaprajna College

Gayathri Babu J.

Shree Devi Institute of Technology, Mangaluru, 574142, India

Sonia Soans

University of Technology and Applied Sciences

Honey Jayaraj

Date Written: September 30, 2021

Background/Purpose: Human sources are those who make the group of workers of a company. It's also recognized via manpower, skills, labour, employees, etc. Human Resource department of a business enterprise performs human useful resource control. It entails various elements of the employment consisting of compliance with labour regulation and employment standards, management of worker benefits, and various other sports related to recruitment and choice of the employee. Worker retention is regarding the efforts with the aid of which employers try and retain the personnel in their team of workers. Retention turns into the strategies in place of the final results. Preserving the worker for long duration of time is known as retention. Retention strategies of the organization need to have the capacity to attract and hold their staff. Organizational effectiveness refers to a company's ability to achieve the goals it sets out to achieve. It's far the performance of the organization, group or an organization to fulfill its goal. Six Sigma is a methodology that makes a specialty of improving the overall efficiency of a business process. Objective: This work is carried out at Dinesh Foods, Kannur. Dinesh foods are a subsidiary unit of Kerala Dinesh Beedi Workers Co-op Society. The objective of this study is to observe and to recognize how worker retention facilitates in growing the organizational effectiveness of Dinesh Foods. It additionally assists to investigate diverse retention techniques followed and also the employee turnover within the unit. This work investigates the worker retention is a device for increasing the organizational effectiveness. Design/Methodology/Approach: For the purpose of study the data was collected through primary and secondary source. Questionnaire was distributed among the workers for collecting necessary data for the study, financial statement of the company to study about the financial stability of the organisation and annual report of the company. Findings/Results: This research is done to find out whether the employee retention in the organisation helps in improving the organisational effectiveness. Varies conditions applied for the hypothesis and it can be proved that the employee retention is a tool for increasing the organisational effectiveness. Based on the analysis, findings and suggestions Dinesh Foods, Kannur can give more concentration towards retaining the employees in the organisation as it is important in any organization. Conclusion: This study focusses on whether employee retention is a tool for improving the organisational effectiveness. It is found that the employee retention is a tool for improving organisational effectiveness and employee retention helps in increasing the productivity.

Keywords: Human Resource, Organizational effectiveness, Business Enterprise, Employee Retention, Financial Stability.

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Impact of Employee Training and Development on Organizational Performance

• P. Vanitha , R. Sankar Ganesh
• Published in Shanlax International Journal… 1 April 2024
• Business, Education

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EMPLOYEE RETENTION STRATEGIES

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sundara rama Seshagiri

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Human Resource is an important resource for an organisation .Now a days retaining an employee in an organisation is a greater challenge for HR managers .They have to choose suitable person with a required experience and ability, to fill up the vacancies in theorganisation. Hiring new talents involves recruitment & training cost plus loss of talents. By retaining employee in the organisation we can save our time& energy and also it is a cost benefit method. It also enhances the productivity and efficiency therefore it is essential to protect this human capital as motivated & talented human asset playan overall growth& development in an organisation. This study focus on all aspect of employee and also to understand various strategies adopted in an organisation to retain the employee.

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Employee retention refers to the ability of an organization to retain its employees. Employee retention can be represented by a simple statistic (for example, a retention rate of 80% usually indicates that an organization kept 80% of its employees in a given period). Doing all the best efforts in order to maintain such a working environment which supports the existing employees to remain in the company, while recognizing their abilities and contribution and implementing suitable reward and recognition strategies is always appreciable and one of the most important things that a business management can do to retain its employees. INTRODUCTION In today's competitive business world, employee retention has become a major concern. It is important for any business organization to implement employee retention strategies to manage employee turnover effectively and efficiently. It must be noted that a high turnover indicates that a company is losing a high percentage of employees as compared to the number of employees who have been hired already. It is also an indication of not doing proper job selection and not creating an environment which helps employees to stay within the organization for a longer period of time. However, a high level of turnover is undesirable for an organization for a number of reasons and affects an organization in many ways causing poor performance, low employee morale, low productivity and the major loss of revenue that comes from the decreased sales.

