EFFECTS OF COMPENSATION ON EMPLOYEE RETENTION: THE CASE OF DASHEN BANK S.C.

Abstract

The purpose of this study was to examine Effects of Compensation on Employee Retention in Dashen Bank S.C. The study used quantitative research approach with Explanatory and Descriptive research design methods to objectively answer the proposed research questions. 168 sample sizes were selected from 816 target populations using stratified random sampling techniques by classifying homogeneous employees from different braches position as strata. Structured questionnaires consisted of 45 statements with five point Likert scale were used to collect the data. Statistical Package for Social Science (SPSS) 25 software was used to analyzing the questionnaires. Descriptive statistics was also used to measure the central tendency through use of mean scores, percentage and presented in tables and graphs. Correlation analysis was used to establish the relationship between the study variables. The study revealed that there is statistically significant positive relationship between the Compensation parameters and employees’ retention. The result of multiple regressions analysis revealed that 96.8% of the variation of employees’ retention can be predicted by the independent variables i.e. Salary, Bonus, Employee services, Insurance, Recognition, Advancement, Sound policy and Working Environment are significantly affects employees’ retention at 95% confidence level. Sound policy and Recognition specifically exhibit the strongest correlations, suggesting their substantial impact on retention. The reliability test conducted to check the dependability and consistency of the instrument showed, a Cronbach Alpha of 0.920 which is most relevant for the study. All the hypothesis of the study showed that the eight independent variables have statistically moderate significant relationship with employee retention based on their corresponding Pearson correlation and Beta Coefficient with sig.00 (2-tailed) and P-value(<0.05).The study was concluded that compensation has positive and significant effect on employee retention and therefore, effective compensation has an end result of better retaining better employees and the study was ended by strong recommendation on salary that was the bank has to employ strong standards for retaining talent employees by redesigning its salary scale and payment structure based on workload of employees, the inflation rate as well as market condition or industry scale