CHAPTER ONE

INTRODUCTION

1.1Background of the study

Employee retention can simply be defined as the strategies put in place by an organization to retain its employees and reduce turnover. 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) . The rate of retention is the inverse of the rate of employee turnover and expectedly if a relatively high number of employees stayed at post within a specified period then the retention rate is high and the turnover rate is low that is (Retention rate =turnover rate). Retaining employees is an important goal of every organization. It helps to reduce wastage in terms of the time, effort and money spent in hiring and training new employees and integrating them into the organization.  Pandey (2007) have called employee turnovers an organization’s loss of memory.

Retaining all the employees may not be the desire of every business. Most of the organizations are concerned with retaining the high performers, those who possess key skill and knowledge needed to run the organization and those who are difficult to be replaced. Greenberg & Sweeney (2010) also emphasize that organizations should make efforts to keep their best talent despite difficult times. They further argue that it is the top performers that distinguish one business from another. Lengnick-Hall (2011) also advocate that if best workers are not retained, an organization can be negatively affected from the operational to the strategic level land that human capital remains one of the few resources that can provide a sustainable competitive advantage. They however suggest that employees should be classified as platinum, gold, iron and lead, and that organizations should spend more effort to retain platinum employees as compared to the lead employees .It is worth mentioning here that employee’s exit from a job has different dimensions. However the issue which is of relevance here is that certain factors of employee’s exit may be controlled by the management while there are other factors on which the management has little or no bearing. For example an employee may leave his job because of family situation; job offers and pursuit of new opportunities. Lengnick-Hall (2011) further emphasize that efforts to maximize retention are consistent with a concern for employees and a desire to make the organizational environment as “sticky” as possible in order to keep employees. Efforts to minimize turnover, on the other hand, can be seen as motivated to reduce or avoid a cost. Got curiosity for practical scientific work may find work in a company less manually.

1.2 statement of the research problem

In today’s highly competitive business environment, the dynamics of talents have become a key factor in an attempt to achieve competitive advantage. Organizations must not only attract the right candidate but must also ensure their retention in order for those employees to make a difference in the realization of the organizational goals.

Employee’s turnover is not something new in business organization, however available literature reveals that it has not been actively discussed or even understood by employers in most organizations. Researchers have undertaken a lot of studies in this area of study, yet the dynamic business environment continues to make employees retention a more complicated issue. Employee turnover is of considerable concern to managers because it disrupts normal operation and necessitates the costly selection and training of replacement, not forgetting the costly hiring and training the new employee to regain the lost customer and supplier contacts. Employee’s retention is one of the challenges in organizations ability to keep employees in the organization and avoid unwanted turnover. It is imperative that employees who have relatively low level of satisfaction are indeed the most likely to quit the job. Competitive salaries, recognition, benefits, on the job training, opportunity for career advancement are very fundamental in retaining employees. It becomes problematic for organizations when the rate of replacement rises over time especially when highly skilled employees are involved. The real challenge of human resource managers therefore lies in devising ways of retaining employees in order to reduce the rate of turnover and the associated costs. According to Brown (2006:2),  the lack of proper retention strategies is having an adverse effects on organizations, as replacing key employees is disruptive, expensive, time consuming and even threatening the sustainability of an organization.

The challenge for most organizations today is the formulation of effective employee retention strategies that will help in retaining employees that are considered critical in attaining organizational goals. Employees who are highly motivated, committed and engaged are more likely to stay longer on the job than those who are bored and dejected. The question is what strategies can an organization puts in place to retain top talents. Hence this study seeks to examine some employee retention strategies and to establish its effects on organizational performance.

1.3       Research questions

• To what extent does employees retention has an effect on organizational performance?
• How does a training and career development opportunity influence organizational performance?
• How can compensation and reward affect organizational performance?
• How working environment does influences organizational performance?

  Objectives of the study

The main objectives of this study is

• To evaluate the effect of employees retention on organizational performance.

The specific objectives

• To evaluate the stent to which training and career development opportunities can influence organizational performance?
• To examine how compensation and reward affects organizational performance?
• To investigate how working environment influences organizational performance?