Selected Human Resource Management Practices and Employee Retention: A Case of Deposit Taking Microfinance Institutions in Nairobi, Kenya

Abstract

Retention of employees is increasingly becoming a real challenge in organizations. While past studies have demonstrated the importance of employee retention in organizations, few have empirically examined the effect of human resource management practices on employee retention. The overall objective of this study was to examine the effect of selected human resource management practices on employee retention in deposit-taking microfinance institutions in Nairobi, Kenya. Specifically, the study sought to establish the effect of career development, learning, and development on employee retention in deposit-taking microfinance institutions in Nairobi, Kenya. A census survey of twelve (12) licensed deposit-taking microfinance institutions was conducted in the study. The study adopted an explanatory research design. The target population comprised 320 employees from the institutions’ headquarters in Nairobi. Stratified sampling was used to select the respondents from different departments of the licensed deposit-taking microfinance institutions. Primary data was collected using a structured questionnaire. The data was summarized using the mean and standard deviation. Pearson’s correlation was used to examine the relationship between career development, learning and development, and employee retention. Simple and multiple regression analyses were used to test the research hypotheses. Pearson correlation results revealed that career development and employee retention (r = 0.161, p value 0.002) were positively and significantly correlated, with a significant positive correlation between learning and development and employee retention (r = 0.672, p < 0.000). Further, regression analysis results show that career development, learning, and development have a significant effect on employee retention. The study also revealed that career development, learning, and development have a significant effect on employee retention. The study recommends that to enhance employee retention, organizations need to invest in career development, learning, and development.