Factors Influencing Employee Retention: An Integrated Perspective

Abstract

Turnover is a big problem for many organizations. It is a misperception that all turnover is bad and must be avoided. But actually if an organization does not have a balanced level of turnover, it will result in monotonous system and that organization will not have access to new ideas, change, dynamism and creativity. Turn over influences profitability and customer satisfaction (Koys, 2001). Our concern is that the required turnover must exist but the unwanted voluntary turnover should be reduced or avoided.

In today’s competitive environment employees leave their organization for various reasons. As the knowledge of employees have become highly important in gaining competitive advantage in today's business environment (Hall, 1993). The organizations are trying to retain the best employees.

The Importance of HR and their retention is established. Initially because resources are scarce and secondly because the competition by businesses to have the best and most talented employees for their organization (Chambers et. Al., 1998) and finally because Turnover also destroys the customer confidence in the company (Koys, 2001). Customers don’t want to teach about their needs to the new employees. So it is better to retain employees that can retain customers.

In the competitive environment, the retention of skilled employees is very difficult. Top management & HR department put in an extensive time, financial resources and effort in order to find out the way to retain their employees and gain competitive advantage (Bartlett & Ghoshal, 2013). Training efforts are also used to retain employees (Chen, 2014). That is why it is critical to understand what employee retention is?

Employee retention means keeping the employee in and with your organization in lay man’s language. It involves taking actions that motivate and tempt employees to stay with the organization for the maximum period of time. It is a planned and organized effort. Which should result in catering the diverse needs of employees so that they remain employed in the organization. For the sake of our discussion we are going to define retention as a continuous and planned effort of taking all actions by the organization to retain the knowledgeable, skilled and competent employees selected.

Now we may be clear on what is retention of employee but merely knowing it is not enough. Why is it important? If it is so simple to retain an employee through a contract, a bond or any other legal agreement for the long period of time. It is because in that process, the recruitment takes a lot of time and we may not be able to get the talent that we wanted. Also what will happen when the contract or the legal agreement expires?

So we want to retain the employees because they want to stay not because they are forced to stay. But what are the factors that make them “Want to Stay”, what factors can cause retention.

Many studies have identified different factors that if handled properly would result in employee retention. Some have studied retention from the employer’s perspective and some from employees'. Our concern is that employees' perspective is more important. So we want to know what an employee considers important to retain him in an organization.

Many researchers have challenged the conventional wisdom of the people that good salary only keeps employees retained. But all different researchers have worked to analyze the impact or influence of one variable or few variables on employee retention. None of them has tried to identify an integrated set of variables or factors that, if handled properly will result in employee retention.

The purpose of our study here is to fulfill this task. We have studied literature from 1947 to 2014 and ten papers were selected from each decade through google scholar to create a set of variables from the literature. In this way 60 or more papers were studied which identified work related and non-work related factors that cause employee retention. Monetary and non-monetary factors that were identified are pay, promotion, social environment, working conditions, relationship with immediate boss, respect, location of organization, organizational justice, organizational prestige, recognition, work-life balance, job satisfaction, job involvement, job content, training, job embeddedness, flexible work arrangements, status, career development, organizational values and beliefs, organization support, Job is not what worker expected, job and person mismatch, growth opportunities, appreciation, trust and support, stress from overwork, new job offer.