Factors Affecting Employee Retention

In this chapter, the previous studies for employee‘s retentions are presented to be the framework to understand and systematically analyze factors that affect employee‘s intentions.

Retention defined as ―an obligation to continue to do business or exchange with a particular company on an ongoing basis ‖ (Zineldin, 2000).

Retention is a voluntary move by an organization to create an environment which engages employees for a long term (Chaminade, 2007). According to Samuel and Chipunza (2009), the main purpose of retention is to prevent the loss of competent employees from leaving the organization as this could have adverse effect on productivity and profitability. However, retention practices have become a daunting and highly challenging task

Increasing numbers of organization mergers and acquisitions have left employees feeling displeased from the companies that they work and haunted by concerns of overall job security. As a result, employees are now making strategic career moves to guarantee employment that satisfy their need for security. On the other hand, employers have a need to keep their staff from leaving or going to work for other companies. This is true because of the great expenses associated with hiring and retraining new employees. The adage, good help is hard to find, is even truer these days than ever before because the job market is becoming increasingly tight

(Eskildesen,2000;Hammer,2000).

One of the traditional ways of managing employee retention and turnover is through organizational reward system. William and Werther (1996) explain reward as what employees receive in exchange for their contributions to the organization. This reward could come in form of salary, promotion, bonuses and other incentives. When the reward system is effectively managed, it helps in achieving organization‘s corporate objectives, and maintains and retains a productive workforce. If employees perceived they are inadequately rewarded, it is often likely that they will leave; and

Herzberg argued further that eliminating the causes of dissatisfaction (through hygiene factors) would not result in a state of satisfaction; instead, it would result in a neutral state. Motivation would only occur as a result of the use of intrinsic factors. Empirical studies (Kinnear and Sutherland, 2001; Meudell and Rodham, 1998; Maertz and Griffeth, 2004) have, however revealed that extrinsic factors such as competitive salary, good interpersonal relationships, friendly working environment, and job security were cited by employees as key motivational variables that influenced their retention in the organizations. The implication of this therefore is that management should not rely only on intrinsic variables to influence employee retention; rather, a combination of both intrinsic and extrinsic variables should be considered as an effective retention strategy.

Based on a review of the literature, many studies have investigated employees intentions to exist, for example Eskildsen and Nussler (2000) in their research suggested that employers are struggling to be talented employees in order to maintain a successful business. In the same bases, Mark Parrott (2000), Anderson and