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Employee Retention Strategy Guide: 25 Ways to Keep Top Talent

Amber Biela-Weyenberg | Content Strategist | May 20, 2024

In This Article

What Is Employee Retention?

Employee retention strategies explained, why are employees leaving, why employee retention matters, 25 employee retention strategies, how to calculate employee retention rate, personalize employee experiences with oracle me, employee retention strategies faqs.

Globally, 93% of organizations worry about employee retention, according to a 2023 LinkedIn survey of more than 2,200 HR and learning development professionals and employees who use learning services. Organizations regularly struggle to find and hold on to talent with the skills, expertise, and knowledge vital to business success. Recognizing the significant impact of employee turnover on the business, more HR leaders are examining employee retention strategies to give employees more compelling reasons to stay with their companies.

Employee retention is an organization’s ability to keep workers at the company and reduce undesired turnover. Often there’s an emphasis on retaining top talent, meaning individuals considered knowledgeable, skilled, and highly productive. Retention also focuses on keeping people in the roles that are essential to delivering a product or service, such as production line workers in a factory, certified nursing assistants at a long-term care center, or servers and chefs at a restaurant. Employee retention has long been an area of focus for human resources teams, but it’s increasingly important as it becomes more challenging to fill positions.

A 2023 ManpowerGroup survey of more than 40,000 employers globally found that 75% struggle to find people who have the skills the company needs. Sometimes this is because only a small segment of the talent pool has those skills, which is a common challenge when hiring for roles that work with emerging technologies. Sometimes, it’s because the skill takes time and training to learn and is in consistently high demand— think nurses , welders, truck drivers, and accountants. And sometimes it’s because an organization is essentially seeking a needle in a haystack—a person with a unique combination of skills and experience.

Additionally, in a challenging hiring market, finding suitable candidates is only half the battle—they also have to accept the job offer. If a company doesn’t provide competitive incentives and an appealing work environment and culture, not only will it have trouble retaining employees, but it will also have difficulty hiring them in the first place. And ultimately, the more time a company spends dealing with employee turnover—including finding and onboarding people, then getting them acclimated and productive in their roles—the less time its workforce has to spend on more innovative and strategic endeavors.

Key Takeaways

• Employee retention is a company’s ability to keep workers, often with a particular focus on retaining high performers and employees in critical, hard-to-fill roles.
• Employee retention impacts the business in many ways, including affecting output, morale, productivity, customer sentiment, and the bottom line, because replacing workers is expensive.
• Effective employee retention strategies include offering career development programs, improving the culture, training managers to retain staff, investing in diversity programs, and offering fair compensation and benefits.

Employee retention strategies are exactly what they sound like: ways your organization can entice employees to stay with the company. Employee retention is influenced by everything a person could like or dislike about a job, such as pay, benefits, company culture, managers, time off policies, remote work opportunities, and much more. Companies must craft policies around these areas with an eye toward how they’ll hurt or help employee retention.

One popular way to think about retention is in terms of Herzberg’s Two-Factor Theory, originally published in 1959. Herzberg, a psychologist, conducted workforce research with his colleagues, and they proposed that job satisfaction and dissatisfaction are affected by two sets of factors: hygiene factors and motivation factors. Hygiene, or external, factors include working conditions, salary, and company policies. Motivation factors include growth potential, meaningful work, recognition, and other aspects related to the work itself. Ideally, employees have positive experiences with both sets of factors, creating an engaged, productive workforce. However, sometimes workers have mixed feelings. An employee who’s happy with their working conditions (a hygiene factor) but who doesn’t feel appreciated (a motivation factor), may be less likely to do more than the bare minimum. The theory also suggests that even if someone loves their job, they’re more likely to leave an organization if they’re unhappy with their salary or company policies. The research concludes, logically, that workforces that have poor experiences with both sets of factors likely suffer from high turnover.

