Strategic Human Resource Management Practices And Employee Retention In The Software Development Industry In Kenya

ABSTRACT

The retention of talented employees is paramount to an organization because

employees’ knowledge and skills are central to its ability to be economically

competitive. Employees are a key resource that can be strategically placed for an

organization to attain competitive advantage. Organizations can increase and sustain

their competitive advantage through effective management of human resource as the

success of any organization is dependent on the quality and efficiency of its human

resources. The value of effective Strategic Human Resource Management practices

cannot be overemphasized especially in the face of a dynamic workforce. Employee

turnover is costly given that the cost of replacing the employees is high, finding

competent employees can be difficult and investments in training are currently less

secure. This study sought to establish the effect of strategic human resource

management practices on employee retention in the software development industry in

Kenya. Specifically, the study sought to determine the effects of compensation, career

management practices, employee work-life balance and employee engagement on

employee retention in the software development industry in Kenya. The study adopted

a descriptive cross-sectional research design. The study’s target population was the

employees of the 304 registered software development companies in Nairobi, Kenya.

The study applied stratified and simple random sampling techniques in sample

selection. The study sample size was 456 respondents. A validated self administered

semi-structured questionnaire was used as the data collection instrument. The study

data was analyzed using descriptive statistics through the use of mean, frequencies

and percentages using the Statistical Package for Social Sciences (SPSS, version

21.0). Further, both regression and correlation analysis were used to test the

relationship between the study variables. The study established that majority (>50%)

of the respondents shared the opinion that employee compensation, career

management practices, employee work-life balance and employee engagement were

used to a great extent to enhance employee retention in the software development

companies in Kenya. The study findings also revealed the respondents did agree that

different types of rewards used in their organizations had a deep and long lasting

effect on employees’ motivation and retention (mean = 4.192); they had received

sufficient training in their organizations to enable them do their job effectively (mean

= 4.311); if employees had good work-life balance, the organization would be more

effective and successful (mean = 4.308) and that they felt a strong sense of belonging

to their organization (mean = 4.198) and were prepared to put in a great deal of effort

beyond what was normally expected in order to help their organization succeed (mean

= 4.163). The 4 study variables were found to have a significant positive effect on

employee retention in the software development companies in Kenya. The study

concluded that employee compensation, career management practices, employee

work-life balance and employee engagement played a significant role in enhancing

employee retention in the software development companies in Kenya. To continually

motivate organizational employees, the study recommends that software development

companies in Kenya should use a competitive compensation scheme that comprises of

both financial and non-financial rewards and that reflects the value of the staff to the

organization. Further, the study recommends that software development companies in

Kenya should formulate elaborate career development programmes that aim at not

only filling existing competency gaps, but which offer the employees an opportunity

to reach new heights in their career progression