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 xiv only filling existing competency gaps, but which offer the employees an opportunity to reach new heights in their career progression.