ABSTRACT

Employee retention remains a key challenge facing the Dairy Industry in Kenya. The implication lies in the costs related to labour turnover. Costs related to directly replacing an employee can be as high as fifty to sixty percent of the employee’s annual salary, but the total cost of turnover can reach as high as ninety to two hundred percent of the employee’s annual salary. Total reward system has been suggested as a key tool that can change the state of high turnover and ensure retention of talented and highly productive workforce. The current study sought to determine the effect of total reward system on employee retention at Mukurwe-ini Wakulima dairy Ltd. The study was guided by the following specific objectives; to determine the effect of intrinsic rewards, extrinsic rewards, career development and learning opportunities on employee retention at Mukurwe-ini Wakulima Dairy ltd. The study was guided by Equity theory as the main guiding theory. Other useful theories included; Herzberg’s hygiene theory, Maslow’s hierarchy of needs theory and Krumboltz’s theory.The study adopted a descriptive survey research design. The study targeted a population of 196 employees at the company as at September, 2017 as gathered from the management. The study used the census study approach to have all the employees participate in the study. The research relied on primary data which was collected through questionnaires. Questionnaires were administered using the drop and pick method. Validity of the instrument was assessed using expert opinion and pre-testing. On the other hand, reliability of the instrument was assessed using Chronbach’s alpha reliability test. The study used both descriptive and inferential statistics in the analysis. ANOVA was used to indicate the percentage variation in employee retention explained by total rewards system variables. The SPSS software was the key analytical tool utilised. As indicated by R square, the coefficient of determination stood at 79.20% of the variation in employee retention at Wakulima Dairy Ltd (the dependent variable) was explained by variation in the total reward system variables; intrinsic rewards, extrinsic rewards, career development, and learning opportunities (independent variables). To that effect, only 20.80% of the variation in employee retention was explained by other factors not included in the model. Pearson correlation analysis output demonstrated a positive effect between total reward systems and its components (intrinsic rewards, extrinsic rewards, career development, and learning opportunities) with employee retention. The study’s conclusion indicated that all the variables under total reward system were statistically significant predictors of employee retention. The study recommended the need to enhance the total reward system in the organisation and particularly career development and extrinsic rewards which were seen to be moderately implemented. This would help in enhancing further, the state of employee retention at Mukurwe-ini Wakulima Dairy Ltd.