What makes employees want to stay? A study in the Malaysian manufacturing sector

An organization's employee retention rate can signal a source of competitive advantage or risk. Yet, many of the factors that can affect retention rates have not been adequately studied, particularly in sectors where competition for highly qualified employees is fierce, such as the Malaysian manufacturing industry. To assess the impact of three categories of organizational initiatives—performance management, rewards and recognition, and hiring and promotion practices—on employee retention in Malaysia, researchers polled 130 employees in a semiconductor manufacturing facility. They also examined the moderating role of work environment and job design. Using a structural equation approach to analyze several hypothesized relationships, the researchers found that performance management, as well as rewards and recognition, had a significant impact on employees' willingness to remain with their employer, and that work environment and job design significantly moderated the relationship between hiring and promotion and employee retention. Employers that wish to improve their employee retention rate can begin by strengthening human resources practices that foster employee engagement and commitment.