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Driving Factors of Employee Retention

Paper Type: Free Essay Subject: Human Resources
Wordcount: 2534 words Published: 8th Feb 2020

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Retention of top performing employees in critical to a successful business.  In today’s workforce it is assumed that everyone can be easily replaced from the vast pool of applicants looking for work.  While this may be true there are expenses and impacts every time and employee leaves the company.  When an employee leaves their position, the company loses the employee and the knowledge that employee has about production, clients, project history, and current projects (Bibi, Ahmad, & Majid, 2018).   If a company experiences a rate of high turnover managers are forced to focus on training of new personnel which can distract them from business objectives and engaging other employees.  This can put more pressure on tenured employees creating a decrease in job satisfaction.  The fundamental way to reduce voluntary turnover is to raise the level of job satisfaction to mitigate an employee’s intent to leave a job (Kasekende, Byarugaba, & Nakate, 2013).  By understanding the drivers of retention policies and practices can be implemented to increase employee satisfaction and retention.


Organization and Management Factors

Organizational structure and management have a substantial influence on an employee’s desire to stay with a company.  Organizations that have well defined goals and hold employees accountable are viewed as better places to work creating a higher moral and increasing job satisfaction (Mathis, Jackson, Valentine, & Meglich, 2017).  By defining goals and holding employees accountable there is a lower probability that a portion of employees will become disengaged forcing other to take on more responsibility.  This could lead to a perceived unfairness which evidence suggests can increase intentions of employees to seek alternate opportunities (Mathis et al., 2017).  This perceived unfairness can be derived from productivity expectations and compensation in comparison to other employees. If an employee feels they are not treated fairly and has a perceived inequity they can become dissatisfied with their job and begin searching for alternate opportunities.

Employee-Supervisor Relationships

The relationships between an employee and a supervisor as well as an employee’s relations with coworkers impacts retention.  When there is a positive trend in office relationships employees feel more supported and more comfortable in their current positions making them less likely to search for alternate opportunities. When supervisors support employees, have open communication and strong relationships employees are more engaged in the organization and turnover intentions are reduced (Irshad & Afridi, 2011).  By creating these relationships there is a stronger team cohesiveness and allow higher quality interactions between coworkers and supervisors. 

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High quality leader member exchange relationships have a positive affect on work engagement, reducing the likelihood that employees will consider leaving the company (Covella, McCarthy, Kaifi, & Cocoran, 2017) Reducing employee intention to leave and creating communication channels allows supervisors to better understand the aspirations of employees and influence their future career paths.  The understanding of an employee’s aspirations allows managers to work with employees to develop career grown plans.  Employee’s who feel they desires and heard an understand have a higher degree of satisfaction and are more likely to stay with their current employer.

Job Security

 With current demands in the modern workplace to operate lean to reduce costs job security has reduced over the years.  With a plethora of cheap labor alternatives outsourcing jobs has become a common practice in the structure of larger organizations.  Downsizing, layoffs, mergers and acquisitions, and organizational restructuring has had an impact on perceived job security (Mathis et al., 2017).  These concerns about security have led to decreased commitment, loyalty and retention of employees in the workforce (Mathis et al., 2017).  Employees want to know their jobs are safe and that they are a valued member of the team. 

Individuals that are concerned about job security are less likely to focus on their work.  This disengagement stops employees from settling in to a position where they can develop their careers to achieve their goals.  If an employee feels their job is safe and feels they are achieving their goals, they are likely to stay with the company for an extended period.

Work-Life Balance

 With modern technology keeping individuals more in touch with personal lives during work hours and keeping tapped into work even after hours it can become difficult to balance work and life.  This can lead to personal life spilling over into professional careers or bringing work home at the end of the day affecting personal relationships. One of the possible outcomes of the stress caused from a poor work life balance is job burnout.  Individuals who experience job burnout experience a loss of interest and satisfaction with the job (Uhl-Bien, Schermerhorn, & Osborn, 2014).  This burnout and dissatisfaction can create a desire for employees to search for alternate opportunities.