While there’s been criticism of Herzberg’s Two-Factor Theory—for example, some people say it assumes everyone values the same things—it’s still a helpful framework for HR leaders to consider as they approach employee retention. By identifying factors that detract from the employee experience , they can help their organizations find solutions or, at least, ways to make those aspects less dissatisfying. Further, HR leaders can help amplify meaningful job aspects to increase employee satisfaction and retention.

Employees leave their organizations for many reasons, which is why most HR professionals conduct exit interviews when someone resigns. They want to understand if the company should address a chronic problem that’s hurting retention. Some common motives are well understood, starting with compensation. 82% of the 4,000 US and UK employees surveyed by Korn Ferry in 2023 said they would leave their current job for a higher salary or better benefits.

Of course, money isn’t everything. When Boston Consulting Group asked more than 11,000 employees what they wanted in a job, they did list better pay and benefits. However, emotional factors were the most important when they reframed the question to ask: What attributes make you want to stay with an employer? Being treated fairly and being respected, doing enjoyable work, having job security, feeling valued and appreciated, and feeling supported all ranked higher than compensation. The same survey found that more than a quarter of employees see themselves leaving their employer within a year.

Other factors influencing employee attrition include bad managers, burnout, a lack of professional development opportunities, low autonomy, and boredom. But negative experiences aren’t the only reasons employees leave. Sometimes an incredible opportunity comes along that a worker can’t pass up. As odd as it sounds, that’s the best-case scenario regarding attrition—the employee was happy and wasn’t looking. However, an organization can still consider whether they can do more to create similar opportunities and whether they need to look at new opportunities and advancement more actively for high-performing employees in the future.

Today it’s common for employees to switch employers, with the median tenure being 4.1 years, according to research released by the US Department of Labor in September 2022. The stigma attached to job hopping is mostly gone, putting more pressure on HR professionals to effectively manage the workforce by analyzing and addressing causes of attrition to strengthen retention. This process is vital because employee attrition negatively impacts the business in several ways.

• Recruiting and hiring is expensive . There’s much debate and research on how much it costs to backfill a position, but there’s no denying HR spends lots of their own time and budget on third-party recruiters and services to fill open roles. Edie Goldberg, founder of talent management firm E.L. Goldberg & Associates, puts the cash and noncash costs at three to four times a position’s salary. The Society for Human Resource Management puts the average cost per hire at nearly US$4,700. While the specific cost may be up for debate, the bottom line is that recruiting takes up money, time, and expertise that could be spent more strategically if employee retention rates were higher.
• Retention affects morale . Poor retention rates cause a sense of instability in the workforce, leading other employees to question if they should be looking for a new job. If one person leaves a team, it’s more likely another will, damaging morale. Likewise, strong retention suggests people consider the company a place to stay and build a career
• Productivity suffers . As employees temporarily take on more to pick up the slack and resources are diverted from projects to focus on backfilling a position, productivity suffers, especially when a high performer leaves
• Output wanes . Poor retention can threaten a company’s core ability to deliver its products and services. There’s a reason US trucking companies emblazon their vehicles with pitches to come drive for them amid a national shortage of commercial truck drivers. And if you’re suffering declining morale and productivity due to poor retention, output will inevitably suffer even more. Additionally, when the organization loses an employee with extensive industry knowledge, it loses invaluable insights, so teams may not have access to relevant knowledge, resulting in subpar decisions.
• The customer experience suffers . Unsurprisingly, the factors listed above negatively affect the customer experience. Unhappy workers, or people distracted by changes in the department or additional work they’ve taken on, aren’t as motivated to help others. Employee retention correlates with customer service satisfaction scores.

HR teams can use many different employee retention strategies that touch different areas of human capital management to boost the employee experience and business value. Here are 25 of the most effective.

1. Offer fair pay

Workers who believe they’re underpaid are more likely to look for another job, so employee retention starts with paying competitive rates. Companies should regularly review salaries from a market analysis and a diversity, equity, and inclusion (DE&I) perspective to ensure people are paid fairly. Inflation has added to the challenge. Workers who don’t receive cost-of-living increases feel like they’re getting a pay cut and are more likely to be dissatisfied with their employer.

