MODERATING EFFECT OF ORGANIZATIONAL CULTURE ON THE RELATIONSHIP BETWEEN RETENTION STRATEGY AND TURNOVER COSTS OF MANUFACTURING COMPANIES IN ELDORET, KENYA

Abstract

Retention of employees is becoming a real challenge in today’s rapidly moving dynamic, uncertain and highly competitive business environment. Firms are facing major decisions and challenges as they begin to realize the value of people that make up the organization. The aim of the study was to establish the effect of the moderating role of organizational culture on the relationship between retention strategy and turnover costs. This research study was guided by the following objectives; to determine the effects of motivation strategy on company turnover costs, to determine the effects of training strategy on company turnover costs, to determine the effects of reward strategy on company turnover costs, to determine the effect of recruitment strategy on company turnover costs to establish the effects of organizational culture on turnover costs and to establish the moderating effect of organizational culture on the relationship between motivation strategy and company turnover cost. The equity theory, resource based theory and transaction cost theory was adopted by the study. The study adopted explanatory research design. Target population was 130 respondents with a sample size of 99 respondents determined by use of Yamane formulae. Random sampling technique was used to select the respondents. Questionnaires were used as data collection instruments and data collected was analyzed using descriptive statistics and inferential statistics. Both face and content validity measures were used to test the validity while Cronbach’s alpha was used to test reliability of the research. Multiple regression analysis was used to establish the relationship between retention strategy and turnover costs. The results of the study indicated that motivation strategies on turn over costs (β = 0.207, t = 2.04, P < 0.05), training and turn over costs (β = 0.333, t = 2.67, P < 0.05), rewards and turn over costs (β = 0.340, t = 2.61, P < 0.05) were statistically significant while recruitment on turnover costs (β = 0.056, t = 0.358, P > 0.05) was not statistically significant. Organization culture (β = - 0.309, t = 3.56, P < 0.05), was positive and statistically significant. Subsequently, when moderated with organizational culture, it was found that motivation strategy (β1 = -0.015, t = - .309, P >0.05), training strategy (β2 = - 0.203, t = -2.15, P < 0.05), reward strategy (β3 = -0.190, t = -1.38, P >0.05) and recruitment strategy (β4 = -0.036, t = -.301, P >0.05) had a negative significant effect. There is need for manufacturing firms to enhance retention of their employees in order to reduce and develop their employee’s talent. The management firms should increase the motivation strategies of their employees by adopting both intrinsic and extrinsic motivation practices in order to improve their productivity by reducing their turnover. The management of manufacturing firms should adopt more rewards mechanism in order to satisfy their employees and retain them in the organization. The management of manufacturing firms should ensure that they follow the right recruitment in order to reduce turnover among the talented employees. Further study to be carried out in the public sector to confirm the applicability of the results. Future study also to be done considering the effect of other factors as career development and compensation.