Implementation of flexible working arrangement such as telecommuting, flexible work schedules, and compressed work weeks are examples of methods that can be used to help manage work-life balance of employees.  A 2018 survey reveals that 52.6% of employers offer telecommuting and 50.6% offer flexible work schedules and/or compressed work weeks (Held, 2018).  Allen’s (2001) researched indicated that employees who promoted a health balance between professional and family responsibilities reduced employee’s intention to leave (Allen, 2001).  By promoting work life balance companies can increase candidate retention and increase employee satisfaction.


Rewards can to presented in different forms, all are equally important.  Rewards can be intrinsic or extrinsic, they can be in the form of increased yearly compensation, one-time bonuses or recognition for a job well done (Irshad & Afridi, 2011).  Rewards are used to recognize an employee’s contribution of the organization.  Intrinsic rewards make employees feel a sense of belonging within a team.  This sense of belonging is critical to developing relationships that are necessary for increased employee retention. 

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Extrinsic rewards keep employers competitive in the market.  If compensation levels deviate 10% to 15% from market levels turnover is often higher (Mathis et al., 2017).  With a network full of information available at one’s fingertips it is becoming an increasingly competitive market.  Compensation packages, and employee experiences are available on sites such as Glassdoor which provides employers with multiple points of comparison.  Attractive compensation packages provide an advantage over competitors when recruiting and retaining employees (Kasekende et al., 2013).  If employees feel they are under compensated for their contributions to the company, there is a decrease in employee satisfaction and actions taken to right the imbalance.  By preventing these types of inequity situations employers reduce employee intentions to leave the company.

Career Training and Development

According to Mathis, Jackson, Valentine, and Meglich (2017) “Opportunity for personal grown lead the list of reasons individuals took their current jobs and why they stay there” (p. 186). Training and development should start on day one and should create a strong impression on new employees.  There should be a training schedule for the first day, week, and even month to create a sense of organizational competence (Randall, 2017).  This preparedness sets a precedence that training, and career development is important to an organization.  

Ahmad, Bibi, and Majid developed a correlation that was supported by data analysis that showed a strong relationship between career training and development and commitment of employees to stay with their company (Bibi et al., 2018).  Developing employees benefits the employee and the organization.  The training should be viewed as an investment from the organization’s standpoint. Younger generations have expectations of training and development opportunities related to long term career progression (McCracken, Currie, & Harrison, 2016).  These development opportunities can be through on the job training or external sources such as continuing education incentives related to career advancement or formal trainings.   Programs that allow employees to continue to develop their skill sets are essential to maintain a high level of employee satisfaction and retention.

Employer Policies and Practices

Employer policies and practices form a large part of the culture in an organization.  The perception of a company’s policies to be fair and reasonable have a direct impact on employee retention (Mathis et al., 2017).  Employees who feel that disciplinary action is not distributed or is overly strict may become frustrated or dissatisfied with their employer, forcing them to search for alternative opportunity.

 As generations evolve it is also important for employer practices and policies to involve.  As the workplace becomes a more diverse environment it is important to reevaluate company policies and practices to adapt to the desires of employees.  For example, implementing flexible work arrangement can lead to better retention of Millennials (Mathis et al., 2017).  This increased flexibility allows employees to effectively manager personal responsibilities leading to decreased stress and increased satisfaction.


Managing employee satisfaction should be a priority for modern companies.  By increasing satisfaction of employee’s companies can increase retention and decrease impacts caused by employee turnover.  Studies confirmed that employees are satisfied they are less likely to leave a company (Kasekende et al., 2013).  Increasing retention has a variety of positive impacts that go beyond simply reducing turnover.  It can yield increased performance, productivity, morale and even enhance recruitment.  By understanding the drivers of retention HR and management can develop and implement innovative practices to increase the retention of employees.  While certain factors may have a larger impact that others it is important to consider all factors when implementing policies to increase employee satisfaction.



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