2. Recruit competitively

Finding the right people to fill open roles is critical to employee retention, since those people are more likely to be happy, productive, and successful. But skills gaps have left more companies competing to find the right candidates in a smaller talent pool. On average, 75% of employers have trouble filling open roles, according to a 2023 ManpowerGroup survey of more than 40,000 employers across 41 countries. Companies should assess the marketplace and review their pay, benefits, and other offerings to ensure competitiveness and increase the likelihood of attracting and hiring the best candidates. They also need to be aware of their reputation as an employer and take action to ensure skilled candidates are aware of both the brand and specific job openings.

3. Hire smarter

Candidates who have a positive experience during the talent acquisition stage are more likely to accept a job offer and have a good impression of the company, making it more likely they’ll stay longer. HR can improve this stage by eliminating the hassle of creating profiles, making sure applications are easy to fill out, actively communicating relevant information at each step, and speeding up the hiring process. Additionally, HR can use automation to send candidates personalized emails and texts at various stages and automate workflows, such as offer approvals, to improve the recruiting experience. Hiring managers can make sure applicants understand the role, the people they’ll work with, and the company culture they’re joining.

4. Improve onboarding

Onboarding is vital to a new employee’s success. Organizations can increase their retention rates by helping each new worker make essential connections with stakeholders, answering their questions, helping them understand the company culture, and giving them the tools they need to thrive and quickly be effective in their role. Some HR software guides employees through the onboarding process, continually giving them relevant information over the initial months to help them acclimate. In addition, some companies have an extended onboarding period that begins with preboarding, helping new hires become familiar with the workplace culture before their first day.

5. Provide benefits people want

Companies regularly provide their workforce with health, dental, and vision insurance, but most employees want and expect more. Some organizations offer expanded benefits such as fertility support, elder care, tuition reimbursement, and mental health support. Consider surveying your workforce to find out what type of support matters most. A Gallup poll found that pay/benefits was the most common reason employees quit in 2023.

6. Invest in professional development

Employee and employer needs align when it comes to career development. Most people want and expect their organization to help them learn new skills to stay relevant in their roles and potentially move into new ones. Tailoring learning opportunities to employees is a great incentive for them to stay with an organization, and it helps companies prepare for the future. Six in ten workers will require training before 2027 due to growing skills gaps, reports the World Economic Forum after surveying 803 organizations (collectively employing more than 11.3 million workers) in 2022 and 2023. Providing relevant training requires business leaders and HR teams to work together to make sure the company offers the right training content and does so in the most effective way. To do this, they need to understand their employees’ skills and career aspirations. Companies that don’t help employees adapt risk having an underskilled workforce and losing some of their most motivated employees—the ones who are eager to learn.

7. Create pathways for growth

Many employees want to upskill to remain employable in the long term, and some want to move up the career ladder, requiring them to learn new skills. Organizations can give workers access to learning development programs that are tailored to their unique needs. Internal mobility is also vital. A 2023 Pew Research Center study of 5,188 US adults found that only 33% are extremely or very satisfied with their opportunities for promotion at work. If an organization doesn’t promote from within, it’s more likely to lose employees who believe they must leave to move to a higher level.

8. Offer mentorship programs

Mentorship programs are one way to help eager employees learn new skills, navigate their career paths, and strengthen their bonds with the organization. The company benefits when more seasoned employees mentor others and pass on their institutional and industry knowledge. Otherwise, these valuable insights may be lost when workers retire. Many mentors get satisfaction from teaching emerging leaders as well, giving them added motivation to stay on the job.

9. Train managers to retain

Great managers are linked with a 72% reduction in attrition risk and a 3.2X increase in employee retention, according to a Boston Consulting Group survey. The key is for managers to have the training, tools, insights, and incentives to support their teams. In terms of training, managers may benefit from improving their communication, listening, empathy, conflict resolution, and leadership skills. Organizations can also encourage managers to look internally first when filling open roles. It’s also beneficial to give them tools and insights, such as learning materials they can share and data that shows employee sentiment over time, to help them guide their teams more effectively and build stronger relationships.

