Factors Affecting Employee Retention Case Solution & Answer

Factors Affecting Employee Retention Case Solution 


Human capital is very essential investment for the companies and there is huge cost associated with human capital in any organization. Acquiring and retaining employees in the organization is important because retaining human capital allows the company to maintain the business and competitive edge in the industry (Singh, Dev, & Mandelbrot, 2014). Global economic system is changing, which is developing pressure on the business to maintain their competitive edge in the industry through employees’ skill development and training of the employees (Burke and Ng 2006).  Having skilled employees allows the company to achieve its goals and helps it to compete globally (Hiltrop 1999).The insurance industry does not require any particular education or job skills, but when the employees lack in skills; it can affect the industry. So it is important for the companies to revive the strategies to retain the employees in insurance companies (Johansdottir, Olaffson, & Davidsdottir, 2014).According to the study of (Singh, 2018) factors that mostly effect the rate of employee retention include compensation, work life balance, self-grooming and great interchange. The study also emphasizes on the management style to increase the employees’ retention.

Problem Statement

Employers are required to provide opportunities to the employees so that they could develop skills and increase their capabilities, because companies prefer to work with organizations that have skilled employees (Dries and Permanents 2008). Increased turnover rate in the company can affect the competitiveness of that company and it is costly for any company to replace the employees (Guilding et al., 2014). Recruiting the replacement of the former employees can cost the company half or 200% of the salary of the former employees. (Hebenstreit, 2008). The replacement costs include the cost of advertisement, salary and organizational culture; whereas,the employees’ retention is a challenge for the companies and its important for the success of the company (Guilding et al., 2014).Companies in the service industry face challenges in retaining high performing employees. There are many factors that contribute to the employee retention, i.e. environment, communication and skill development programs. Leaders of insurance industry claim that it is becoming difficult for companies to retain their employees (Johansdottir et al., 2014). In insurance companies; the turnover is increasing, which is affecting the profitability and business productivity. So, the main issue which the companies have found is the lack of employees’ retention strategies in the industry.Communication is a vital source in business to flow information throughout the company. Though it is very important but companies sometimes either neglect this factor or they do not consider it. But communication is an effective tool for the companies to increase the employees’ satisfaction (Sergeeva, 2018). Satisfied employees stay in the organization and help the companies in achieving their business goals (Olendo and Muindi, 2017).

Purpose of research study

This main purpose of this study is to evaluate the best strategies to retain the employees in the insurance industry and to help the managers in planning as well as in company’s development. This study will add into the literature and will also analyze the direct relationship between the factors that affect and employees’ retention. Previously,the studies have explained the strategies but they have not particularly focused on communication strategies. Communication is vital in the organizations, but organizations often neglect this factor and they do not make any efforts to make the communication strategies more appealing (Conrad, 2014; Nwata et al., 2016). Communication is an important factor to enhance the employees’ performance (Femi, 2014).  Effective communication can increase the employees’ performance and their efficiency   (Hills, 2015; Luthra and Dahiya, 2015).  Communication increases the employees’ motivation and employees feel valued in the organization and they choose to stay in the organization and work for company’s success.(Kukla, 2017)

Research Question

This research will explore the factors that affect the employees’ retention in the company:

  1. Do supervisor’s support and employees’ retention have a positive relation?
  2. Do the job satisfaction and employee retention have a positive relation?
  3. Do the salary & rewards and employee retention have a positive relation?
  4. Do the career development opportunities and employee retention have a positive relation?

1.4 Objectives of the Study

To determine the factors which significantly influence the employees to retain or leave the organization; we will first examine the factors that are affecting the employees’ retention through available literature and then we will investigate the impact of those factors in effect to the insurance industry of the USA.

  • Effect on organizations’ retention policies.
  • Finding retention procedures for the organizations.
  • Highlighting the reasons why individuals are resigning.
  • Identifying the ways to reduce the turnover rates.

Literature Review

Employee Retention

There are several factors which contribute to employees’ retention, but among those, organizational commitment is a significant one.(Curtis and Wright 2001). Employees who possess high degree of organizational commitment are likely to get more importance from the companies and get a sense of membership, due to which the yare more likely to stay working for the organization (Curtis and Wright 2001).  Organizational strategies and environmental strategies help the companies to develop and maintain sense of ownership in employees and increase the retention rate in the organization climate (Kaliprasad 2006). There are several factors that need companies’ consideration for employees’ retention,  increasing the employee commitment and retention (Hytter 2007). Several studies found negative relationship between job satisfaction and companies’ turnover rates, because satisfied employees are more likely to stay in the organization (Tett and Meyer 1993; Trevor 2001). A study stated seven factors that tend to increase the employees’ retention in the organization, i.e. compensation, challenging work, clear career path, organizational environment, positive employee relations, work life balance and communication (Walker; 2001).  Along with that, another study stated that employees’ trust level, commitment, loyalty and image of organization are positively related with employees’ retention. Alongside these, personal factors, organizational factors i.e. career path, rewards, training and development are positively related with the organization (Hytter 2007).A Study of India (Sinha & Shukla, 2013) was a study conducted on the employees’ retention in the pharmaceuticals sector in which they selected respondents randomly from the pharmaceutical companies. They used dichotomous questions. 126 questionnaires were analyzed in which they found that pharmaceutical industry had high retention rate than other industries. The main reasons which they found through this study was that 60% of employees didn’t have any issue with their jobs as they had full job security and they were satisfied with the working hours.Organizations are centering on the issue of longer retention of their experienced, senior and useful employees.Organizations are worried about saving a talented representative for an extensional period of time. There are numerous motivations to hold the representatives, and its main role is to recruit and give training to other labors, which is a delaying and an expensive cycle. This method causes the loss of important assets. To accomplish targets and objectives; the organizations are attempting to do their best to continue existing…………………………

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