Impact of HRM Practices on Employee Retention: Moderating Role of Job Satisfaction

Abstract

This study aims to explore the impact of compensation, training, and development (T&D), and working conditions on employee retention within the manufacturing sector of Pakistan, with a specific focus on the mediating role of job satisfaction. Employing a convenience sampling strategy, the research collected data from 382 employees across various manufacturing firms in Pakistan. Structural Equation Modeling (SEM) was conducted using Smart PLS software to analyze the data and test the proposed hypotheses. The findings of the study reveal that compensation, training and development, and working conditions have a direct and positive impact on employee retention. Moreover, the results highlight the significant mediating role of job satisfaction in the relationship between these organizational factors and employee retention. All direct and indirect hypotheses proposed in the study were accepted, confirming the mediating influence of job satisfaction and underscoring its critical role in enhancing employee retention within the manufacturing sector. While the study provides valuable insights, its reliance on convenience sampling and the focus on the manufacturing sector of Pakistan may limit the generalizability of the findings. Future research could employ a more diverse sampling strategy and explore other sectors to validate and extend the study's findings. The study offers practical guidance for industry practitioners and decision-makers, emphasizing the importance of fair compensation, effective training and development programs, and favorable working conditions in fostering job satisfaction and enhancing employee retention. Organizations are encouraged to adopt holistic approaches that consider these factors to nurture a satisfied and committed workforce. This research contributes to the existing literature by providing empirical evidence of the direct effects of compensation, training and development, and working conditions on employee retention, as well as the mediating role of job satisfaction, within the context of the manufacturing sector in Pakistan. The study's findings offer a nuanced understanding of the dynamics involved in employee retention strategies, serving as a valuable resource for both academic researchers and industry practitioners.