10. Build employee engagement

It’s well known that engaged employees have higher retention rates and increased productivity due to reduced absenteeism, better overall well-being, and a sense of psychological safety that lets them freely share their ideas. Creating an environment where workers feel respected and have a sense of belonging is critical to engagement and therefore retention. Strong employee engagement can also offer companies a competitive edge. In 2023, on average, 23% of employees were engaged globally, according to a Gallup survey of more than 120,000 employees. But at companies that follow HR best practices, 72% of employees were engaged.

11. Communicate transparently

Clear and honest communication is a key factor in building trust with your workforce. When employees don’t understand why the business makes certain decisions, it makes them uneasy. It also increases the likelihood that they won’t see how their contributions help the organization, which is problematic because, without that knowledge, they can’t find meaning in their work. Companies can keep employees and managers on the same page and help the workforce feel valued and respected by communicating openly and often about company strategy, culture, and policies. It’s also vital to ensure communications are relevant and meaningful or else they become background noise that employees start to ignore.

12. Offer incentives

Incentives encourage employees to perform at the highest level and stay with an organization. They may include a formal employee recognition program with small gifts, bonuses for workers who meet certain quotas or thresholds , or extra paid time off awarded for a job well done. Workers who feel recognized and appreciated are more likely to stay with their employer. Incentives can also be perks the company offers all employees, such as tuition reimbursement, profit sharing, or discount programs.

13. Value DE&I

Feeling accepted for who you are, being treated fairly, and having the same opportunities as everyone else are vital to employee retention, highlighting the importance of diversity, equity, and inclusion (DE&I) initiatives. As part of their DE&I efforts, many companies track metrics such as salaries, promotions, and attrition across the workforce to identify bias and correct disparities. Companies can also take steps to build a diverse workforce during the hiring process by posting jobs in a wide variety of places to reach people of different backgrounds and tracking the results.

14. Provide continuous feedback

Too often employees aren’t sure how they’re performing. 51% of the more than 5,100 US workers included in a 2023 Pew Research Center study said they aren’t satisfied with the amount of feedback from their supervisor. Workers want guidance to help them improve and encouragement and recognition when they’re doing well. Some companies recognize that peers can provide helpful feedback too, especially when it comes to acknowledging great performance, and encourage employees to submit feedback for colleagues during annual reviews. Without feedback, employees may feel their contributions don’t matter or the company doesn’t care, making them more likely to leave.

15. Work on culture continuously

Workplace culture comprises the shared beliefs, acceptable behaviors, and general attitude of the workforce. Cultures vary by company, and there’s no one “right” kind of culture. When it comes to retention, leaders must be consistent about the culture they nurture and the actions they take and reward. And they need to listen and watch to see whether employees buy into that culture. Organizations that build a sense of community among the workforce enhance the employee experience and retention.

16. Engaging in CSR programs

65% of millennials told Korn Ferry they’d feel more inspired at a company with a good environmental, social, and governance (ESG) policy—and that they’d be more loyal. That’s according to a 2023 survey of 4,000 professionals in the US and UK. Employees generally expect their organizations to have corporate social responsibility (CSR) programs and take ESG seriously.

17. Provide autonomy and choice

No one likes being micromanaged. 73% of workers say it’s the #1 sign of a toxic workplace, according to a 2023 Monster poll of more than 6,000 employees. Empowering your workforce to make decisions and giving them the freedom to complete tasks in a way that makes sense to them are practices likely to boost employee retention. It’s also essential to ensure the workforce can get the help they need when they need it. Many companies use chatbots and knowledgebase articles to help employees quickly find answers to questions, eliminating frustrating roadblocks.

