Examining the Antecedents of Employee Retention an Evaluation of the Small and Medium Enterprises SME Sector

Abstract

The main objective of this research is to study how the Motivation Factors and Hygiene Factors (as per Herzberg s Two Factor Theory) influence Employee Retention in the SME sector through Job Satisfaction, Organisational Commitment and Intention to Stay. The researcher has studied two theories namely Herzberg s Two-Factor Theory and Job Embeddedness Theory connecting them with six constructs namely Motivation Factors, Hygiene Factors, Job Satisfaction, Organisational Commitment, Intention to Stay and Employee Retention. Herzberg s Two-Factor Theory shows the linkage among Motivation Factors, Hygiene Factors and Job Satisfaction whereas Job Embeddedness Theory shows the linkage among Job Satisfaction, Organisational Commitment, Intention to Stay and Employee Retention. The independent variables were Motivation Factors, Hygiene Factors, Job Satisfaction, Organisational Commitment and Intention to Stay. The dependent variable was Employee Retention. Based on the literature review, the two theories and the six constructs, the researcher developed the research conceptual model. The research model has led to the formation of 14 Hypotheses. For each construct, appropriate survey items were identified from the existing literature and they have been adapted for this research. In this study, the researcher is interested in examining how an individual employee perceives himself/herself to be a retainable resource for the organisation. Hence, for the construct, Employee Retention, due to lack of availability of the appropriate survey instruments, the researcher has designed a set of survey instruments. The same has been validated through Focus Group meetings as well as through Pilot studies. For the larger research, the data was collected from 502 employees across different SME industry sectors. The data was analysed using the Partial Least Squares (PLS) method. The study results produced some interesting findings. Out of 14 hypotheses, 12 were supported and two were not supported.