Examining the Relationship between HR Practices and Employee Retention in Pakistan's Banking Industry

Abstract

In Pakistan’s banking industry, organization is facing the most unrelenting issue which is employee retention and is particularly going true as we are observing that many organizations are facing higher turnover rates. In this study, we examined the impact of human resource (HR) practices on employee retention in the banking sectors in Pakistan. The focus is on five HR practices, namely, Recruitment and Selection, Empowerment, Training and Development, Compensation and Benefits, to analyze how HR practices influence employee stay decision. Using a survey questionnaire, we followed a quantitative approach by collecting responses from 300 bank employees in Pakistan, to which a total of 114 questionnaires were completed. The rankings score dependent variables based on the extent and effect of various HR practices, using a 5-point Likert scale. CFA testing is then employed to endorse the factor structure of questionnaire, to establish the construct’s reliability and validity. Findings of the study indicate that all five HR practices significantly increase employee retention. Good recruitment and selection processes lead to a better employee-organization fit, which helps reduce turnover rates. By granting employees autonomy and control over their work, empowerment promotes job satisfaction and retention. Trainings and development sessions refine employees' skills, improve their career opportunities, and thus increase their dedication towards the organization. The findings offer HR professionals, managers, and policymakers valuable comprehensions in the banking sector. By identifying the most impactful HR practices, this research aids banking institutions in crafting targeted strategies to reduce turnover, thereby enhancing organizational stability and performance.