18. Consider work-life balance

Long hours spent in the office or online answering emails late into the night negatively affect the employee experience, especially when this behavior is habitual. It’ll likely lead to burnout and higher attrition rates. Organizations can take steps to ensure their culture doesn’t promote this lifestyle by encouraging workers to have a healthy work-life balance, offering flexibility, and respecting employees who take care of themselves. Leaders shouldn’t only praise employees who “go the extra mile.” If leaders normalize taking paid time off, employees will be encouraged to recharge and less likely to burn out.

19. Emphasize teamwork

Teamwork is a great way to foster a sense of community and solve problems better. It can also improve productivity and tap into people’s unique perspectives, helping them feel valued. People who like their teams are more motivated to stay with a company. Coworkers may be scattered across the globe or operating in a hybrid workplace, so giving your workforce collaborative communication tools is vital to effective teamwork. Companies can also encourage teamwork by acknowledging its importance in company communications, highlighting team successes, and helping managers build collaborative teams.

20. Create employee stock ownership plans

Employee stock ownership plans help workers feel more connected to the business’s success. Employee ownership can be achieved by making stock grants and options part of the compensation package, with vesting periods that provide an incentive to stay with the company, or by offering discounts for employees to purchase stock. Employee ownership strengthens the employee-employer connection by making the workforce feel like they’re part of something bigger, and they benefit financially if the company’s stock rises. Companies can also set up a more formal employee stock ownership program, or ESOP, where employees own all or part of the company. Since employees must sell their share of an ESOP if they leave, they’re less likely to do so if the company performs well.

21. Invest in change management

Change is constant and can grind on employees, leading to change fatigue, burnout, and higher attrition rates. Companies can invest in change management programs to ease the impact on employees. They can also consider using technology embedded with AI that can help support communication efforts, increase productivity, and uncover insights to help their workforce navigate the transition more successfully. In addition, companies should equip their managers to deal with change, explain why it’s happening, and inspire their teams. Helping employees navigate these changes well can improve retention.

22. Support employee well-being

Boston Consulting Group surveyed 11,000 workers globally in 2023 and found the biggest employee retention factors weren’t pay and benefits. Emotional needs that affect a worker’s overall well-being topped the list. People are more likely to stay with their employer if they feel valued, appreciated, supported, and respected. They also want to be treated fairly, have a sense of job security, and enjoy their work. Organizations should think about well-being holistically. Wellness programs and mental health support are essential, but other workplace factors affect employee welfare.

23. Acknowledge hard work and milestones

Employees want to be seen and recognized for their contributions to the organization. While HR often leads formal recognition programs and handles employee milestone anniversaries, companies can help managers with workforce appreciation. Some HR platforms have tools for managers to help them build better relationships with their direct reports through recognition. Notifications can be automatically sent to remind them to thank an employee for their years of service and to check in with their direct reports if it’s been a while. If managers don’t regularly talk to each direct report, well-deserved thanks will go unexpressed. Additionally, organizations can share significant individual and team accomplishments companywide, fostering a culture of appreciation and recognition.

24. Be aware of burnout

Stress is common at work. Low stress levels can motivate employees, but the World Health Organization says chronic workplace stress that’s not successfully managed leads to burnout. Burned-out employees are exhausted, have negative feelings toward their job, and often leave. Organizations should train leaders at all levels to spot early signs of burnout and step in to help employees before it’s too late. It’s vital to create a company culture where self-care is promoted and workers are encouraged to take vacations and days off before their energy is depleted.

25. Know when to let employees go

If a company tolerates poor performance or violations of the company culture, its best employees are more likely to leave in frustration. It’s important for organizations to support employees, have plans in place to help them improve when they’re not meeting expectations, and give managers tools to help them progress. Sometimes the extra attention and support pay off, putting the employee on a better path; sometimes they don’t. Organizations should carefully consider when it’s time to let an employee go.

Calculating your employee retention rate is a straightforward process. First, decide what time period you want to assess. Divide the number of employees the organization had on the last day of that period, minus any new hires, by the number it had on the first day. Next, multiply that number by 100. That’s your employee retention rate.

Employee retention = (number of employees who stayed during the time period / number of employees at the start of the time period) x 100

For example, if you’re measuring retention year to date, take the number of employees today, subtract the number of new hires made this year, and divide the result by the number of employees the organization had on January 1. Multiply the result by 100 to find your employee retention rate.

Oracle ME , part of Oracle Fusion Cloud Human Capital Management (HCM) , is a complete employee experience platform that helps organizations deliver an exceptional workforce experience so employees can grow and thrive. The embedded features and tools in Oracle ME enhance different aspects of work. For example, Oracle HR Help Desk, a self-service knowledgebase, and Oracle Digital Assistant, a conversational AI chatbot, let workers find answers quickly and get support when they need it. Additional assistance comes from Oracle Journeys, which provides contextual guidance to help employees compete HR-related tasks, and Oracle Grow, which offers a personalized learning experience that unifies learning, skills development, and talent mobility opportunities. Managers receive support, too, with Oracle Touchpoints. It lets them track employee sentiment with personalized team insights and encourages continuous engagement with direct reports. Oracle ME further fosters a sense of belonging and community with Oracle Connections, an interactive workforce directory, and Oracle Celebrate, which lets peers recognize each other’s efforts. HR benefits from the ability to communicate directly with the workforce and measure the impact of communications with Oracle HCM Communicate.

What’s the difference between employee retention and employee turnover? Employee retention is when an organization keeps workers in the company, and employee turnover is when they leave voluntarily.

What is a KPI for employee retention? The most common employee retention KPI is the employee retention rate. To calculate it, take the number of employees your company has at the end of a given time period, subtract the number of new hires made during that time period, divide the result by the number of employees at the start of the time period, and then multiply by 100. A company may also consider other metrics, such as involuntary turnover rate and employee satisfaction scores.

Why are workers leaving? Employees quit for many reasons, including low pay, burnout, bad managers, lack of career development opportunities, and feeling disrespected or undervalued. HR should conduct exit interviews and track why workers leave to see if a widespread problem should be addressed.

See the features in Oracle Cloud HCM that help you improve the employee experience and reduce turnover.

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More From Forbes

How strategic connection enhances employee retention and engagement.

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Portrait of a group of diverse businesspeople smiling while standing arm in arm together in an ... [+] office corridor

Ask any leader about their key challenges, and they will tell you that engagement and retention within an increasingly remote and hybrid workforce is a major hurdle. Practical steps to foster genuine human connections can significantly enhance employee retention. Instead of relying on short-term solutions like spot bonuses or extravagant perks, which rarely yield long-term loyalty, companies should focus on building deeper relationships among employees.

Effective connection strategies include facilitating meaningful interactions beyond digital messages, promoting shared experiences, and ensuring that all communications within the workplace foster real, impactful relationships.

To help leaders effectively foster connection, here are some practical steps to consider :

Get Personal

Contrary to the emphasis on office perks like free snacks and foosball tables, what employees miss most when working remotely are spontaneous interactions with coworkers. Sixty percent of employees say these interactions are the top benefit of being in the office. Nearly two-thirds state that coworkers and peers significantly impact their sense of connection.

To build human connection, embrace the personal aspect, allowing employees to find commonalities and share experiences. At a recent company off-site for a Fortune 500 company, we brought all employees together in person for the first time since Covid. We introduced a networking tool where everyone shared a little-known fact about themselves. It resulted in tripling connections in 24 hours.

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Even in a remote setting, make sure to acknowledge significant moments—celebrate marriages, birthdays, and other milestones. Ensure that all employees, regardless of their location, experience the same level of connection through automated workflows and prompts.

These small nudges pay off. Employees with strong work friendships are seven times more likely to be engaged in their jobs, better at engaging customers, and produce higher-quality work.

Impress Your New Hires

Ensuring connection from day one is crucial, yet current practices often fall short. Up to 30% of new hires leave within the first 90 days .

To counteract this trend, personalize the onboarding process. Send automated, hyper-personalized communications to new hires. Learn about your new hires and show them you’re listening. For instance, ask each new hire about their preferred snack and ensure it’s on their desk on their first day. Imagine sharing your coffee preferences in a preboarding questionnaire and having your manager prepare it just how you like it on your first day.

These gestures are more than just polite; they show genuine care. Proper onboarding can reduce first-year turnover by 50%. This retention rate leads to significant dividends; an employee who experiences a stellar onboarding process becomes a brand ambassador, attracting better applicants and reducing recruitment costs.

Build Cross-Functional Connection

While many teams have effective internal connection strategies, silos often exist between different teams and functional groups within the same company.

One effective method to bridge these gaps is through mentoring programs. Such initiatives can significantly impact learning; the majority of employees say that discussing new ideas or changes with someone helps them learn and adapt.

For maximum impact, pair mentors and mentees of different ages and experience levels . Use technology to send reminders and prompts about potential discussion topics to ensure adherence to the plan. This reverse technology mentoring helps bridge generational and experiential divides.

Empower Your Managers

Managers have a significant influence on company culture. Gallup Research shows that direct managers account for up to 70% of the variance in employee engagement.

Support your managers by providing just-in-time nudges about having regular check-ins, giving feedback, and sharing praise. While people management comes naturally to some leaders, most managers either lack this intuition or are too busy to remember the basics, especially concerning remote employees.

This principle is particularly evident in learning environments. Instead of isolating employees with fast-paced learning management system videos, make learning a connected experience. Assign learning buddies to employees so they can apply their knowledge in real-time. This approach turns learning into a team activity, further strengthening organizational connections.

Addressing the war for talent requires a multifaceted approach centered on genuine human connection. Business leaders can create a work environment where employees feel valued and engaged by personalizing interactions, fostering cross-functional relationships, and empowering managers. These strategies not only improve retention but also enhance overall organizational performance in today’s dynamic business landscape.

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Build a Corporate Culture That Works

There’s a widespread understanding that managing corporate culture is key to business success. Yet few companies articulate their culture in such a way that the words become an organizational reality that molds employee behavior as intended.

All too often a culture is described as a set of anodyne norms, principles, or values, which do not offer decision-makers guidance on how to make difficult choices when faced with conflicting but equally defensible courses of action.

The trick to making a desired culture come alive is to debate and articulate it using dilemmas. If you identify the tough dilemmas your employees routinely face and clearly state how they should be resolved—“In this company, when we come across this dilemma, we turn left”—then your desired culture will take root and influence the behavior of the team.

To develop a culture that works, follow six rules: Ground your culture in the dilemmas you are likely to confront, dilemma-test your values, communicate your values in colorful terms, hire people who fit, let culture drive strategy, and know when to pull back from a value statement.

Start by thinking about the dilemmas your people will face.

Idea in Brief

The problem.

There’s a widespread understanding that managing corporate culture is key to business success. Yet few companies articulate their corporate culture in such a way that the words become an organizational reality that molds employee behavior as intended.

What Usually Happens

How to fix it.

Follow six rules: Ground your culture in the dilemmas you are likely to confront, dilemma-test your values, communicate your values in colorful terms, hire people who fit, let culture drive strategy, and know when to pull back from a value.

At the beginning of my career, I worked for the health-care-software specialist HBOC. One day, a woman from human resources came into the cafeteria with a roll of tape and began sticking posters on the walls. They proclaimed in royal blue the company’s values: “Transparency, Respect, Integrity, Honesty.” The next day we received wallet-sized plastic cards with the same words and were asked to memorize them so that we could incorporate them into our actions. The following year, when management was indicted on 17 counts of conspiracy and fraud, we learned what the company’s values really were.

• EM Erin Meyer is a professor at INSEAD, where she directs the executive education program Leading Across Borders and Cultures. She is the author of The Culture Map: Breaking Through the Invisible Boundaries of Global Business (PublicAffairs, 2014) and coauthor (with Reed Hastings) of No Rules Rules: Netflix and the Culture of Reinvention (Penguin, 2020). ErinMeyerINSEAD

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